Journal of Digital Life 2022,2,7

ArticleOrganizational Ambidexterity and Firm Performance:
Effect of Two Types of Exploitation on JapaneseVideo Game Industry
Taiki Ito 1
1

Faculty of Commerce and Economics, Chiba University of Commerce

Abstract
Recent organizational ambidexterity studies have discussed the importance of achieving a balance between
Exploration and Exploitation. However, existing studies have not distinguished the detail of exploitation; thisstudy categorizes exploitation as ‘Repetitive Exploitation’ and ‘Incremental Exploitation.’ Our study
contributes to ambidexterity studies by analyzing the impact of a combination of both these types of
exploitation and exploration on a firm’s performance. We used 647 observations from Japanese video gameindustries between 1997 and 2019 for panel data analysis. In line with existing studies, we proved that firm
performance increases when a balance between exploration and exploitation is achieved. At the same time,
we found that firms with a lower exploration performed better when the rate of incremental exploitation was
high. The results of our study suggest that even when the firm's ambidexterity is imbalanced, different results
can be expected when both types of exploitation are considered. The Study has implications for organizations
to improve their performance.
Keywords: Ambidexterity; Incremental Exploitation; Repetitive Exploitation; Video Game Industry.

1. Introduction
Exploration and exploitation have been receiving growing attention in corporate strategy and organizational learning.
Many researchers have focused on the relationship between the two, and their impact on firm performance andinnovation (Jansen, Simsek, & Cao, 2012; Lavie, Stettner, & Tushman, 2010). The effect of ambidexterity, which
combines exploration and exploitation, on firm performance has been the subject of much research.
However, the empirical evidence on the effects of ambidexterity on performance shows mixed results; some studies
show that higher levels of ambidexterity lead to positive relationships (Katlia & Ahuja, 2002), while others have foundno relationship (He & Wong, 2004) or a negative relationship (Atuahene-Gima, 2005). Owing to the ambiguity ofthese results, Junni et al. (2013) conducted a meta-analysis of ambidexterity studies, arguing that these (varying)
results are due to different assumptions, measurement methods, and levels of analysis in each study. The results ofthe meta-analysis showed a positive relationship between organizational ambidexterity and performance. This
relationship was also supported by subsequent studies (Luger, Raisch, & Schimmer, 2018; Papachroni, Heracleous,& Paroutis, 2015; Lennerts, Schulze, & Tomczak, 2020).
Previous studies have measured exploration and exploitation on various scales, but they have not distinguishedbetween the two types of exploitation. In some cases, exploitation is just a repetition of knowledge, while in others,
it refers to expansion and development of new knowledge or technologies. Though Piao and Zajac (2016) havecategorized exploitation as ‘Repetitive’ (i.e., repetition of existing designs for existing products), and ‘Incremental’(i.e., creation of new designs for existing products), and have analyzed their effect on subsequent exploration, theirstudy does not address the effect of different combinations of exploration and the two categories of exploitation on
Received: 15 March 2022, Accepted: 1 April 2022, Published: 12 April 2022
* Correspondence: ito@cuc.ac.jp
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1Organizational Ambidexterity and Firm Performance
Taiki Itofirm performance. Thus, saying “exploitation” has different effects on firms depends on the specifics of the
exploitation.
Exploration and exploitation are mutually interactive in corporate activities (Lavie et al., 2010), and it is proven that
there is a strong relationship between exploitation and firm performance (Junni et al., 2013). As such, it can bepresumed that the combination of exploration and the two types of exploitation also affects firm performance. This
study aims to contribute to the study of ambidexterity by analyzing the impact of exploration and both types of
exploitation on firm performance.
Using 647 firm-year observations from 1997 to 2019 in the Japanese video game industry, our study analyzes therelationship between exploration and incremental/repetitive exploitation on firm performance. Our results show thathigher ambidexterity balance in a firm leads to higher performance. At the same time, firms with low explorationachieved higher performance when the incremental exploitation was high. The result of this study provides new
insights to the relationship between exploration and exploitation.
This paper first highlights the Theory and Hypotheses relating to the combinations of both incremental and repetitive
exploitation and exploration, and how their balance affects a firm’s performance. Thereafter, it defines the researchmethodology and results obtained from the analysis. Finally, it presents the conclusion and a brief discussion on the
results of the Study.
2. Theory and Hypotheses
Theoretical background
In organizational learning literature, organizational activities have been defined by two perspectives: exploration andexploitation. March (1991: 71) defined exploration as activities relevant to “search, variation, risk-taking,experimentation, play, flexibility, discovery, and innovation” and exploitation as activities relevant to “refinement,
choice, production, efficiency, selection, implementation, and execution.” Exploration leads to the acquisition of new
knowledge through learning and innovation, whereas exploitation leads to the continued use of past knowledge bases(Vermeulen & Barkema, 2001).
Because of the strong correlation between exploration and exploitation, many researchers have emphasized
ambidexterity, which combines both, as a concept of dual orientation of the firm (e.g., Gibson & Birkinshaw, 2004;
He & Wong, 2004; Lubatkin, Simsek, Ling, & Veiga, 2006; O'Reilly & Tushman, 2004; Tushman & O'Reilly, 1996).
Balance between exploration and exploitation has been a major part of ambidexterity research (Stieglitz, Knudsen, &Becker, 2016). This is because both exploration and exploitation are important aspects of an organization andcombining them enhances firm performance (He & Wong, 2004; Junni et al., 2013). Conversely, a deviation towardeither of these concepts can lead to a competency trap, thereby reducing firm performance and survival probability(Levitt & March, 1988). Therefore, being in a state of ambidexterity is critical to a firm’s success.
In a state of imbalance between the two, especially when exploration is high, firms can acquire a variety of information
through exposure to various sources of knowledge (Beckman, 2006), but it is difficult to obtain adequate returns on
the costs of exploration and experimentation. Additionally, high exploration results in slower absorption andadaptation to and assimilation of new knowledge in the organization (Zahra & George, 2002). On the other hand,when exploitation is high, firms tend to avoid risk and focus on short-term performance. Moreover, the improvementin performance is temporary, and unable to keep up with technological or environmental changes (Tushman &Anderson, 1986). Also, when exploitation is high, firms acquire little new knowledge or resources, and the scale ofthe effect of exploitation is limited (Cao et al., 2009). Therefore, investing in an appropriate balance between
exploitation and exploration is important for a firm’s success (Utterback, 1994).
When exploration and exploitation are balanced, the organization can fully utilize existing knowledge and resourcesto acquire and create new knowledge. At the same time, new knowledge can integrate and strengthen existingknowledge and resources. Many prior studies suggest that balanced ambidexterity lowers failure risk and improves
firm performance (Cao et al., 2009; Gibson & Birkinshaw, 2004; March, 1991). Thus, the balance between explorationand exploitation activities should be maintained for the long-term success of a firm (Lee & Puranam, 2016; O'Reilly& Tushman, 2013; Raisch & Birkinshaw, 2009).
However, the empirical evidence on the effects of ambidexterity on performance is mixed. While some studies show
positive effect (Gibson & Birkinshaw, 2004; Lubatkin et al., 2006), others show insignificant (Venkatraman, Lee, &Copyright: © SANKEI DIGITAL INC.

