Wei‐Nan Wang, Zichun Yan, Jinxing Zhang
In an era of increasingly intense global competition and digital transformation, enhancing the innovation capabilities of specialized small and medium-sized enterprises (SMEs) is a critical strategic objective with respect to national competitiveness. Although the role of digital infrastructure as a catalyst for innovation has been widely acknowledged, its specific impact on a firm's dual innovation activities, balancing exploratory and exploitative innovation, remains underexplored, particularly with respect to the underlying mechanisms. This study addresses this gap by using data obtained from national “specialized, sophisticated, distinctive and innovative” (SSDI) enterprises in China from 2009–2019 to empirically investigate the impact of digital infrastructure on their innovation outcomes. The findings reveal that digital infrastructure significantly promotes both exploratory and exploitative innovation and that the effect on the former is stronger. A mechanism analysis reveals two distinct pathways through which digital infrastructure operates. First, it alleviates financing constraints by reducing information asymmetry, which broadly increases a firm's overall investment in both innovation types. Second, more critically, it facilitates the attraction of high-skilled talent, a resource that disproportionately enhances the efficiency of complex and uncertain exploratory innovation. This second mechanism explains the stronger effect on exploratory activities observed in this context. This study has significant theoretical and practical implications. Theoretically, it contributes to the ambidextrous innovation literature by demonstrating how an external environmental factor—digital infrastructure—asymmetrically influences a firm's innovation portfolio. Practically, the findings provide actionable guidance for policy-makers, particularly by suggesting that maximizing returns on digital infrastructure investment requires complementary policies aimed at easing SME financing and attracting and retaining talent.