The Formation and E ff ects of Exploitative Dynamic Capabilities and Explorative Dynamic Capabilities : An Empirical Study

Although previous studies have explored the formation and effects of dynamic capabilities, much remains to be learned on this topic. There has been little research on the formation and effects of exploitative dynamic capabilities and explorative dynamic capabilities. This paper provides an explanation of how entrepreneurial leadership style and slack resources affect the formation of exploitive dynamic capabilities and explorative dynamic capabilities and evaluates the effects of exploitive dynamic capabilities and explorative dynamic capabilities on competitive advantage. Based on a sample of 382 Chinese firms, the empirical results show that a transactional leadership style and absorbed slack resources can encourage the formation of exploitative dynamic capabilities, and that a transformational leadership style and unabsorbed slack resources are conducive to the development of explorative dynamic capabilities. Furthermore, exploitative dynamic capabilities and explorative dynamic capabilities can reinforce and complement each other. Exploitative dynamic capabilities positively impact explorative dynamic capabilities, and explorative dynamic capabilities enhance exploitative dynamic capabilities. In particular, exploitative dynamic capabilities have an important effect on short-term financial performance, and explorative dynamic capabilities lead to a significant long-term competitive advantage. The results show that explorative dynamic capabilities surpass exploitative dynamic capabilities in terms of competitive advantage, even if both have a positive influence on competitive advantage. This study validates and develops the theory of dynamic capabilities.


Introduction
Over the past 20 years, scholars have studied the important role of dynamic capabilities in achieving innovation and competitive advantage through integrating, building, and reconstructing internal and external capabilities to adapt to rapidly changing environments [1].According to Monferrer (2015), Dixon (2014), and Ferreira (2018), dynamic capabilities can be divided into exploitative dynamic capabilities and explorative dynamic capabilities [2][3][4]."Exploration includes things captured by terms such as search, variation, risk taking, experimentation, play, flexibility, discovery, innovation.Exploitation includes such things as refinement, choice, production, efficiency, selection, implementation, execution" (March, 1991, p. 71) [5].Exploitation involves searching for known knowledge and efficiency, while exploration involves searching for new knowledge and flexibility [5,6].Both exploitative dynamic capabilities and explorative dynamic capabilities are important for firm innovation [2][3][4].
The resource base is very important for innovation in enterprises [7][8][9][10].The resources provide a solid foundation for the enterprise to renew or reallocate its resource base, and they can influence the formation of dynamic capabilities [10,11].Different levels of firm resources lead to different kinds of capabilities.
Entrepreneurial leadership style reflects the ability of managers to recognize and deal with problems [12].According to upper-echelon theory [13,14], the characteristics of managers influence how they make decisions [15,16], thus affecting the entire organization.The influence of entrepreneurial characteristics on organizational capabilities has been of great concern [12,[17][18][19].In this article, we discuss the effect of heterogeneous entrepreneurial leadership style on explorative dynamic capabilities and exploitative dynamic capabilities.Entrepreneurial leadership can lead to the formation of dynamic capabilities [20].It is suggested that the CEO (chief executive officer) or TMT (top management team) affects the fostering of firm dynamic capabilities [21][22][23].For example, based on the extension of Coleman's (1990) bathtub model [24], Bendig (2018) argued that CEO personality traits influence the development of organizational knowledge resources, which promote learning and help to build dynamic capabilities on an organizational level [20].Different entrepreneurial leadership styles lead to different kinds of dynamic capabilities [16].
Many studies have focused on exploitative dynamic capabilities and explorative dynamic capabilities.For example, Monferrer (2015) and Ferreira (2018) proposed that exploitative dynamic capabilities and explorative dynamic capabilities are positively related to firm innovation and competitive advantage [2,4].However, there is a lack of empirical research on their formation and effect mechanism.To fill these research gaps, this paper discusses the formation and effect mechanism of exploitative dynamic capabilities and explorative dynamic capabilities from the viewpoint of heterogeneous entrepreneurial leadership style and the slack resource approach.
In addition to addressing research gaps, this study contributes to the strategic management literature in three important ways.Firstly, based on upper-echelon theory, this study is among the first to explicitly study the influence of different entrepreneurial leadership styles as key contingency factors that shape firms' exploitative dynamic capabilities and explorative dynamic capabilities.Our results provide additional explanations for the impact of different slack resources on explorative and exploitative dynamic capabilities.Secondly, this paper discusses the different impacts of exploitative and explorative dynamic capacities on competitive advantages.Thirdly, although previous studies have illustrated the concepts of exploitative dynamic capabilities and explorative dynamic capabilities and the importance of these two capabilities for enterprise innovation, they have not examined the relationship between exploitative dynamic capabilities and explorative dynamic capabilities.This paper indicates that exploitative dynamic capacities are related to the formation of explorative dynamic capacities and explorative dynamic capacities promote the development of exploitative dynamic capacities.The implications for the development of exploitative dynamic capabilities and explorative dynamic capabilities and future research directions are discussed in this paper.
This article is organized as follows.Firstly, we outline the theoretical background of the paper.Next, we develop our hypotheses based on the existing literature.We then introduce our research method and present our results.Finally, we provide a discussion of the findings, discuss the theoretical and practical implications, and identify suggestions for future research.

