Title: The dual role of exploration and exploitation in SME innovation: a study of Korean manufacturing sector

Authors: Gun Jea Yu; Kyungah Lee

Addresses: College of Business Administration, Hongik University, 72-1 Sangsu-Dong, Mapo-Gu, Seoul, South Korea ' College of Business Administration, Hongik University, 72-1 Sangsu-Dong, Mapo-Gu, Seoul, South Korea

Abstract: Small and medium-sized firms (SMEs) face significant challenges in innovation due to limited resources and workforce. To enhance their innovation capabilities, SMEs must actively collaborate with external partners. Through external knowledge search, they can acquire novel insights and opportunities that foster the development of innovative products and services. Drawing on data from the 2020 Korean Enterprise Innovation Survey conducted by the Science and Technology Policy Institute, this study examines the effect of external knowledge search on innovation performance. It further explores the mediating roles of exploration and exploitation in this relationship. Results indicate that external knowledge search positively influences innovation performance. Exploration serves as a positive mediator, while exploitation mediates the relationship negatively. These findings underscore the importance of external collaboration in facilitating innovation for SMEs.

Keywords: exploration and exploitation; breadth of external knowledge search; mediation; innovation performance.

DOI: 10.1504/IJMTM.2025.151223

International Journal of Manufacturing Technology and Management, 2025 Vol.39 No.6, pp.526 - 535

Received: 10 Jun 2024
Accepted: 18 Jun 2025
Published online: 19 Jan 2026 *

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