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Organizational Ambidexterity and Firm Performance
Taiki ItoIyer, 2007; Lennerts et al., 2020), or even negative effect (Athuahene & Gima, 2005). Also, in studies focusing on thebalance between exploitation and exploitation, high exploitation needs to be combined with high exploration (i.e., ahigh-high combination) to achieve superior performance (Lennerts et al., 2020). Owing to these variations, i.e.,
positive effects of a high-high combination (Katila & Ahuja, 2002) to insignificant (He & Wong, 2004) or negative
effects (Atuahene-Gima, 2005) on a firm’s performance, it is assumed that exploration and exploitation do not have asimple relationship.
Junni et al. (2013) attributed these mixed results to different measurement scales, levels of analysis, research design,and other issues in each study. They performed a meta-analysis of existing organizational ambidexterity studies andsuggested that the relationship between ambidexterity and performance is strongly influenced by moderator variables,
but the relationship between balanced ambidexterity and performance itself is a positive. Later studies have also
substantiated that ambidexterity improves firms' competitive advantage and performance (Luger et al., 2018;
Papachroni et al., 2015; Lennerts et al., 2020). Therefore, controlling for other variables, we suggested that higher
balanced ambidexterity positively related to firm performance.
H1. Balanced ambidexterity is positively related to a firm’s performance
Repetitive exploitation and incremental exploitation
While existing studies on ambidexterity, including the previous studies addressed in Junni et al. (2013), measured
exploration and exploitation on various scales, they have not distinguished between the two types of exploitation.
Exploitation is not necessarily expected to be unique. This means that exploitation may simply be a repetitive use ofknowledge, or it may be an evolution of the existing knowledge.
Piao and Zajac (2016) state that there are two types of exploitation: repetitive exploitation and incremental exploitation.
They define repetitive exploitation as "the repetition of existing designs for existing products"; as per March’s (1991:
71) description, "production," "efficiency," "implementation," and "execution" are applied in repetitive exploitation.
Incremental exploitation is defined as "the creation of new designs for existing products,"; as per March's (1991: 71)
description, "refinement", "choice", and "selection" are applied in the incremental exploitation. Their study examines
the impact of both types of exploitation on likelihood of future exploration. The results suggested repetitive
exploitation decreases exploration and delays the response to environmental changes, while incremental exploration
increases exploration and hastens the response to environmental changes. Acevedo and Díaz-Molina (2019) also
assumed that incremental exploitation affects incremental innovation and repetitive exploitation affects operational
efficiency. Thus, the impact of simply saying "exploitation" has a different effect on firms according to the nature of
the exploitation.
However, while existing studies have examined the impact of repetitive and incremental exploitation on subsequent
exploration or the independent effect, they have not discussed how the combinations of exploration andrepetitive/incremental exploitation affect firm performance. Therefore, we will discuss the effect of combinations of
exploration with both types of exploitation on a firm’s performance.
The impact of exploration and repetitive/incremental exploitation
Incremental exploitation leverages knowledge and resources that a firm already has, to create something novel (Piao& Zajac, 2016). Therefore, while using existing resources, actual activities are conducted on a trial-and-error basis,
linking different knowledge and resources combinations to generate later exploration (Lichtenthaler & Ernst, 2012).
Therefore, incremental exploitation improves the organizational ability to explore. This can lead to organizational
stimulation and the creation of new innovative products (March, 2008). Also, whereas exploration is associated withradical innovation, incremental exploitation is associated with incremental innovation, so its risk is lower (Acevedo& Díaz-Molina, 2019). Furthermore, using incremental resources to enter new markets is less costly than entering
new markets independently (Sakhartov & Folta, 2015).
