FACULTY AND RESEARCH

Drawing on organizational learning theory, this study investigates whether, and how, digital firms' characteristics can alter the determinants of exploration and exploitation activities through acquisitions. Considering that digital firms intrinsically differ from non-digital firms as regards their resource bundles, cost structure, and growth strategy, we argue that these distinctive characteristics can moderate the effects of slack resources and performance feedback on the propensity to conduct explorative and exploitative acquisitions. Comparing large, U.S. publicly traded digital and non-digital acquiring firms, we empirically show that consistent with our predictions, digital firms' characteristics mitigate the effects of slack resources and performance feedback on the propensity to conduct explorative acquisitions. Yet, contrary to our predictions, the findings also indicate that digital firms' characteristics reinforce the effects of these determinants on the propensity to conduct exploitative acquisitions.