Exploratory versus exploitative innovation: SME performance implications of managerial ties and empowering leadership in China

ABSTRACT

While exploration and exploitation represent two fundamentally different approaches to organisational innovation, recent literature has increasingly indicated the need for small and medium-size enterprises (SMEs) to manage these approaches. This study examines the linkages of managerial ties to exploratory and exploitative innovation and explores the moderating effects of empowering leadership on the linkages. The study results suggest that the positive relationship between political ties and exploratory innovation is weakened by empowering leadership, while the relationship between business ties and exploratory innovation is moderated positively by empowering leadership. Moreover, the study also finds that the positive relationship between business ties and exploitative innovation is strengthened by empowering leadership, while the moderating role of empowering leadership on the linkage between political ties and exploitative innovation is not significant. This study enriches the literature on social network theories and situational leadership theories in the Chinese context. Analyses of a sample of Chinese SMEs largely support our hypotheses.

KEYWORDS:

• SMEs
• exploratory innovation
• exploitative innovation
• managerial ties
• empowering leadership

Acknowledgements

The authors would like to thank Prof. Feng Yang and Prof. Haibin Yang for their valuable comments. Special thanks also to the Editor, and to several anonymous reviewers for their valuable comments and suggestions, which led to significant improvements in the paper. All errors are ours.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by National Natural Science Foundation of China [grant number 71202054]; Introduces Talents for Scientific Research and Starts Special Fund Project of University of Science and Technology of China [grant number KY2160000003]; Anhui Province Philosophy and Social Science Planning Project [grant number AHSKY2019D025].

Notes on contributors

Zhengyang Wu

Zhengyang Wu, male, he received his BSc from Wuhan University in 2016, MSc from University of Science and Technology of China in 2019. He is a PhD student of the School of Management of USTC. His main research interests include innovation strategies, leadership, and entrepreneurship.

Xiaobao Peng

Xiaobao Peng, male, Associate Professor, he received his BSc from Jilin University in 2005, MSc and PhD from University of Science and Technology of China in 2009 and 2012, respectively. He is the Dean of the Innovation Management Research Center of USTC. His main research interests include innovation network, intellectual property, and entrepreneurship.