Resource Allocation Between Exploration and Exploitation Strategies: A Case Study on A Malaysian SME Family Firm

Abstract

Studies of exploration and exploitation strategies in small or medium-sized enterprise (SME) firms highlight resource scarcity as a critical issue. Imperatively, SME firms need to allocate their scarce resources efficiently in order to implement exploration and/or exploitation strategies. However, studies of resource allocation between exploration and exploitation strategies in SME family firms are limited. The main objective of this research, in the context of SME family firms, is to explore the types of resources allocated between exploration and/or exploitation strategies and what circumstances both strategies can be implemented. The nature of a family firm, known as 'familiness', provides an opportunity to further investigate this unique resource. This research utilises a case study methodology and a Malaysian SME family firm is selected due to its importance in terms of economic and social development. The study found that the abilities and familiness of a family firm are the main factors in allocating resources for exploration and exploitation strategies. In fact, cultural differences between the first and second generation have an impact on the engagement of the firm with respect to exploration and exploitation strategies. The result enhances the understanding of resource allocation and enriches the theories in studies of family firms.