Competence exploration and exploitation in new product development: The moderating effects of environmental dynamism and competitiveness

This paper aims to extend research on exploration and exploitation by investigating the effects of competence exploration and exploitation on new product development outcomes in China. Premised from the perspective of environment‐performance relationship and the fit‐as‐moderation view, the authors argue that exploration and exploitation have curvilinear effects on new product development performance due to external environmental factors.

The paper is based on a questionnaire survey/analysis of a sample of 289 firms in China.

Consistent with the two perspectives mentioned above, the curvilinear link between competence exploration and new product performance was negatively moderated by environmental dynamism but positively moderated by environmental competitiveness. In contrast, the non‐linear effect of competence exploitation on new product performance was positively moderated by environmental dynamism but negatively moderated by environmental competitiveness.

The exploration and exploitation‐performance link emerges as more complex than previous research has shown. The results indicate the need for simultaneous consideration of environmental dynamism and competitiveness as moderators in the discourse on the curvilinear effects of exploration and exploitation on new product performance.