Exploration-exploitation dilemmas of venture capital funds: The role of organisational slack and horizons

Shmuel Ellis*, Tamar Sagiv, Israel Drori

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


This paper analyses the investment decisions of venture capitalists (VCs). Drawing on March's conceptual exploration-exploitation framework, we examine whether organisational slack and organisational horizons can predict exploration and exploitation behaviours. Using data on VC funds that operated in Israel between 1990 and 2004, we explore two central VCs' dilemmas: The first, whether to invest in startups at their seed stage, and the second - when to opt for an exit. We found that whereas organisational slack and time horizons predicted explorative performance, exploitation was found as more dependent on situational factors and more strongly associated with investors' pressure. The findings are discussed in terms of the limited ability of top management teams to maintain an optimal balance between exploration and exploitation in organisations in general, and in VC funds in particular. Copyright

Original languageEnglish
Pages (from-to)220-241
Number of pages22
JournalInternational Journal of Entrepreneurial Venturing
Issue number3
Publication statusPublished - 1 Jan 2014


  • Exploration vs. Exploitation
  • Israel
  • Organisational horizons
  • Organisational slack
  • Venture capital


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