Abstract
This study examines how manufacturing small and medium-sized enterprises (SMEs) in emerging economies use exploitative and exploratory search to improve environmental performance via new product development. Analyzing time-lagged data from Ghanaian SMEs, we find that both search strategies enhance environmental outcomes, with new product development as a key mechanism. Environmental dynamism moderates these effects-strengthening exploitative search while weakening exploratory efforts-highlighting the need for strategic alignment in volatile contexts. Our findings extend prior research by linking organizational search to environmental outcomes and by revealing how dynamic conditions shape these relationships. Policy implications point to a dual-track approach: efficiency-focused tax incentives alongside targeted grants for sustainability-driven innovation. We discuss a roadmap for policy makers to build adaptive industrial ecosystems and for SME managers to align innovation with environmental goals.