Exploitative or explorative innovation? An event study of cloud computing business value

Firms may invest in cloud computing for exploitative or explorative innovation. Exploitative innovation oriented cloud computing investments impact the firms' core business limitedly while the investments for explorative innovation bring the firms both more opportunities and risks such as complex integration with multiple participants. Different enterprises should invest in cloud computing for different orientations according to their situations so as to fully realize the business value. This study examines how the business value of cloud computing is contingent on the investment orientations and the contextual factors of firm characteristics. Taking 183 Chinese listed companies adopted cloud computing as the research sample, we conduct event study methodology to investigate the business value of cloud computing regarding the focal firms' objectives and characteristics including organizational inertia, innovation capability and industry types. The results show that the business value of cloud investment for explorative innovation is more positive than that for exploitative innovation especially for the innovative firms with weak organizational inertia in non-service industries. Meanwhile, achievement of cloud computing business value is complementary to overcoming organizational inertia and promoting innovation capability. This study extends the boundary of business value research of cloud computing and provides references for cloud investment decision making.