The evolutionary view posits that the intraorganizational ecology of strategy-making comprises two distinct types of strategic action. Induced strategic action involves initiatives on the part of operational and middle-level managers that fit with the existing concept of corporate strategy, which represents the explicit theory that the company has about the basis for its past and current successes and failures. Top management can proactively influence the external environment to the company’s advantage through induced strategic action. However, emergent environmental change may create novel growth opportunities pursued through autonomous strategic action by individuals or small groups, typically involving new product-market categories and combinations of competencies that are not centrally important in the firm’s existing strategy.
Autonomous strategic actions are variations that materialize because a company’s competencies are fungible and lead to entrepreneurial initiatives that are different from the company’s mainstream business. Top management tolerates autonomous strategic initiatives because such initiatives potentially extend the boundaries of the company’s competencies and generate learning about new markets and technologies, perhaps in new environmental niches having weaker competitive or institutional pressures. Administrative and cultural mechanisms regulating the allocation of managerial attention and organizational resources perform a selection function inside a company. When the activation of a strategic context determination process selects a viable autonomous strategic initiative for company-wide adoption, a linkage gets created that amends the corporate strategy. Retention takes the form of organization-level learning about viable product-market positioning, valuable and relatively unique distinctive competence, realistic strategic objectives, and shared values associated with organizational identity that shapes the evolving corporate strategy.
The induced and autonomous strategy processes of the internal ecology of strategy-making, together, provide the foundation for continued organizational adaptation in the face of strong external selection pressures empirically demonstrated by organizational ecology research.
Field research findings related to the internal ecology of strategy-making has been linked to computational research of exploration/exploitation in organizational learning. Induced strategy—conforming to a closed system formalization—maps to the continuum conception of exploration-exploitation. Autonomous strategy—conforming to an open system formalization—maps to the orthogonal conception. Exploitation-exploration balance has been proved to be unattainable for induced strategy. For autonomous strategy, exploration-exploitation balance is attainable: several exploration-exploitation mixes yield equifinal optimal outcome. However, induced strategy is likely to be favored because top management can easily discern change in organizational knowledge by modulating the rate of exploitation; such discernment is difficult for autonomous strategy when a company attempts an innovation requiring knowledge close to the knowledge embodied in the current corporate strategy. In contrast, if a radical innovation is attempted, top management can discern change in new knowledge created by modulating the rate of exploitation. This functions as a useful tool in strategic context determination. Related research also explains why strong exploitation drive is beneficial under low exploitation urgency—to move an innovation project out from exploration to exploitation—and harmful under high exploitation urgency, in the presence of strong exploitation capability.