Market sensing capability and international performance in exporting SMEs: the mediating effects of explorative and exploitative innovation strategies

Purpose This study investigates the impact of market sensing capability on the international performance of exporting SMEs through the lens of dynamic capability theory. It specifically explores the mediating roles of explorative and exploitative innovation strategies in translating market sensing into superior international outcomes. Design/methodology/approach Data were collected from 212 exporting SMEs in Vietnam using a probability-based random sampling technique. Hypotheses were tested using structural equation modeling (SEM) with AMOS version 28. Findings The results reveal that market sensing capability has a significant positive effect on international performance. Furthermore, both explorative and exploitative innovation strategies serve as critical mediating mechanisms, indicating that market sensing facilitates international success by enabling firms to simultaneously refine existing offerings and pursue new market opportunities. Practical implications The study provides actionable guidance for SME managers in transition economies, highlighting that market sensing is a foundational capability for managing the strategic trade-offs between innovation and efficiency. Managers are encouraged to utilize cost-effective digital sensing tools to inform their ambidextrous innovation efforts. Originality/value By integrating market sensing and innovation ambidexterity within a single framework, this research extends dynamic capability theory to the context of resource-constrained SMEs in emerging markets, identifying the specific pathways through which market intelligence is converted into competitive advantage.