Abstract
The purpose of this study is to clarify the temporal sequence of local exploration and home-base exploitation from the perspective of punctuated equilibrium, and consider how this sequence is related to capability building of overseas product development center. Especially, this study focuses on switching from exploration to exploitation, which has not been much studied in previous international business research. In this paper, we conducted a case study of a Chinese Development Center in a Japanese Analytical, Testing and Measuring Instruments Company (A). For this purpose, we analyzed the establishment process of this Chinese Development Center from the perspective of the sequence of exploration and exploitation.
We found that by performing local exploration activities first, learning about higher order problems such as value standards and basic routines is carried out, and this provides a solid foundation for later exploitation activities which facilitates local adaptation at the Chinese Development Center.
