Exploration, exploitation, ambidexterity and the performance of international SMEs

Abstract

Purpose This study aims to examine how international small and medium-sized enterprises (ISMEs) improve adaptive marketing capabilities (AMCs) through exploration, exploitation and ambidexterity (EEA) and thereby increase exporting performance. In addition, the present study attempts to examine conditions under which EEA can more effectively improve AMCs. Design/methodology/approach The theoretical model was tested by using survey data collected from 119 ISMEs based in the U.S. Partial least squares structural equation modeling was deployed to analyze the data. Findings The results show that exploration increases ISMEs’ performance through improving AMCs while ambidexterity reduces ISMEs’ performance through weakening AMCs. However, the negative influence of ambidexterity on AMCs attenuates in a dissimilar host country where ISMEs can conveniently learn new information. Finally, when ISMEs pursue exploitation in an either similar or dissimilar host country, their AMCs do not improve. Research limitations/implications We provide empirical evidence of SMEs increasing AMCs and firm performance via EEA within the context of exporting. However, we did not collect objective financial performance of ISMEs. Practical implications Our findings provide guidance for ISMEs’ marketing managers to build AMCs by learning something new. Moreover, the findings help ISMEs effectively identify and select the most appropriate international marketing strategy depending on the similarity between host and home countries. Originality/value Our findings contribute to the literature by explicating how ISMEs can heighten marketing capability to build competitive advantages in global markets through exploration. However, ISMEs should be cautious when pursuing ambidexterity, which may weaken AMCs and finally decrease firm performance. In addition, we identify external factors that influence effectiveness of EEA in building AMCs. By doing so, the findings help ISMEs understand how to increase AMCs so as to improve competencies in fast-changing global markets.

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