Effective sense-and-respond strategies: Mediating roles of exploratory and exploitative innovation

Integrating the dynamic capabilities view of the firm with ambidexterity theory, this article proposes a sense and-respond performance framework, in which technology-and market-sensing capabilities drive explorative and exploitative innovation activities, which then determine firm performance in an emerging market. With a sample of 150 Vietnamese firms, this study shows that exploratory and exploitative innovations are salient modi operandi through which the effects of technology-sensing and market-sensing capabilities affect firm performance. No performance-related empirical evidence supports the proposed complementarity between exploratory innovation and exploitative innovation. Instead, the findings imply that a firm's ability to compete in a complex market depends on its possession of adaptive capabilities.