To achieve sustainable performance (Lubatkin et al., 2006, Smara et al., 2024), competitive advantage (O’Reilly & Tushman, 2013), survival, and resilience (Iborra et al, 2020), many organizations are increasingly turning to the concept of innovative ambidexterity, which implies an appropriate balance of exploratory and exploitative innovations (He & Wong, 2004). According to previous research, exploitative innovations are to meet the current market needs; they involve incremental adjustments within existing technological trajectories. Exploratory innovations lead to radical changes necessary for targeting new or emerging markets (Benner & Tushman, 2003). These two strategies require completely distinct structures, processes, skills and capabilities (He & Wong, 2004). In general, exploration is linked to bottom-up learning, variance-increasing activities, flexibility and uncertain returns, whereas exploitation focuses on top-down learning, stability, and more predictable outcomes (Lavie et al., 2010). Resolving the contradictions between these approaches remains a key challenge for businesses aiming to be ambidextrous (Smith & Tushman, 2005).

In today’s turbulent business environment, swift responses to emerging threats and opportunities are vital for survival and prosperity. Companies must be strategically adaptable to navigate the existing and new opportunities, capitalize on them, exploit the available leverages and mitigate risks. Balancing these strategies is crucial, especially when facing external shocks (Smara et al., 2024). Research shows that SMEs, despite their limited resources, benefit significantly from balancing exploratory and exploitative innovation (Cao et al., 2009). During recessions, SMEs tend to develop more ambidextrous strategies than larger firms, which helps them survive in uncertain environments (Alcalde-Heras et al., 2019). However, their “liability of smallness”—limited resources and capabilities—makes achieving innovative ambidexterity particularly challenging.

It has always been difficult for SMEs to maintain innovative ambidexterity in turbulent times; the COVID-19 pandemic further accentuated the importance of adaptability. The pandemic not only intensified the need for SMEs to balance exploration and exploitation but also acted as a significant opportunity, especially for IT businesses. The COVID-19 crisis emerged as a powerful catalyst for digital transformation, accelerating the adoption of emerging technologies and opening new market opportunities. Amankwah-Amoah et al. (2021) describe the pandemic as “the great accelerator,” fast-tracking global shifts toward digitalization. This shift has driven profound changes in business strategies, work patterns, and lifestyles, and created new growth prospects for IT firms. For example, Vardari et al. (2022) found that SMEs in Kosovo increased their information and communication technology investments during the pandemic, recognizing the role of technology in adapting to the crisis and enhancing operational efficiency. Akpan et al. (2021) further emphasize that the adoption of cutting-edge technologies, even involuntary, offered competitive advantages and ensured business survival. These studies highlight the critical role of digital technologies in helping IT firms navigate and thrive in uncertain times.

Attempts to explain how firms achieve ambidexterity have focused on structural means (O`Reilly & Tushman, 2013), top management behavior (Lubatkin et al., 2006), and organizational context (Gibson & Birkinshaw, 2004). However, research on ambidexterity has mainly examined its antecedents in periods of stability, with less attention given to how SMEs achieve and balance ambidexterity, especially in challenging environments. Ambidextrous strategies are particularly difficult for firms facing both internal and external constraints; empirical evidence about achieving innovative ambidexterity is not plentiful (Zimmermann et al., 2020).

Imbalances between exploration and exploitation are a critical issue in organizational learning and innovation. Overemphasizing exploration can lead to increased risks and resource depletion, while focusing too much on exploitation can cause missed opportunities and vulnerability to disruption (Lavie et al., 2010). Despite the importance of balance, there is insufficient understanding of how to manage and mitigate such potential imbalances. This study aims to develop a framework for achieving innovative ambidexterity in SMEs during turbulent times, identifying key capabilities to manage potential imbalances. Innovative ambidexterity, the ability to exploit existing assets while exploring new technologies and markets, is crucial for organizational adaptability (O’Reilly & Tushman, 2008). This concept is best understood through dynamic capabilities, which enable firms to integrate, build, and reconfigure competencies in response to changing environments. Prior studies on ambidexterity have frequently used a static viewpoint. However, contemporary contingency theory shows that alignment is a dynamic process. A variety of theoretical frameworks have been used to explain organizational ambidexterity; our choice is based on the assumption that dynamic capabilities provide the most suitable lens for understanding this concept. Dynamic capabilities allow organizations to sense and seize opportunities, transform operations, and efficiently allocate resources between exploratory and exploitative activities. Besides, these capabilities encompass organizational learning processes that help integrate new knowledge and refine existing knowledge, thereby supporting ambidexterity (Zollo & Winter, 2002). The interplay between exploitation and exploration should over time evolve into a comprehensive dynamic capability (Raisch et al., 2009). Building on this understanding, we have formulated the research questions addressed in this study. First, how do SMEs achieve innovative ambidexterity that best serves their performance goals, helping them overcome adverse conditions and cope with environmental demands through the dynamic capability perspective? Second, how do SMEs deal with possible imbalances?

