Search for exploratory and exploitative service innovation in manufacturing firms: The role of ties with service intermediaries

Although the literature highlights the role of ties with service intermediaries in facilitating firms’ search for innovation, the relationship between these ties and exploratory versus exploitative service innovation remains unclear. In line with the innovation search perspective, we combine search scope and search depth to analyze and examine the mechanism of how ties with service intermediaries influence exploratory and exploitative service innovation differently. We also propose that technological capability and strategic flexibility moderate the impact of the relationships on exploratory versus exploitative service innovation. Using data from a sample of manufacturing firms in China, we find that ties with service intermediaries have a positive effect on exploitative service innovation but an inverted U-shaped relationship with exploratory service innovation. We further find that technological capability strengthens the positive effects of ties on both exploratory and exploitative service innovation, whereas strategic flexibility strengthens the positive effects of ties on exploratory service innovation. This study contributes to a more nuanced understanding of the curvilinear effects of the effect of service intermediaries on exploratory and exploitative service innovation. This study also extends the literature by proposing and empirically confirming that technological capability and strategic flexibility help manufacturing firms take advantage of relationships with service intermediaries.