Rhythm and shift frequency of strategic renewal in Indonesian firm performance

Abstract

Purpose This study aims to explore how manufacturing firms in emerging economies can effectively adjust the rhythm and shift frequency between exploitation and exploration renewal. The authors also examine how these strategic adjustments can significantly boost firm performance, offering insights into the dynamic process of strategic renewal. Design/methodology/approach This study analyzes annual reports of 127 Indonesian manufacturing firms from 2014 to 2019, applying both linear and curvilinear regression models to examine the hypotheses. Data on exploration and exploitation renewal were meticulously gathered using computer-aided text analysis, using targeted keywords to identify strategic renewal efforts. Findings The study shows that a rather irregular balance rhythm between exploitation and exploration renewal surprisingly enhances firm performance. A curvilinear relationship emerges as performance peaks when the shift frequency of renewal occurs about three times. This relationship optimizes the strategic renewal processes, emphasizing that firms need to remain agile and adaptable in today’s dynamic market environment. Originality/value This study leverages organizational learning to assess how the paradoxical dimensions of exploration and exploitation renewal impact firm performance. By focusing on the temporal transition of these tensions, it provides insights into optimizing the rhythm and shift frequency of renewal, transitioning from a static to a dynamic accord.