Dynamic Capabilities
Scholars have decomposed dynamic capabilities from different perspectives, such as the content and process perspective, the ontology perspective, and the epistemological perspective, to uncover the rich, multidimensional content of dynamic capabilities [25,26].The most primitive definition of dynamic capabilities is that firms integrate, build, and reconstruct internal and external capabilities to adapt to changes in the environment [1].To avoid definition duplication, Eisenhardt and Martin (2000) defined dynamic capabilities as a series of processes for product development, strategy development, and alliances from the process perspective [6].Zollo and Winter (2002) defined dynamic capabilities as a stable collective activity model from the perspective of knowledge evolution.They divided knowledge evolution into four stages: variation, internal selection, replication, and genetics [9].From the entrepreneurial perspective, Zahra et al. (2006) described dynamic capabilities as the restructuring of resources and business practices according to an entrepreneur's expectations [27].Dynamic capabilities are valuable, scarce, imitative, and irreplaceable resources and are the main source of competitive advantage for companies [1,6].In a complex and changeable market environment, dynamic capabilities are the key to product innovation and play an important role in organizational innovation [28].
Dynamic capabilities have been defined from different points of view, so the division of the dynamic capabilities dimension is also inconsistent.Referring to previous studies, in this paper, based on different characteristics, we divided dynamic capabilities into exploitative dynamic capabilities and explorative dynamic capabilities [2,3].Exploitative dynamic capabilities include adaptive capabilities and absorptive capabilities.Explorative dynamic capabilities mainly refer to the innovative capabilities of enterprises [2,3].

Entrepreneurial Leadership Style
Entrepreneurial leadership style is a behaviour pattern that is a characteristic of leadership behaviour.Entrepreneurial leadership can lead to the formation of dynamic capabilities [20].We further examined heterogeneous entrepreneurial leadership style to reveal the impact of entrepreneurial leadership style on the formation of exploitative dynamic capabilities and explorative dynamic capabilities.
Scholars stated that ambidextrous leadership should be divided into two contradictory yet complementary leadership styles: transformational and transactional leadership [12].Transformational leadership, defined as "moving the follower beyond immediate self-interest through idealized influence (charisma), inspiration, intellectual stimulation, or individualized consideration" (Bass, 1999, p. 11) [29], which encourages employees to reach high performance standards and to develop new situations [30].Thus, transformational leadership has a positive influence on creativity and innovation [31].In contrast to transformational leadership, transactional leadership, defined as a leader model that is task-oriented, uses different kinds of incentives to achieve goals [32].Transactional leadership does not encourage experimentation; it has no positive influence on firm innovation and creativity [31].

