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What Drives Exploration? Convergence of Tendencies Among Alliances Partners and Competitors

Strategy research has alluded to organizational incentives and environmental conditions that drive firms’ tendencies to explore versus exploit. We complement this research by demonstrating how convergence with the dominant corporate behaviors of the firm’s alliance partners and competitors drives these tendencies. Using panel data on 182 U.S.-based publicly-traded electronics firms, we reveal an inverted U-shaped association between the firm’s exploration and the exploration tendencies of its partners and competitors. We also show how the convergence with their exploration tendencies becomes stronger under uncertainty but weaker when the exploration pattern exhibited by the firm’s partners and competitors is incoherent. Finally, counter to expectations, convergence is weakened by the technological proximity between the firm and its competitors. Our findings inform research on the antecedents of exploration and underscore the role of interdependence in firms’ exploration tendencies.