Impacts of Practice Combinations on Organizational Knowledge: Based on March’s Exploration-Exploitation Model

Abstract

Organizational learning is an important approach for organizations to improve knowledge levels and enhance adaptability to a complex environment. In this paper, based on the exact recreation of March’s classical model on organizational learning, we conduct research systematically on the impacts of different rate combinations of two typical organizational practices, socialization and codification, on the level of organizational knowledge. Environmental dynamism and system openness are taken into account, as contextual variables. The result shows that (1) accelerating codification and slowing down socialization can achieve better outcomes in a stable environment and closed system. (2) Moderate system openness is beneficial for organizational knowledge when in a stable environment. (3) Environmental turbulence has obvious negative effects on organizational knowledge, and the adjustment of rates of socialization and codification only works temporarily, when in the closed system. (4) System openness can relieve the negative correlation between environmental turbulence and organizational knowledge. Furthermore, we discuss some challenges in how to apply research findings in this paper to organizational actual operations and also provide a few suggestions for further studies. Our paper enriches relative literature on March’s agent-based model, and some results and conclusions obtained in the paper can provide a helpful reference for follow-up researches in this domain.