On the contrast, the nature of incremental exploitation is similar in some respects to exploration and is not necessarily
associated with organizational stability. Since the prospects of the final products are uncertain, adaptability issues
with the existing organization may arise (Moore, 1991).
Repetitive exploitation is the reuse or reproduction of something that has already been successful to a certain levelwithin a firm (Denrell & March, 2001; Piao & Zajac, 2016). Since existing assets are used, it is easier to predict
outcomes from repetitive exploitation, making it less prone to critical failures (Denrell & March, 2001) and less likely
to make mistakes because of short cognitive distance (Nooteboom, 2000). Even if it fails, the losses in time and cost
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Organizational Ambidexterity and Firm Performance
Taiki Ito
are minimal (Holmqvist, 2004). For these reasons, repetitive exploitation is likely to reduce organizational risk andprovide stable returns, but at the same time, its use is unlikely to acquire new knowledge. Therefore, though it may
lead to a revenue increase the short-term, it could impact the firm's revenue and survival when viewed from a longterm perspective. Since the use of repetitive exploitation also reduces the absorb capacity and employees focus only
on continuous improvement and learning (Camisón, Boronat-Navarro, & Forés, 2018), there will be delayed adaption
to innovative technologies or environment changes (Lubatkin et al., 2006).
In firms with low exploration, a focus on repetitive exploitation will lower the viability of the organization. Conversely,
decreasing repetitive exploitation and increasing incremental exploitation will lead to an organization's innovativenessboth, by acquiring new knowledge, and creating synergy with existing knowledge. In summary, increasing repetitive
exploitation in firms with low exploration is likely to reduce the ambidexterity balance, thereby decreasing
opportunities for new findings, and resulting in poor performance. Therefore, the firms with low exploration should
increase incremental exploitation to achieve ambidexterity balance and improve organizational performance.
H2a: For firms with low exploration, there is a positive relationship between incremental exploitation and firm
performance.
H2b: For firms with low exploration, there is a negative relationship between repetitive exploitation and firm
performance.
Likewise, focusing on incremental exploitation in firms with high exploration leads to a synergistic increase in therisk of failure. Additionally, the increased cost and time to combine existing and new knowledge make it difficult toachieve desirable outcomes (Lubatkin et al., 2006). Conversely, decreasing incremental exploitation and increasing
repetitive exploitation will reduce the risk of such failures thereby leading to organizational stability. In summary,increasing incremental exploitation in firms with high exploration is likely to reduce the ambidexterity balance,
thereby increasing uncertainty risk and resulting in poor performance. Therefore, the firms with high exploration
should increase repetitive exploitation to achieve ambidexterity balance and improve firm performance.
H3a: For firms with high exploration, there is a negative relationship between incremental exploitation and firm
performance.
H3b: For firms with high exploration, there is a positive relationship between repetitive exploitation and firm
performance.
Ambidexterity consists of both, exploration and exploitation, but their relationship is treated differently by different
papers. Some studies treat both as continuum variables (Heyden, Oehmichen, Nichting, & Volberda, 2015; Lavie etal. 2010; March, 1991), while others treat them as orthogonal variables (Gupta, Smith, & Shalley, 2006; Katila &Ahuja, 2002). In this study, we treat exploration and exploitation as continuum variables. This is because once newknowledge is developed to create content, it is left to exploitation to make use of that knowledge (Lavie et al., 2010).
Of course, the acquisition of new knowledge involves exploration, but that knowledge is made more accessible
through exploitation. As the knowledge acquired in the exploration is transformed into exploitation when subsequently
used, both are seen as an extension of each other rather than being independent, therefore, we treat them as continuum
variables (e.g., Brunner, Staats, Tushman, & Upton, 2010).

