Balancing exploration and exploitation of knowledge through an unlearning context : An empirical investigation in SMEs

Purpose – SMEs may be trapped in a suboptimal stable equilibrium, as many overloaded managers are cutting back on their resources and may be over‐investing in the development of exploration and exploitation processes rather than investing in mechanisms to facilitate an unlearning context. This paper proposes an unlearning context to manage an appropriate balance between exploratory processes and exploitative processes. Design/methodology/approach – This paper examines the relationship between and significance of two key factors of organisational learning (the exploration and exploitation of knowledge) within an unlearning context, and their effects on the improvement of the performance of SMEs. These relationships are examined through an empirical investigation of 229 SMEs in the Spanish metal sector. Findings – The results indicate that the effects of exploration and exploitation of knowledge on organizational performance are mediated through an unlearning context. Originality/value – The findings provide interesting insights into the drivers of organizational performance for SMEs using an unlearning context. SMEs need to provide for and support changes of perspective, of individual habits and in the framework for consolidating emergent understandings.