Ownership structure and the exploration–exploitation tradeoff: evidence from Chinese advanced manufacturing firms

Purpose Although the ambidexterity literature emphasizes the importance of balancing exploration and exploitation, less is known about whether the innovation–performance implications of relative exploration vary across corporate governance conditions. This study examines whether executive and institutional shareholding are associated with differences in the estimated exploration–exploitation turning point. Design/methodology/approach Using an unbalanced panel of 254 Chinese advanced manufacturing firms from 2010 to 2020, this study estimates two-way fixed-effects models of the relationship between relative exploration (RE) and innovation performance. The sample firms are identified from companies included in the SSE Made in China (2025) Index and the CSI Made in China (2025) Index during 2015–2020. We further examine whether executive shareholding and two types of institutional shareholding – pressure-sensitive and pressure-resistant – are associated with the location of the estimated conditional turning point. Findings RE is associated with innovation performance in an inverted U-shaped pattern. Higher executive shareholding is associated with a more exploration-oriented estimated conditional turning point, whereas higher pressure-resistant institutional shareholding is associated with a more exploitation-oriented turning point. By contrast, the interaction between RE and pressure-sensitive institutional shareholding is statistically insignificant and is treated as inconclusive rather than as evidence of an absent or substantively negligible moderating association. All estimates represent conditional associations and should not be interpreted as causal effects. Originality/value Building on the established inverted U-shaped association between RE and innovation performance, this study offers an empirical extension of ambidexterity research by showing that the estimated conditional turning point varies across ownership arrangements. It identifies heterogeneous ownership structures as boundary conditions of the established RE–innovation performance relationship.