3. Research Method
In this study, we conducted a statistical analysis of the Japanese video game industry including data from 1997 to
2019. There are two reasons why the video game industry was appropriate for our study. First, the important variables
necessary for the analysis can be easily measured in the video game industry. When firms develop new games, theyoften use internal resources, including incremental exploitation and repetitive exploitation. Therefore, we can see theimpact of both types of exploitation. Second, firms can choose which resources to use in game development. Thus, it
can be seen as a reflection of the firm's strategy of whether to give more importance to exploration or exploitation.
We used data from "The Annual Game Industry Report 1997-2020" for the analysis. Although data from year 1997 to2019 was used for our analysis, game titles released in 2019 were not included because some of these were released
just before the measurement period of the data source and do not necessarily reflect actual sales. Therefore, we onlyused 2019 data on cumulative sales of game titles released before 2018.
During the observation period, 572 new game titles were released in Japan on an average every year (game releasedon multiple platforms with the same title is counted as one). “The Annual Game Industry Report” included only the

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Organizational Ambidexterity and Firm Performance
Taiki Ito
top 1,000 sales for the year, but on average, 85.2% of new released games data were included in our dataset. Of the
excluded data, 51.2% had less than 2 months of measurement period1. Therefore, we conclude that the video gamedata were sufficiently covered in our dataset. Each game title was compiled by firm-year, and we removed firms with
only a single firm-year data. The final sample contains 97 firms and a total of 647 usable observations.
Dependent variable
Average Sales Growth Rate. In this study, we used the average sales growth rate as a measure of firm performance.
Although Return on Assets (ROA) or sales growth rate should normally be used, we considered it difficult to use it as
an indicator because of the problems in collecting performance measures for many unlisted companies. The sales
growth rate is defined as the average sales of all game titles released by a firm in year t divided by the average sales
in year t-1. The average sales growth rate in year t was then defined as the average of sales growth rate in the last
three years (He & Wong, 2004). Sustained sales growth rate has been found to be a reliable proxy indicator of longterm firm performance (Henderson, 1999).
The three-year measurement period was chosen because the development time for most game software is usually
lesser; the average game development time is about 16 months, and 91.5% of games have a development time of lessthan two years (Computer Entertainment Supplier's Association, 2015: 16). Except about 6.7% of games that takemore than three years to develop, most game titles would accrue returns on investment within three years.
Independent variables
Balance. To measure balance, we follow He and Wang (2004) and use the absolute difference between exploitationt1 and exploration t-1 , such as |(1-α)-α| for analysis. Also, to facilitate interpretation, to follow Cao et al. (2009), wereverse this measure by subtracting the difference score from 1 so that a higher value indicates greater balance
dimensions.
Exploitation. Exploitationt-1 was measured as the sum of Incremental exploitationt-1 and Repetitive exploitationt-1.
Incremental exploitationt-1 was measured by the number of game titles with sequels of existing game series and game
titles using game characters2 in year t-1 divided by the total number of titles in year t-1. These titles were determined
to be incremental exploitation because the worldview, characters, design, and other aspects could be appropriatedfrom the existing game, but the stories, systems, and genres had to be newly constructed.
Repetitive exploitation. Repetitive exploitationt-1 was measured by the number of remakes, remastered editions, best
editions, and collection editions titles released in year t-1 divided by the total number of titles in year t-1. A remakeor remastered edition is a remastering of a previous work using the latest technology, which may include some
additional elements, but in most cases the content itself is not changed significantly. The best editions are low-priced
versions of previous titles with the content unchanged in most cases. Collection editions are those wherein several
previous series of titles are sold together. These game titles were considered repetitive exploitation because theylargely used previous titles in their entirety. Additionally, titles that contain elements of both incremental exploitation
and repetitive exploitation (e.g., remastered versions of series sequels) were also counted as repetitive exploitation
because there are few new elements to be developed3.
Exploration. Explorationt-1 was measured by the number of titles that did not correspond to repetitive explorationt-1
