Balancing exploration and exploitation: investigating the nexus of entrepreneurial orientation, disruptive innovation and digitalization strategy

Purpose Although the relationship between entrepreneurial orientation (EO) and innovation performance is well documented, the underlying mechanisms and boundary conditions remain insufficiently understood. Grounded in the resource-based view, this study addresses the gap by examining the mediating role of disruptive innovation in the relationship between EO and innovation performance. Additionally, it explores how digitalization strategy mediates the relationship between EO and disruptive innovation. Moreover, the study investigates the moderating effects of exploitation and exploration orientations on the relationship between disruptive innovation and innovation performance. Design/methodology/approach Using random sampling, data (N = 436) were collected through a two-wave survey of small- and medium-sized enterprises (SMEs). Structural equation modeling was employed for data analysis. Findings The results indicate that disruptive innovation significantly mediates the relationship between EO and innovation performance. Moreover, a digitalization strategy mediates the link between EO and disruptive innovation. While exploration orientation strengthens the positive effect of disruptive innovation on innovation performance, exploitation orientation does not demonstrate a significant moderating effect on this relationship. Originality/value This study contributes to the existing literature by providing novel insights into the outcomes of EO and offering practical implications for SMEs seeking to enhance their innovation performance.