Organizational slack, ambidextrous search and high-tech SMEs' performance: do strategic orientations matter?

The study addresses how organizational slack influences ambidextrous search—simultaneous search for technological and market knowledge—and how these searches, individually and jointly, affect performance in high-tech SMEs. Framing the interdependent yet contradictory relationship between technology and market search as a technology–market search paradox, the authors examine whether firms can balance this tension to improve performance. They further investigate whether strategic orientations (growth-oriented vs. profit-oriented) shape how slack is redeployed toward ambidextrous search. Given high-tech SMEs' resource constraints and reliance on external knowledge, understanding antecedents (slack, strategy) and outcomes (performance) of ambidextrous search is particularly important in emerging markets.

Two main streams of prior work are synthesized. First, antecedents of ambidextrous search include resources, problems, and managerial cognition; yet the role of organizational slack is debated as both enabler of innovation and potential source of inefficiency. Strategic orientations are argued to guide resource allocation and search direction, but growth and profit have seldom been treated as strategic orientations rather than outcome metrics. Second, outcomes of ambidextrous search have typically been examined for technology and market search separately, with limited attention to their interaction and paradoxical nature, especially in high-tech SMEs. Drawing on the resource-based view and paradox theory, the paper posits that slack supports both searches but that their interaction may be detrimental under SME constraints. Growth-oriented strategies (risk-taking, exploration, capability building) should amplify slack’s deployment to both searches, whereas profit-oriented strategies (efficiency, imitation, quick returns) may favor market search and dampen technology search.

Design: Quantitative panel analysis using firm-, industry-, and region-level secondary data with firm and year fixed effects. Sample: 547 listed high-tech SMEs on China’s Growth Enterprise Board spanning 2009–2018, drawn from IT, materials, pharmaceuticals, and engineering industries. Initial pool: 606 firms; excluded those with missing focal variables for three consecutive years. Data sources: Wind Database (firm financials and disclosures), China Statistical Yearbooks (provincial indicators). Measures: - Technology search (TS): Change in R&D expenses from t−1 to t divided by R&D expenses at t−1. - Market search (MS): Change in advertising, marketing, and distribution expenses from t−1 to t divided by those expenses at t−1. - Firm performance: ROA; robustness uses net profit. - Organizational slack (OS): Equity-to-debt ratio; robustness uses unabsorbed slack (current assets/current liabilities). - Strategic orientations: Growth-oriented strategy (GOS) = 1 if firm’s sales growth > industry average and profit < industry average; Profit-oriented strategy (POS) = 1 if profit > industry average and sales growth < industry average. Controls: Firm size (ln employees), firm age (years since founding), intangible assets (ln), profitability (ln net profit), cash strength ratio (cash net flow/total assets), performance feedback (ROA minus industry average ROA), industry sales growth, industry technology search (change in industry R&D), industry market search (change in industry market expenses), province GDP per capita (ln), province R&D expenditure per capita. Estimation: Fixed-effects regressions with clustered standard errors; Hausman test supports FE over RE. Independent and control variables lagged to mitigate reverse causality; year and firm fixed effects included. Additional robustness: alternative slack measure, residual centering for interaction term (TS×MS), alternative performance measure.

- Organizational slack → ambidextrous search: - OS → TS: Positive and significant (b ≈ 0.004, p<0.05; Table 2 Model 2). - OS → MS: Positive and marginally significant (b ≈ 0.004, p<0.10; Table 2 Model 5). - Moderation by strategic orientations: - OS×GOS → TS: Positive (b ≈ 0.008, p<0.10; Model 3). - OS×GOS → MS: Positive (b ≈ 0.007, p<0.10; Model 6). - OS×POS: Not significant for TS or MS; hypotheses H5 and H6 not supported. - Ambidextrous search → performance (ROA): - TS → performance: Positive (b ≈ 0.899, p<0.01; narrative for Model 8). - MS → performance: Positive (b ≈ 0.625, p<0.01; narrative for Model 7). - TS×MS → performance: Negative synergy (b ≈ −0.020, p<0.05; Model 9), indicating a detrimental interaction. - Robustness checks: - Using unabsorbed slack: OS still promotes TS (b=0.008, p<0.01) and MS (b=0.004, p<0.05); TS and MS remain positively related to performance; TS×MS remains negative (b=−0.020, p<0.05). - Residual-centering of interaction confirms negative synergy (b=−0.108, p<0.05). - Using net profit as performance measure also shows negative TS×MS interaction, supporting H9.

Findings show that slack resources enable high-tech SMEs to intensify both technology and market search by providing resource buffers and risk absorption. Growth-oriented strategic orientation strengthens the redeployment of slack toward both searches, consistent with long-term capability building and exploration motives. Contrary to expectations, profit orientation did not significantly shift slack toward market search nor reduce its deployment to technology search, possibly because even imitation strategies require R&D investment and because market search still entails uncertainty and managerial attention. While each search type individually improves performance, their interaction harms performance in high-tech SMEs, consistent with paradox theory: limited resources, managerial attention constraints, integration challenges, and path dependence complicate balancing both searches concurrently in emerging-market contexts. Thus, the technology–market search paradox manifests as negative synergy for performance.

The study integrates antecedents and consequences of ambidextrous search in high-tech SMEs, demonstrating that organizational slack promotes technology and market search, and that growth-oriented strategy amplifies these effects. Individually, both searches enhance performance, yet their interaction reduces performance, evidencing a technology–market search paradox under SME constraints. Contributions include empirically establishing the paradox’s negative synergy in high-tech SMEs, clarifying slack’s enabling role for ambidextrous search, and incorporating strategic orientations as contingencies. Future research should test generalizability across countries and firm types and examine additional boundary conditions.

- Context specificity: Evidence comes from Chinese high-tech SMEs; generalizability to other countries/contexts may be limited. - Scope: Focus on high-tech SMEs; applicability to non-high-tech sectors or large firms remains to be tested. - Boundary conditions: Only strategic orientations were modeled as moderators; environmental/institutional changes and competitive intensity warrant examination.