Innovation Ambidexterity in SMEs: A Critical Literature Review and Multilevel Framework

Abstract

Innovation ambidexterity, the ability to balance exploration and exploitation has emerged as a strategic imperative for small and medium-sized enterprises (SMEs), particularly in dynamic and resource-constrained environments. While much of the literature has focused on large firms in developed economies, research on SMEs, and especially those in ASEAN contexts, remains fragmented. This paper provides a critical literature review of studies published between 2020 and 2025, synthesizing evidence on the determinants of SME ambidexterity. Eight core determinants are identified: knowledge management, entrepreneurial orientation, formalization, market orientation, networking, technological capability, organizational context, and environmental dynamism. Drawing on recent empirical and conceptual studies, the review highlights that ambidexterity emerges not from isolated factors but from their interdependencies across multiple levels. Building on these insights, the paper proposes a multilevel framework integrating individual, organizational, and environmental determinants. The review further identifies methodological gaps (e.g., reliance on cross-sectional designs), contextual gaps (ASEAN underrepresentation), and thematic gaps (limited integration of digitalization and sustainability). The findings contribute to theory by advancing a holistic understanding of ambidexterity and to practice by offering guidance for SME managers navigating digital transformation, sustainability imperatives, and volatile markets.