Exploitative and exploratory search: Dynamic capabilities enhancing SME adaptation, new product development, and environmental performance

Christian Sarfo, Mohammad Fakhar Manesh and Andrea Caputo

Journal of Small Business Management, 2025, vol. 63, issue 5, 1978-2007

Abstract: This study delves into how small and medium-sized enterprises (SMEs) adapt to market changes and enhance environmental performance through exploitative and exploratory search strategies within emerging economies. Operationalizing these strategies as dynamic capabilities, we investigate their impact on new product development amid environmental dynamism. Utilizing a two-wave survey of 437 manufacturing SMEs, with lagged primary environmental performance data, we applied partial least squares—structural equational modeling (PLS-SEM) to test our hypotheses. Our findings contribute invaluable insights to entrepreneurship literature, emphasizing the crucial role of intentional search in SMEs’ continuous adaptation and innovation. We shed light on the distinctive contributions of exploitative and exploratory search in shaping SMEs’ resource base and specific outputs, such as environmental performance. By discerning between possessing a capability and achieving successful outcomes, our study offers a resilient framework for SMEs, boosting both new product development and environmental performance in emerging economies.

Date: 2025
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DOI: 10.1080/00472778.2024.2418026

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