Although Clavulanic acid does have some degree of bacterial activity, its principal role is as a beta-lactamase inhibitor. Beta-lactam antibiotics, such as the penicillins and cephalosporins, act by disrupting the development of bacterial cells walls thus causing the disintegration of the bacteria. However, some bacteria acquired the genes to produce enzymes which inactivated this mode of action - so called beta-lactamases - drastically reducing the efficacy of this class of antibiotics.
Clavulanic acid has a similar structure to the beta-lactam antibiotics but binds irreversibly to the beta-lactamase enzymes. Used in combination with the beta-lactam antibiotics, it has become one of the most prescribed antibiotics in the western world prolonging the effective life of antibiotics such as Ampicillin (as in GSK's Augmentin®).