and incremental exploration t-1 in year t-1, divided by the total number of titles in year t-1. The first of a series that
doesn’t use a character and later has a sequel is counted here, since it is considered a new game at the time of its
release.
Proportion of Incremental Exploitation. Following Piao and Zajac (2016), our study defined Proportion ofincremental exploitationt-1 as incremental exploitation t-1 divided by the sum of repetitive exploitationt-1 andincremental exploitation t-1. Therefore, the closer to 1 means a higher rate of incremental exploitation.
Control variables
Firm size was measured by the number of game titles, because data on the number of full-time employees (Baum etal., 2001) and capital was difficult to access. Also, since the development time per game title is about 16 months, we
determined that the number of titles reflects the size of the firm, because more employees and capital are required toincrease the number of titles. Firm age was assessed as the number of years since establishment. The variable isincluded to account for the routines and levels of experience that were built up within a firm and are available as aresource (De Vaan, Stark, & Vedre, 2015). Industry sales were measured as the total sales of the entire video gameindustry. Platform diversification - the Herfindahl index was used to measure the degree of platform diversification
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Organizational Ambidexterity and Firm Performance
Taiki Itoof each firm (Montgomery, 1982). The choice of which platform (e.g., Nintendo Switch, Play Station 5, Xbox Series
X/S) to sell a game on is important. The more major platforms will expect to increase sales volume, but this alsomeans more competitors. Also, developing a game title on the newest platform is a new learning experience, whichmeans more opportunities for trial and error, which can extend development time. However, it is presumed that firms
with higher diversity of platforms are more likely to handle changes and problems in the environment. Platformdiversification was calculated based on 25 platforms that existed during the observation period, as per the "The Annual
Game Industry Report”. Genre diversification - the Herfindahl index was used to measure the degree of genre
diversification of each firm. Video games in highly competitive genres are benchmarked against more and possibly
higher quality games which are expected to influence sales (De Vaan et al., 2015). In Japan, RPG and action genres
are popular, so the influence of genres was controlled. Genres were classified into 12, based on " The Annual Game
Industry Report.” We also added year dummy as a control variable.
Statistics method
In comparison with previous organizational ambidexterity studies which mainly employed a cross-sectional research
design (Junni et al., 2013), our data are structured as panel data because panel data lessens the risk of confounding
correlation with causation (Luger et al., 2018). All independent variables and control variables are lagged by one year,
relative to the dependent variables in analysis, to facilitate causal inference. To test our hypotheses, we chose fixedeffect model for our analysis to control firm-level unobservable factors. All statistics in our study were performed
using Stata 14.
4. Results
Table1 shows mean, standard deviation and correlation matrix of all variables in our analyses. Table 2 presents theresults of the regression analyses. Model 1 contains all control variables in the analyses. Models 2-4 added independent
variables and tested hypotheses 1-3. In Model 2, the balance was positively significant (b=.224, p<0.10), supporting
Hypothesis 1. In other words, the more balanced the exploitation and exploitation, higher the average sales growthrate. Model 3 shows the impact of incremental exploitation and repetitive exploitation on the firms with the lowest
proportion of exploration (the bottom 50% of exploration). In Model 3, the variable of proportion of incremental
exploitation was positive and significant (b=.417, p<0.05), which supports Hypotheses 2a and 2b. That is, firms withlower exploration increase their average sales growth rate as the proportion of incremental exploitation increases,
while average sales growth rate reduces as the proportion of repetitive exploitation increases. Model 4 shows theimpact of incremental exploitation and repetitive exploitation on the firms with the highest proportion of exploration(the top 50% of exploration). The variable of proportion of incremental exploitation was negative, but since its effect
was insignificant, Hypotheses 3a and 3b were not supported. The effects of Model 3 and Model 4 are visually presented
in Figure 1
Table 1. Descriptive Statistics and Correlation Matrix
Variables
Mean
1. Average sales growth
1.35
2. Balance
0.35
3. Proportion of
0.58
incremental exploitation
4. Firm size
7.98
5. Firm age
26.56
6. Industry sales
494.9(Billion yen)
7.Platform diversification
0.29
8. Genre diversification
0.35*p<0.05, **p<0.01, ***p<0.001

