This study empirically analyzes the effects of exploitation and exploration on the innovation performance of emerging companies. We assumed that R&D expenditures or outsourcing production are positively associated with the level of innovation of the firm. The study conducted an analysis based on World Bank data collected from 2008 to 2009 for 1,555 companies in 11 emerging countries. As a result, firms in many emerging economies with insufficient resources and in low-tech manufacturing industries have shown that exploratory innovation activities, represented by investments in R&D expenditure, are still critical to achieving superior performance in new product production. On the other hand, exploitative activities through outsourcing did not have a significant impact on firms’ innovation performance. Through the results of this analysis, this study suggests that exploratory activities are meaningful in emerging countries to increase their innovation performance.

The present paper discusses the interrelationship among knowledge creation, heterogeneity, and open service innovation – an important theme of marketing research. Drawing on the literature of knowledge based innovation, we argue that both researchers and practitioners should extend the functionality of created knowledge into open and service-oriented innovation context. Our conceptual framework represent the following major points. First, the four classic knowledge creation mode each has different influences on open service innovation, given employee and customer knowledge is a cornerstone of service innovation. Specifically, socialization positively, externalization positively, combination positively, and internalization negatively predicts open service innovation. Second, knowledge heterogeneity moderates in the above mentioned relationships. Implication are discussed