To identify the mechanisms, processes, and capabilities of SMEs that would support ambidexterity in challenging contexts, we conducted a comparative case study of SMEs selected from a larger cohort of Russian IT companies, all of which experienced the challenges and turbulence of COVID-19. Our results illuminate the pathway for innovative ambidexterity in Russian SMEs facing turbulent environments, offering a research framework that uncovers the essential building blocks of dynamic capability. Specifically, the three areas of dynamic capability (sensing, seizing, and reconfiguring), guided by short- and long-term goals, appear to be instrumental in fostering innovative ambidexterity. Through a dynamic capability model, the research underscores the pivotal role of three factors critical for achieving innovative ambidexterity. Firstly, SMEs benefit from the development of dynamic technological and marketing capabilities, problem-solving acumen, and continuous learning with real-time awareness. These capabilities empower SMEs to capitalize on emerging opportunities, fostering both exploration and exploitation. The second crucial factor is cultivating a culture of innovation and empowerment, coupled with active collaboration and continuous training, is crucial. This dynamic environment not only encourages the generation of fresh ideas but also optimizes resource utilization. Finally, to achieve ambidexterity, SMEs must strategically reconfigure resources through adaptive decision-making, resource and coordination flexibility, and forward-thinking innovation and partnerships. These findings provide a roadmap for SMEs to navigate crises, adapt to evolving market landscapes, and sustain innovation-driven growth in the face of uncertainty. To effectively address potential imbalances arising from management biases that may cause deviations from desired actions, several key capabilities are essential. These include providing clear goals and continuous performance feedback, incorporating both short-term adjustments and long-term planning. It is imperative to cultivate a culture of openness and trust, encourage agile adaptation, ensure goal alignment, and allocate firm-specific resources judiciously. Furthermore, the dynamic formation of teams emerges as pivotal in maintaining equilibrium between exploration and exploitation, thereby enabling SMEs to remain resilient and adept at seizing emerging opportunities.

The rest of the paper is organized as follows. Section 2 presents theoretical underpinnings of the study which covers the formation of innovative ambidexterity in SMEs and the view of the concept of ambidexterity through the lens of dynamic capability. Section 3 details the research design and methodology. Sections 4 describes the findings obtained by study. The discussion of conceptual framework developed by the author is presented in Section 5, and the final section summarizes the findings, implications and new theoretical perspectives created in the course of research.

The purpose of this paper is to explore the nature of innovative ambidexterity as a core strategy and, using inductive research approach, build a theory explaining how to implement this strategy. The study is mostly empirical; it uses the qualitative approach to identify potential determinants of SMEs’ innovative ambidexterity in turbulent times and explore mechanisms that help SMEs to deal with possible imbalances. The paper also provides information that may prove useful for developing a theory on balanced view of capabilities (Adu, 2019). Since case studies are best suited for responding to “how” and “why” questions that are firmly rooted in complex organizational environments, the authors carried out a comparative case study to acquire deep understanding of the context and processes involved (Yin, 2009). Such an approach makes it possible to grasp the complex and rich nature of the phenomenon and to identify patterns in various cases. It can help test the assumption that the results can be reproduced from case to case (Yin, 2009) and thus present a comprehensive picture of the processes.

The conceptual model (Figure 5) illustrates how innovative ambidexterity is achieved in turbulent times through dynamic capability phases. It shows how feedback loops in performance measurement and strategic goals help adjust behaviors to cope with possible imbalance of exploration and exploitation. The analysis has shown that, guided by short- and long-term goals, SMEs with capabilities in sensing, seizing, and reconfiguration can achieve innovative ambidexterity in turbulent times. Despite their limitations, SMEs benefit from their flexibility that enables them to navigate opportunities and threats. Innovative ambidexterity requires developing capabilities to sense changes, seize opportunities, and reconfigure resources. Our conceptual framework includes these key pillars of dynamic capability with specific abilities.

Pillar 1: SMEs need dynamic technological and marketing capabilities, problem-solving skills, and continuous learning to help decision-makers capitalize on current and future opportunities in a rapidly changing environment. These capabilities facilitate exploration and exploitation within SMEs; integrating digital technology and ambidexterity became particularly important in the COVID-19 era. SMEs use technology exploration and exploitation to meet customer demands and stay competitive (Van de Vrande et al., 2009). Marketing capabilities contribute to incremental innovation; effective exploration leads to radical innovation (Eng & Okten, 2011), also enhancing the quality of problem-solving (Glover et al., 2016).

