Exploration and exploitation in project-based organizations: Development and diffusion of knowledge at different organizational levels in construction companies

Management studies highlight the importance of an organizationʹs capability to both exploit existing knowledge and technologies for short-term profits and also explore new knowledge and technologies to enhance long-term innovation. Although this paradox recently has received escalating interest in management research, studies dealing with project-levels and project-based organizations (PBOs) are scarce. This conceptual paper discusses how PBOs in the construction industry can manage the exploration/exploitation paradox at different organizational levels. Short-term project focus and decentralization inhibits learning from one point in time and space to another, making it easier to reap the benefits of exploitation than of exploration. Current structural and sequential separation of exploration and exploitation activities at business unit, project portfolio, and project levels do not solve the paradox, due to lack of integrating mechanisms. Hence, PBOs in the construction industry may suffer from inadequate extent of exploration, while the extent of exploitation is not reaching its potential. Cooperative procurement procedures can serve as a basis for facilitating both exploration and exploitation of knowledge and technologies in construction projects.