Effects of political networking capability and strategic capability on exploratory and exploitative innovation: evidence from traditional manufacturing firms in China

Abstract

PurposeThis study examines the effect of political networking capability (PNC) and strategic capability on exploratory innovation/exploitative innovation through the mediation of absorptive capability (AC).Design/methodology/approachUsing empirical survey data collected from 153 traditional manufacturing firms (TMFs) in China, the authors apply partial least squares structural equation modeling (PLS-SEM) combined with mediation analyses to test hypotheses.FindingsPNC has a higher impact on exploratory innovation than exploitative innovation through AC. The authors thus provide novel empirical insights into independent variables of firms' ambidextrous innovation and their implementation mechanisms.Research limitations/implicationsThe authors highlight a unique situation of China and contribute to the literature on PNC and AC. The findings demonstrate that AC plays an important role in configuring government-obtained external resources into new products, thus influencing ambidextrous innovation strategic decisions.Practical implicationsTMFs' executives should enhance PNC to obtain more resources to conduct exploratory and exploitative innovation. Government officials and policymakers should strengthen the supervision of TMFs' innovation activities and adopt effective measures to ensure that TMFs could conduct more exploratory innovation as governments expected.Originality/valueThis study provides new insights by bridging research gaps in the literature and advances the insights of how TMFs' PNC/strategic capability directly and indirectly fosters exploratory and exploitative innovation via the mediating role of AC in China.

Effects of inventive capabilities on new product development performance: the knowledge combination view

“…Inventing with existing knowledge belongs to an exploitation-oriented innovation strategy (March, 1991). Facing rapid economic and technological changes, firms also invest in exploratory innovation to sustain survival and development (Wang et al. , 2022a; Wen et al.…”

“…Inventing with existing knowledge belongs to an exploitation-oriented innovation strategy (March, 1991). Facing rapid economic and technological changes, firms also invest in exploratory innovation to sustain survival and development (Wang et al, 2022a;Wen et al, 2021). The pursuit of exploratory innovation requires firms to introduce new knowledge from novel technological domains (Wang et al, 2014), and new inventions featured with higher novelty are also generated from combining new knowledge (Lobo and Strumsky, 2019;Strumsky and Lobo, 2015;Jin et al, 2022;Yayavaram and Chen, 2015).…”

Partners' knowledge utilization and exploratory innovation: the moderating effect of competitive and collaborative relationships

“…Therefore, the success of exploratory innovation can be extremely helpful for the improvement of organizational performance (Jansen et al, 2006). Many scholars have currently conducted extensive research on the factors influencing exploratory innovation, such as institutional environment (Mueller et al, 2013), political network capabilities and strategic capabilities (Wang et al, 2022), network structure (Guan and Liu, 2016), alliance partners' and competitors' exploration tendency (Duysters et al, 2020), intellectual capital (Duodu and Rowlinson, 2019), knowledge absorptive capacity (M€ uller et al, 2021), top management team conflict , geographic and network ties (Ozer and Zhang, 2015), etc.…”

“…Many scholars have currently conducted extensive research on the factors influencing exploratory innovation, such as institutional environment (Mueller et al. , 2013), political network capabilities and strategic capabilities (Wang et al. , 2022), network structure (Guan and Liu, 2016), alliance partners' and competitors' exploration tendency (Duysters et al.…”

FINANCIAL MARKET REACTION TO R&D VOLATILITY IN THE PHARMACEUTICAL INDUSTRY. A MULTI-COUNTRY STUDY

“…Hai et al (2019) link the volatility of R&D expenditure to two distinct innovation strategies (exploratory innovation and exploitative innovation), which compete in terms of corporate resources and create organizational tensions. The exploratory innovation strategy or radical innovation involves the development of new technologies and opportunities, creates new market segments for products/processes (Wang et al, 2022) and targets the future viability of the company. Because it involves exploring new knowledge, using unfamiliar technologies, creating products with unknown demand, substantial technical risk, long time, and high costs for failed experiments (Greve, 2007), exploratory innovation is associated with high R&D expenditures.…”