Slack Resources
The resource-based theory proposes that the success or failure of a firm depends on its unique resources [33].When an enterprise is rich in resources, it is possible that it can gain a competitive advantage and survive market competition [34].The traditional resource-based view refers to the total amount of resources that companies can obtain, but these resources include those that cannot be freely distributed.Therefore, scholars have proposed the concept of "slack resources".Slack resources are defined as "the difference between total resources and total necessary payments", which do not include the resources needed to carry out routine operations, so companies can use slack resources to support growth or buffer internal and external pressures [35].Different slack resources have different features and may have different impacts on organizational outcomes [36][37][38][39][40][41][42].Singh (1986) divided slack resources into unabsorbed slack resources and absorbed slack resources [43].Unabsorbed slack resources are organizational resources that are not committed to specific tasks and can be easily redeployed by the firm, such as financial resource slack [40,42,44], retained earnings, discretionary capital, and debt financing support [39,40].In contrast, "absorbed slack", such as operational slack, under-leveraged equipment, facilities, and surplus production capability, refers to the resources rooted in the firm's existing programmes and is difficult to redeploy [40,45].Unabsorbed slack resources and absorbed slack resources reduce internal or external stress to different extents, giving managers more or less discretion and flexibility [46,47].
The resource base of a firm affects employees' behaviours.The resulting actions allow employees to learn.Technological learning can lead to the accumulation of models of collective learning.Finally, it can promote the development of dynamic capabilities [9,20].

The Formation Mechanism of Exploitative Dynamic Capabilities and Explorative Dynamic Capabilities
Transformational leadership motivates followers by changing employees' values, manners, and behaviours, and, in turn, the followers propose new ideas and integrate new ideas into innovative activities [29][30][31].Transformative leaders encourage employees to set goals, achieve their desired goals, and put them into action [29][30][31].In contrast, transactional leaders do not encourage experimentation and risk-taking.The transactional leadership style emphasizes completing tasks and making employees abide by the rules, pursues efficiency and improvement of the existing rules and is related to the exploitation of current knowledge [29][30][31].
Previous research has linked organizational ambidexterity with entrepreneurial characteristics, such as heterogeneous entrepreneurial leadership, which can explain how these characteristics support and strengthen corporate exploration and exploitation [12,[48][49][50].
Transformational leadership encourages employees to reach high performance standards and to develop new situations [30], so transformational leadership has a positive influence on creativity and innovation [31].Transformative leadership can promote innovation when employees are asked to come up with new ideas.It is more likely associated with explorative innovation.In contrast to transformational leadership, transactional leadership is more important when companies need to be more efficient.Transactional leadership does not encourage experimentation and has no positive influence on a firm's innovation and creativity capabilities, which are more likely to be associated with exploitative innovation [31,[51][52][53].
We therefore hypothesize the following: Hypothesis 1a (H1a).Transactional leadership style is positively related to exploitative dynamic capabilities.

Hypothesis 1b (H1b).
Transformational leadership style is positively related to explorative dynamic capabilities.
Resources refer to "the tangible and intangible entities available to the firm that enable it to produce efficiently and/or effectively a market offering that has value for some market segment(s)."Hunt (2010) [34].Resources enable firms to foster firm capabilities [54,55].
The resources of the company will affect the strategic decisions of the manager [56,57].For example, Xinchun Wang (2017) suggested that companies with more slack resources are more likely to develop new technologies than companies with fewer resources [35].However, due to the scarcity of corporate resources [58], managers often have to allocate resources reasonably to develop optimal alternatives [34].
Therefore, when the resource base of an enterprise is weak, there are many limitations to the decisions made by managers [59,60], and the managers are reluctant to take risks [61].In such cases, companies often adopt more conservative innovation strategies, such as exploitation.On the other hand, when the resource base of the company is relatively strong, managers have the flexibility to make decisions.Managers often formulate long-term innovation strategies and allocate more resources to the development of new products [62].Managers are more likely to adopt radical innovative strategies, such as exploration [63].
In addition, unabsorbed slack resources are usually viewed as highly discretionary slack resources or high-level slack resources, and absorbed slack resources are usually viewed as lowly discretionary slack resources or low-level slack resources [64,65].The level of slack resources has different effects on exploitation and exploration [44,66].
We therefore hypothesize the following: Hypothesis 2a (H2a).Absorbed slack resources are positively related to exploitative dynamic capabilities.

