Does Firm Size and Age Strengthen the Relationship Between Ambidexterity and Financial Performance? Empirical Evidence in MSME Perspective

Abstract

A firm that combines entrepreneurship is often recognized as a critical contributor to economic growth, job creation, and development, as well as an essential component of economic vitality. This study investigates the moderating effect of firm size and age on the association between ambidexterity and financial performance. The idea is tested using a quantitative methodology in this study. The research instrument was a questionnaire that respondents filled out. The participants in this study are all MSME leaders in Tangerang City, Banten, Indonesia. For this study, 216 participants were chosen randomly, and data were analyzed using a structural equation model (SEM). Its results discovered that ambidexterity has a favorable and statistically significant effect on financial performance. In addition, firm age improves the association between all ambidexterity aspects (product exploration, product exploitation, market exploration, and market exploitation) and financial performance. However, company size has no moderating effect on the association between product and market exploitation and financial performance, only on the relationship between product and market exploration and financial performance. This research is contributing to the size of businesses with structural distinction through mechanisms underpinning resources and capabilities. In addition, the firm's age and expertise with contextual systems and processes, as well as the mechanisms underlying organizational learning, enable the company to maximize its performance. Although using MSMEs as the study's sample boosted internal validity, caution should be exercised when extending these findings to other industries, such as manufacturing.