The differentiating effects of workforce aging on exploitative and exploratory innovation: The moderating role of workforce diversity

Despite negative predictions about the effects of workforce aging on organizational innovation performance, little systematic research has been conducted on this question. We investigate the differentiating effects of workforce aging by classifying organizational innovation as either exploitation or exploration. More specifically, we suggest that workforce aging positively affects exploitative innovation performance, whereas it negatively influences exploratory innovation performance. Moreover, building on the double-edged effects of diversity, this study examines the moderating role of age diversity in the workforce aging–innovation performance relationship. We predict that the diverse composition in the labor structure contributes only to exploration, not to exploitation. We tested hypotheses using data gathered from a government-sponsored survey of Korean companies—234 firms for exploitative innovation and 166 firms for exploratory innovation. Results revealed that workforce aging had a positive influence on exploitative innovation performance and had an inverted U-shaped relationship with exploratory innovation performance. In addition, age diversity only attenuated the positive workforce aging–exploitative innovation performance relationship. Theoretical and practical implications are also discussed.