Asymmetric effects of digital dynamic capabilities on innovation ambidexterity in SMEs: the moderating role of network embeddedness

Although digital dynamic capabilities are critical for innovation ambidexterity, existing research has yet to examine their asymmetric effects on exploratory versus exploitative innovation in SMEs, or how digital network relational embeddedness (DNRE) selectively moderates these pathways. Integrating dynamic capability and social network theories, we analyse hierarchical regression of survey data from 315 SMEs. Findings suggest that digital sensing and seizing capabilities are more strongly associated with exploratory innovation, while digital transforming capabilities are more strongly associated with exploitative innovation. DNRE shows a selective pattern: it is positively associated with all three capability pathways to exploratory innovation. However, it is only associated with seizing and transforming pathways to exploitation, with no significant association with sensing. This study extends dynamic capability theory by specifying boundary conditions for capability-innovation alignment and offers preliminary guidance for SMEs on aligning capability investments with innovation priorities under resource constraints.