The Relationship between Exploitative and Explorative Dynamic Capabilities
Due to the scarcity of resources, there is a competitive relationship between explorative dynamic capabilities and exploitative dynamic capabilities, but they are not "you exist, and I die", but rather, they promote each other and infiltrate each other, producing certain synergies [2,67].
When enterprises are involved in new technologies beyond the existing technology fields, enterprises focus on explorative behaviours, conduct more research and experiments, and make more discoveries.However, this does not mean that there is a lack of exploitative behaviours at this stage.Whether it is exploration or exploitation, the group must be based on previous relevant knowledge and background [67,68].The broader the knowledge base of enterprises is, the stronger the absorptive capacity is, the greater the attention given to the changing industrial environment and emerging technologies is, the more it can stimulate enterprises to find new technologies, and the more effective they are at exploring the channels and mechanisms of external opportunities.Moreover, the ability to explore new opportunities, evaluate, understand, and acquire new knowledge also depends on the company's original experience in related fields.Previous technological behaviours provide the company with a certain knowledge base so that the company has the ability to absorb and digest new technology knowledge [67,68].Therefore, exploitative dynamic capabilities can promote explorative dynamic capabilities.
With the continuous development of explorative learning, relevant technologies and information gradually accumulate, the frequency of explorative behaviours decreases, and enterprises conduct more exploitative behaviours, refine and deepen the learned knowledge, thus obtaining more benefits from existing knowledge and information.However, this does not mean that explorative behaviours are not required.The exploitative behaviours of existing knowledge need to be combined with complementary knowledge elements.At this time, the explorative learning of new areas of knowledge may lead to the integration of new knowledge into existing knowledge fields, stimulating organizations to explore existing technology fields and promoting the innovative application of knowledge in existing technical fields [67,68].As a result, exploitative capabilities can promote explorative dynamic capabilities.
We therefore hypothesize the following: Hypothesis 3a (H3a).Exploitative dynamic capabilities are positively related to explorative dynamic capabilities.

Effects of Exploitative and Explorative Dynamic Capabilities
Dynamic capabilities can change a firm's resource base and formulate new valuable strategies [69][70][71][72][73]. Eisenhardt and Martin (2000) indicated that dynamic capabilities can optimize the allocation of resources in the pursuit of long-term competitive advantage [6].Dynamic capabilities are sources for sustaining competitive advantage [1].Dynamic capabilities play an important role in enterprise innovation and competitive advantage, but there are significant differences in the effects of different types of dynamic capabilities on competitive advantage.
Exploitative dynamic capabilities have a significant effect on the short-term financial performance of enterprises but have no obvious impact on long-term competitive advantage.Explorative dynamic capabilities have a significant positive impact on the long-term competitive advantage of enterprises.Fischer (2010) highlighted that by exploiting their own knowledge and technical experience, firms can improve product functions, expand product lines, consolidate established markets, and improve financial performance [74].Therefore, exploitative dynamic capabilities can help enterprises replicate and apply their own knowledge and technology in related fields [74,75].Due to the unique contribution of exploitative dynamic capabilities to short-term financial performance, enterprises are prone to losing their innovation motivation under the influence of path dependence.They continue to strengthen themselves along the fixed technology track for a long period of time, causing an inhibitory effect on innovation performance, which is not conducive to long-term competitive advantage.In contrast, explorative dynamic capabilities have a close relationship with the development of long-term competitive advantage.Enterprises can build a differentiated product strategy through explorative activities, take the lead in entering a new product market, reduce the cost of environmental adaptability with organizational flexibility, and quickly gain a competitive advantage [2,4,67,68].
We therefore hypothesize the following:

Hypothesis 4a (H4a).
Exploitative dynamic capabilities are positively related to short-term financial performance.

