The development of ambidexterity as a key dynamic capability for eco-innovation in SMEs: an action research study

Eco-innovation represents a discontinuous change, global in nature and comparable only to the industrial revolution. The scale of both environmental and economic challenges in the global economy highlights an unprecedented high level of need for technological and behavioural change and renewal. Innovation is widely viewed as being central to the success of societal responses to environmental challenges and efforts have focused on how best to stimulate innovation towards more environmentally sustainable solutions or eco-innovation. While eco-innovation is similar in many ways and a subset of, innovation in general, eco-innovation also has unique features that distinguish it from other innovations and suggest a need for particular management and policy approaches to foster development. Small to medium size enterprises (SMEs) have a distinct and critical role to play in eco-innovation and have historically been disproportionately responsible for new market developments and initial diffusion of innovation generally. Pursuing an ecoinnovation strategy requires firms to have the capability to change and adapt on a continuous basis as eco-innovations become increasingly better, thus contributing to dynamic market conditions. Both eco-innovation and sustained competitive advantage require ambidexterity to improve existing processes and technologies and also address the need for innovation to simultaneously develop new sustainable technologies. The challenge however is that ambidexterity is considered difficult to achieve, particularly for SMEs with limited resources. This study offers a number of contributions to and implications for theory, practice and policy. From a theoretical perspective, the main contribution of this study is the integration of dynamic capabilities, ambidexterity and eco-innovation literatures to form a theoretical framework as a basis for the study. The overall finding of the study supports the theoretical framework and the view that, achieving ambidexterity as a dynamic capability for eco-innovation in SMEs is enabled by internationalisation and collaboration capabilities and contingent on the SMEs ability x to access the necessary resources in the general business environment. Second, this study addressed the gap in practice created by the confusion that surrounds the dynamic capabilities construct by employing an action research study. Ambidexterity was operationalised through implementing interventions that allow the actions and behaviours of entrepreneurs to be observed and repeated. As well as a research methodology, action research in this context also acted as a process for establishing the routines and behaviour necessary for the development of dynamic capabilities. Finally, as a significant contribution to policy, a conceptual model was developed which established the ambidexterity focus of the SMEs and highlighted the importance of developing policies to stimulate both exploitation and exploration in eco-innovation.2020-10-1