The Role of R&D in the Relationship Between Exploration and Exploitation to the Firm Performance: Empirical Evidence from Indonesian SMEs

The purpose of this study is to investigate the impact of exploration and exploitation on the firm performance in small and medium enterprises (SMEs) in Indonesia. The role of research and development (R&D) as a mediating variable is also examined. The research method used in this study is quantitative by distributing questionnaires to 211 CEOs of SMEs in Indonesia. Data analysis used Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 3.0software. The results show that exploration and exploitation have a direct positive and significant influence on firm performance. In addition, R&D also has a significant positive effect as a mediator between variables