Hypothesis 4b (H4b).
Explorative dynamic capabilities are positively related to long-term competitive advantage.
The research model and hypotheses of this article are described in Figure 1.Explorative dynamic capabilities have a significant positive impact on the long-term competitive advantage of enterprises.Fischer (2010) highlighted that by exploiting their own knowledge and technical experience, firms can improve product functions, expand product lines, consolidate established markets, and improve financial performance [74].Therefore, exploitative dynamic capabilities can help enterprises replicate and apply their own knowledge and technology in related fields [74,75].Due to the unique contribution of exploitative dynamic capabilities to short-term financial performance, enterprises are prone to losing their innovation motivation under the influence of path dependence.They continue to strengthen themselves along the fixed technology track for a long period of time, causing an inhibitory effect on innovation performance, which is not conducive to long-term competitive advantage.In contrast, explorative dynamic capabilities have a close relationship with the development of long-term competitive advantage.Enterprises can build a differentiated product strategy through explorative activities, take the lead in entering a new product market, reduce the cost of environmental adaptability with organizational flexibility, and quickly gain a competitive advantage [2,4,67,68].We therefore hypothesize the following:

Hypothesis 4b (H4b). Explorative dynamic capabilities are positively related to long-term competitive advantage.
The research model and hypotheses of this article are described in Figure 1.

Survey Construction
The survey was developed in English and translated into Chinese.The corresponding items were pre-tested.We invited a group of experts to comment on the representativeness and suitability of the issues.The questionnaire was then improved based on the comments and suggestions received.The items of the questionnaire were developed based on the existing literature.A five-point Likert scale was adopted.The subjects were asked to evaluate the degree of conformity of the survey topics from Level 1 to Level 5, where 1 indicated "very inconsistent" and 5 indicated "very consistent".The middle levels 2-4 represented "relatively inconsistent", "generally consistent", and "more consistent", respectively.

Survey Construction
The survey was developed in English and translated into Chinese.The corresponding items were pre-tested.We invited a group of experts to comment on the representativeness and suitability of the issues.The questionnaire was then improved based on the comments and suggestions received.The items of the questionnaire were developed based on the existing literature.A five-point Likert scale was adopted.The subjects were asked to evaluate the degree of conformity of the survey topics from Level 1 to Level 5, where 1 indicated "very inconsistent" and 5 indicated "very consistent".

Dependent Variables
Short-term financial performance was measured by adapting the scale proposed by Stam and Elfring (2008) [76].This scale was also used in the study by Tang and Hull (2012) [77].The scale comprises five items that indicate the level of sales, investment, earnings, market share growth, and the net profit of the firm.Long-term competitive advantage was measured by four items adopted from Tracey (2006) [78], Thatte (2009) [79], and Chen (2009) [80].The four items of the scale were intended to indicate cost, management skills, profit margin, and leadership in relation to the organization's sustainable competitive advantage (in the Appendix A).

Independent Variables
Transactional leadership style and transformational leadership style were measured with five items adopted from Podsakoff (1990) and Deichmann (2015), respectively [84,85].The measures of transactional leadership style were designed to assess contingent reward, while the measures of transformational leadership style were designed to assess inspiration, intellectual stimulation, and individualized consideration (in the Appendix A).

Control Variables
We included several control variables, including firm age, firm size, R&D investment, and industry type.Firstly, firm age was measured by the number of years since the firm's founding before categorizing it into three intervals.Secondly, firm size was measured by the number of employees, and this was categorized into three intervals.Thirdly, a firm's internal R&D is a common measure of a firm's capacity [86] and has a positive effect on a firm's innovation and competitive advantage.Thus, we also controlled for R&D investment, which was measured using three items based on Zhou et al. (2010) [87].Finally, we included industry dummies to control for differences across industries (in the Appendix A).