Pillar 2: Seizing opportunities for exploration and exploitation necessitates a multifaceted approach that maximizes organizational capabilities through learning-driven enhancement, fosters a dynamic culture of innovation and empowerment, encourages continuous training and active collaboration at all levels, and utilizes achievement recognition and team rewards to their utmost potential.

SMEs need to be constantly engaged in continuous learning, invest in generating fresh ideas, develop new knowledge and skills, and thus ensure that existing capabilities are continuously improved. Learning to collaborate stands as a critical factor that benefits innovation whether focused on exploitation or exploration (Hernández-Espallardo et al., 2011). Fostering a culture of innovation involves creativity, risk-taking and entrepreneurial mindset; all these support exploration and agility in seizing new opportunities, while achievement recognition and team rewards enhance the capability to exploit existing strengths (Khan & Mir, 2019). Existing research highlights the significance of an ambidextrous organizational culture, characterized by both innovation and a performance-based approach as a crucial facilitator of contextual ambidexterity (Khan & Mir, 2019, Wang & Rafiq, 2014). Active collaboration is paramount for balancing exploration and exploitation. External partnerships bring in complementary resources and knowledge, reducing resource constraints and risks, especially during crises (Hernández-Espallardo et al., 2011). Strong internal and external knowledge capabilities support long-term growth and resilience; collaboration facilitates best practice sharing and continuous improvement, essential for optimizing resources (Zouaghi et al., 2018). Training is key in bridging exploration and exploitation. It ensures that employees perform effectively in their current roles while developing new skills to adapt to evolving organizational needs (Greco et al., 2019).

Pillar 3: Ambidexterity also requires reconfiguring resources and modifying priorities; the capabilities that help in this phase are threefold: adaptive decision making, resource and coordination flexibility, and forward innovation and partnerships.

As posited by the upper echelons’ theory, the decision-making acumen enabling SMEs to sense environmental shifts and seize both exploratory and exploitative avenues is contingent upon the capabilities of their TMTs (Dolz et al., 2018). Adaptive decision-making requires managerial flexibility, decentralized decisions, and an iterative approach. Organizations must adjust to environmental shifts, with leaders embracing new ideas and roles to enhance problem-solving and foster a culture of creativity and change. Incremental changes in processes or products are also crucial (O’Reilly et al., 2014). Involving team members in decision-making enhances their receptiveness to change, encourages exploration, and facilitates knowledge transfer. This collaborative approach helps overcome cognitive limitations and creates a shared memory system within the team (Nemanich & Vera, 2009). Research shows that firms achieve agility through strategic flexibility, which depends on effective management of resources and adaptation of internal processes, including reallocating assets and adjusting coordination to respond to market changes (Wei & Guo, 2014). Innovation is often managed as a project, and project-based firms support this process, contributing to long-term success. Organizations navigate production challenges and adapt to evolving client demands, balancing the exploitation of existing knowledge and exploration of new ideas (Hobday, 2000). By fostering collaboration, a management team stands to effectively leverage complementary resources and skills, thereby gaining entry to a wide array of capabilities and expertise (Tiwana, 2008).

As a result of the study, we have formulated several propositions that clearly describe the formation and development of innovative ambidexterity within SMEs under difficult conditions.

Proposition 1: The concurrent development of dynamic technological and marketing capabilities, problem-solving ability and continuous learning with real-time awareness within SMEs plays a pivotal role in fostering both exploration and exploitation. These initiatives not only enable SMEs to adapt their capabilities dynamically but also empower organizations to navigate the changing environments with resilience and agility.

Proposition 2: Cultivating a spirit of empowerment, fostering innovation and performance-driven culture, promoting active collaboration at all organizational levels, and emphasizing engagement in continuous learning collectively nurtures an environment conducive to both explorative and exploitative endeavors. This approach provides firms with the resilience needed to thrive amidst challenges and opportunities.

Proposition 3: Adaptive decision-making, flexibility in resource allocation and coordination, and forward-thinking approaches to innovation and partnerships, establishes a robust foundation needed to achieve strategic objectives. This framework enables SMEs to effectively reconfigure resources, thereby helping to maintain the delicate equilibrium between the dual endeavors of exploration and exploitation.

Balancing exploration and exploitation is a permanent challenge for SMEs. Managers’ efforts to achieve the right balance can be skewed by managerial biases. Wang and Li (2008) suggest that firms using the satisficing principle may prematurely halt exploration if their satisfaction threshold is low, while those exceeding their satisfaction point pursue more exploratory innovations. The proposition below explains how to manage this potential imbalance effectively.

Proposition 4: Essential capabilities to manage the potential imbalance between exploration and exploitation include clear goals and performance feedback, a culture of openness, trust, and mutual support, agile adaptation and goal alignment, together wiht wise allocation of firm-specific resources.