SD
1.40
0.36

1

2

3

4

5

6

0.10**

0.38

0.11**

11.64
19.16

-0.08*

0.23***

0.37***-0.04

0.09***

0.17***

0.31***

113.6-0.09*

0.02

-0.02

-0.02

-0.07*

0.28
0.32-0.09*

0.40***

0.52***

0.53***

0.27***

0.06*-0.08*

0.43***

0.53***

0.56***

0.34***

0.04

7

0.82***

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60.65***

Organizational Ambidexterity and Firm Performance
Taiki Ito

Table 2. Regression Results
DV: Average Sales GrowthFirm size
Firm age
Industry sales
Platform diversification
Genre diversification

Model1Model2-.056(.103)-.023(.562).353(.374)-.058(.739).018(.911)-.057(.201)-.008(.880)-.121(.798)-.023(.904).051(.780).224*(.063)

Balance
Proportion ofincremental exploitation
Year dummy
Adjuster R2
F
N

Included
.054
1.54*
647

Included
.062
1.72*
647

Model3:
Low Exploration-.042(.340)-.074(.158).188(.699).008(.973).174(.475)

Model4:High Exploration-.097*(.084).118*(.071)-3.93(.174)-.004(.976).028(.851).417**(.040)
Included.072
3.68***
476-.134(.281)
Included
.056
1.30
171

*p<0.1, **p<0.05, ***p<0.01.
Values are standardized regression coefficients, with p value in parenthesis.

