Paths to success: an ambidexterity perspective on how responsive and proactive market orientations affect SMEs' business performance

Abstract

Despite advancements in understanding the distinction between responsive and proactive market orientations, their effects on business performance are still not explicit. Drawing on the market orientation and ambidexterity literature, this study examines how responsive and proactive market orientations affect business performance in SMEs from an ambidexterity perspective. In this study, we develop a theoretical model toward market orientation for business performance from an ambidexterity perspective. Ambidextrous market orientation (AMO) is defined as a match in the relative magnitude of responsive and proactive market orientations. Using a sample of 186 high-tech firms in China, the authors find that responsive and proactive market orientations are positively associated with exploitative and exploratory innovation strategies, respectively, and exploitative and exploratory innovation strategies are both positively related to business performance. More importantly, we find evidence consistent with the ambidexterity hypothesis by showing that (1) AMO has a positive impact on innovation ambidexterity (i.e., balanced dimension) in SMEs, (2) ambidexterity innovation mediates the relationship between AMO and business performance in SMEs, and (3) ambidexterity innovation has a more positive impact than exploitative and exploratory innovation strategies on business performance. Academic and managerial implications are also discussed.