Exploration, exploitation, and geographic diversity: A study of new entrepreneurial ventures

The smallness and newness of new entrepreneurial ventures can impede their exploratory and exploitative innovation, which makes the creation of extra-cluster ties particularly relevant. This study investigates to what extent geographic network diversity contributes to a new entrepreneurial venture’s exploration and exploitation innovation performance. Using a unique dataset of entrepreneurs’ ego networks, it was found that geographic network diversity has a positive effect on both types of innovation up to a certain point, after which geographic diversity has a negative effect. Exploitative processes reach this inflection point at a relatively low level of geographic diversity, whereas exploratory processes thrive at a higher level of geographic diversity