Fig.1. Moderating effect of exploration
5. Discussion and Conclusions
This study clarifies the relationship between exploration and exploitation on firm performance by dividing exploitation
into incremental and repetitive exploitation, which have been grouped together in previous studies of ambidexterity.
The results of our study make several contributions to ambidexterity studies.
First, we proved that ambidexterity and performance are positively related, but this relationship differs when
exploitation is categorized further.

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Organizational Ambidexterity and Firm Performance
Taiki Ito
Second, the results of this study's analysis imply a complementary relationship between exploration and incremental
exploitation. In previous research, conflicting views suggest that exploitation disturbs exploration (Levinthal & March,
1993), while complementary views suggest that exploitation complements exploration (Zollo & Winter, 2002). The
results of our study confirm that firms can achieve high sales growth rates by increasing the proportion of incremental
exploitation even when the exploration is low. This result suggests that by focusing on incremental exploitation,
exploration and exploitation can complement each other. However, increasing repetitive exploitation did not lead toan increase in sales growth rate when exploration was high. This might be because repetitive exploitation, whichsimply means the reuse of resources, has a weak relationship with exploration, thereby suggesting that both have
independent effects.
Also, our findings have several managerial implications. The results of our study provide suggestions to industries
utilizing intangible assets, e.g., the video game industry, on how these assets should be explored and exploited. Firms
need to constantly make new products and ideas for their growth, but it is not always possible to continue constant
exploration. When exploration does not work well, organizational performance could be complemented by increasing
the proportion of incremental exploitation and rely for a while on incremental innovation.
Despite these contributions, there are some limitations in this study.
First, whether a game title includes a character or not is based on the author's subjective view, so the reliability of theclassification is not necessarily ensured. Therefore, it is necessary to ensure the reliability by confirming theconsistency in multiple researchers and measuring Cohen’s kappa coefficient.
Second, many game development firms have also entered the smartphone game industry since around 2010; the impactof this on the video game industry is not insignificant. In fact, there have been cases wherein popular smartphonegames have been adapted and released as video games, so the relationship between the two industries may need to beconsidered in future analyses.
As a direction for future research, this study estimates the growth rate over a three-year period, but different results
may be found when observed over a longer period. For example, although repetitive exploitation did not show asignificant impact on firm growth rate, the development of game software through repetitive exploitation is often
assigned to newcomers with little experience. Therefore, from a human resource development perspective, it may
have an impact on the long-term survival of the firm. This may lead to new findings in the long run.
Although this study focused only on Japan, it is expected that more accurate analysis would be possible by including
overseas as well. This is because some firms focus on overseas sales and game titles are produced with the goal ofincreasing worldwide sales. So, a poor sale in Japan does not necessarily mean failure. Since non-Japanese firms do
not necessarily make products for the Japanese market, it is difficult to determine success or failure based solely on
Japanese domestic data. Therefore, the inclusion of foreign data would further enhance the elaboration of this study.

Funding
This research received no external funding.
Data Availability Statement
Raw data were generated at the Media Create (https://www.m-create.com/english/). The datasets generated during
and/or analyzed during the current study are available from the corresponding author on reasonable request.
Conflicts of Interest
The author declares no conflict of interest.
Appendix
1 For the excluded data, due to data unavailability, calculations are based only on 2019 data.
2 Character games were determined by whether the title included the firm's specific game character name or not. For
example, Nintendo: “Yoshi’s Crafted World”, Capcom: “Rockman X command mission”, Sega: “Sonic Chronicles:
The Dark Brotherhood”. Underlined parts are names of firm’s specific character. As these data do not exist,
classifications were made by authors subjective.

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Organizational Ambidexterity and Firm Performance
Taiki Ito
3 The detailed priorities for exploitation classification are as follows. Each of the games is considered to fall into theclassification of higher priority one.
Collection > Best > Remaster > Remake > Sequel > Character > Not applicable (Exploration)

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