Organizational search and environmental performance: A policy guide for SMEs in emerging economies

This study examines how manufacturing small and medium-sized enterprises (SMEs) in emerging economies use exploita-tive and exploratory search to improve environmental perfor-mance via new product development. Analyzing time-laggeddata from Ghanaian SMEs, we find that both search strategiesenhance environmental outcomes, with new product develop-ment as a key mechanism. Environmental dynamism moderatesthese effects—strengthening exploitative search while weaken-ing exploratory efforts—highlighting the need for strategicalignment in volatile contexts. Our findings extend priorresearch by linking organizational search to environmental out-comes and by revealing how dynamic conditions shape theserelationships. Policy implications point to a dual-track approach:efficiency-focused tax incentives alongside targeted grants forsustainability-driven innovation. We discuss a roadmap for pol-icy makers to build adaptive industrial ecosystems and for SMEmanagers to align innovation with environmental goals.