Innovation Ambidexterity, Resource Configuration and Firm Growth: Is Smallness a Liability or an Asset?

Abstract

This study examines when small- and medium-sized enterprises (SMEs) benefit from innovation ambidexterity for their growth. We argue that innovation ambidexterity in SMEs is sensitive to resource configuration, necessitating a careful fit assessment among firms’ internal resources (firm size), external resources (customer concentration) and the forms of innovation ambidexterity. Patent and utility model data from 912 firm-years for the 2000–2017 period in the Korean electronic parts industry were analysed using a feasible generalised least squares (FGLS) model. Consistent with our prediction, we establish that firm size is negatively related to the growth effect of balanced innovation ambidexterity (BIA), but positively to that of combined innovation ambidexterity (CIA), and that customer concentration is positively related to the growth effect of CIA. The three-way interaction patterns further demonstrate that smaller firms with high customer concentration achieve the best growth when pursuing BIA, whereas the same configuration can lead to the worst growth if they adopt CIA.