In this study, our aim was to fully understand and characterize the capabilities essential for implementing ambidexterity within SMEs, particularly within recessionary contexts. Drawing upon the dynamic capability perspective, we elucidate how companies achieve and sustain innovative ambidexterity. However, the realization of ambidexterity is a multifaceted endeavor, lacking a ‘one-size-fits-all’ solution. Through our investigation, we have identified the capabilities crucial for supporting both exploration and exploitation, and reconfiguring existing structures toward ambidextrous SMEs. We assert that sensing and seizing capabilities play pivotal roles in fostering exploration and exploitation activities. Nevertheless, achieving a harmonious balance between these two strategies necessitates a robust reconfiguring capability. To perpetuate this equilibrium and effectively manage potential imbalances, feedback loops emerge as vital mechanisms. It is essential to nurture the key behaviors and practices aligning them with balanced goal perspectives.

We support the conclusions of research literature on ambidexterity, dynamic capabilities, and organizational adaptation by showing that achieving ambidexterity in resource-constrained firms is challenging yet possible (Alcalde-Heras et al., 2019). Our insights reveal how ambidexterity can be attained despite internal and external constraints through dynamic capabilities. According to O’Reilly and Tushman (2008), sensing, seizing, and reconfiguring are essential for organizational ambidexterity. In turbulent times, ambidexterity is a dynamic achievement. SMEs that integrate dynamic technological and market capabilities, problem-solving skills, and continuous learning can better sense and address environmental opportunities and threats. However, the successful seizing of these opportunities for exploration and exploitation demands a multifaceted strategy. This strategy includes bolstering organizational capabilities through learning-driven initiatives, fostering a culture of innovation and empowerment, promoting ongoing training, encouraging active collaboration at all levels, and leveraging achievement recognition and team rewards. SMEs benefit from a threefold approach when making critical decisions on reallocating essential assets and priorities for recovery: adaptive decision-making, resource and coordination flexibility, and future-oriented innovation and partnerships. Effective management of these capabilities allows SMEs to navigate the balance between exploration and exploitation, ensuring resilience and readiness to seize emerging opportunities in evolving business landscapes. When addressing potential imbalances, essential capabilities required to manage the delicate balance between exploration and exploitation include establishing clear goals and providing performance feedback, cultivating a culture of openness, trust, and mutual support, agile adaptation and alignment with goals, and the strategic allocation of firm-specific resources, for which dynamic formation of teams is crucial. We offer our theoretical framework to scholars and practitioners, aiding in the attainment and maintenance of innovative ambidexterity within challenging contexts for SMEs. We are confident that SMEs endowed with high levels of dynamic capabilities along the three dimensions - sensing, seizing, and reconfiguring - produce innovations that combine their current market or technological capabilities, continuous learning and cognitive flexibility with fast decision making, which should lead to the creation of revolutionary and evolutionary innovations and hence an ambidextrous innovation portfolio. SMEs’ senior managers and CEOs should work to develop an ambidextrous strategy by building a culture that supports innovation. Their perception of risk aids in their decision-making and the development of ambidexterity may prove critical when the future is highly uncertain.

Achieving innovative ambidexterity in uncertain contexts is crucial for SME managers. SMEs benefit when managers effectively balance exploration and exploitation through their decisions. Our research highlights the specific behaviors and decisions that help SMEs achieve ambidexterity, especially under survival threats. Leaders must respond quickly, allocate resources efficiently, and build the skills needed to adapt to a changing environment (Alcalde-Heras et al., 2019). Managers’ cognitive flexibility and adaptive decision-making influence the reconfiguration stage of dynamic capabilities by optimizing resource allocation and modifying priorities for effective exploitation and exploration. We recommend that manager teams be set up in a way that encourages unconventional thinking by cultivating a dynamic innovation culture, empowerment and adoption of new information sources, which can improve decision-making. Managers need to be aware that dynamic technological and marketing capabilities and problem-solving ability help in obtaining, interpreting, and shaping information in novel ways. On the other hand, to adjust to a quickly shifting business environment, managers are recommended to maintain continuous learning, continuous training at all levels and innovative culture to absorb and transform external knowledge into internal innovation and better navigate the challenging environments. SMEs need to develop and nurture specific capabilities to effectively manage the delicate balance between exploration and exploitation. By providing clear goals and regular performance feedback, SMEs can align their actions with strategic objectives and ensure a focused pursuit of both avenues.

Openness and trust encourage innovation; agile adaptation and goal alignment allow SMEs to quickly adjust strategies. Efficient resource allocation and dynamic team formation support both exploration and exploitation, helping SMEs maintain balance and drive sustained innovation and growth. This study’s conceptual model, based on the Russian SMEs, may not be extrapolated to other regions or industries. Future research should explore diverse contexts through cross-industry and cross-country analyses, use larger and more varied samples, and consider external factors influencing SMEs. Longitudinal studies could also provide deeper insights into the evolution of ambidextrous capabilities over time.