Answering the question of how enabling technology-based firms manage tensions in their development process, we focus on tensions related to balancing the need to explore new developments for future performance, with the need to exploit existing capabilities to generate sufficient value in the short term. Based on social system theory, we suggest that entrepreneurs use four types of functions to develop their business: goal attainment, pattern maintenance, social networking and economic optimization. Building sustainable firms requires the development of all four functions and the related types of capital (strategic, cultural, economic and social) up to a certain minimum; they must then be balanced in such a way that the exploration-exploitation tension can be dealt with adequately.Through a case study of the development of a sound measuring sensor, we illustrate the four types of functions and the accumulation of capitals by exploring a set of three propositions.
- Exploration-exploitation dilemma
- Radical innovation
- Social system theory