Data Collection
First, the sample selection criteria were established according to the research issues.This study focused on the formation and effect of exploitative dynamic capabilities and explorative dynamic capabilities from the perspectives of entrepreneur leadership style and slack resource theory.In accordance with the principles of convenience, representativeness, and feasibility of the sample, the sample used for this study was selected on the basis of the following conditions: (1) taking into account the representative nature of the sample, enterprises that had been established for more than 5 years were selected, and (2) the questionnaire was filled out through live interviews and e-mail methods by managers and technicians who were familiar with the overall operation of the enterprise.
The questionnaire was issued from September 2017 to February 2018.It took six months to issue 840 questionnaires.Four hundred eighty-eight questionnaires were recovered, of which 382 were valid, resulting in an effective rate of 77.87%.The samples were mainly selected from companies in Beijing, Shanghai, Tianjin, Hunan, Xi'an, Heilongjiang, Jilin, and Liaoning.Regions in the east accounted for 46.23% of the study sample, and the Beijing-Tianjin region represented 28.10%.Enterprises aged 5-10 years accounted for 35.33% of the total sample, followed by those aged 15-20 years, accounting for 28.26% of the total sample.The proportion of enterprises with more than 1000 people was 45.36%, and that with less than 1000 people was 54.64%.For the nature of enterprises, state-owned and state-controlled enterprises accounted for 20.11%, private enterprises accounted for 45.68%, and foreign companies accounted for 34.21% of the total sample.Regarding the industry in which the enterprise was located, general and specialized equipment manufacturing accounted for 14.78%, followed by medical equipment and biological products, which accounted for 11.34%, and computer, communications and other electronic equipment manufacturing, which accounted for 10.03%.Top managers accounted for 69.85% of respondents, and the technical personnel accounted for 30.15%.All respondents had worked in the company for more than 5 years.The proportion of respondents working for more than 8 years accounted for 90.3% of the sample.The investigators were very familiar with the situation in each company.Rich work experience ensured the accuracy of the questionnaires.The informants' descriptive statistics are presented in Table 1.

Data Analysis
In this study, SPSS 21.0 and AMOS 21.0 were used to analyse the validation factors of each variable.Table 2 presents the descriptive statistics for the main variables assessed in the study.As shown in Table 2, for the variable of transactional leadership style, the mean value is 4.55, the SD value is 1.36, the minimum value is 1, and the maximum is 5.For the variable of transformational leadership style, the mean value is 3.18, the SD value is 0.98, the minimum value is 1, and the maximum is 5.For the variable of absorbed slack resources, the mean value is 4.34, the SD value is 1.49, the minimum value is 1, and the maximum is 5.For the variable of unabsorbed slack resources, the mean value is 3.73, the SD value is 1.22, the minimum value is 1, and the maximum value is 5.For the variable of exploitative dynamic capabilities, the mean value is 4.59, the SD value is 1.35, the minimum value is 1, and the maximum value is 5.For the variable of explorative dynamic capabilities, the mean value is 3.82, the SD value is 1.01, the minimum value is 1, and the maximum value is 5.For the variable of short-term financial performance, the mean value is 3.27, the SD value is 0.22, the minimum value is 1, and the maximum value is 5.For the variable of long-term competitive advantage, the mean value is 3.03, the SD value is 0.14, the minimum value is 1, and the maximum value is 5.For the variable of firm age (ln), the mean value is 2.42, the SD value is 0.93, the minimum value is 1.61, and the maximum value is 4.19.For the variable of firm size (ln), the mean value is 6.21, the SD value is 1.45, the minimum value is 5.31, and the maximum value is 7.54.For the variable of R&D intensity, the mean value is 3.24, the SD value is 2.56, the minimum value is 1, and the maximum value is 5.For the variable of industry types (industry dummy), the mean value is 0.32, the SD value is 0.02, the minimum value is 0, and the maximum value is 1.Table 3 shows the test results for the variable reliability.The minimum value for each variable, as assessed by Cronbach's α, was 0.75, i.e., greater than 0.7.Thus, this study passed the reliability test.When the third item assessed for the transformational leadership style, the fourth item for exploitative dynamic capabilities, and the first item for short-term financial performance were deleted, the variables had loading factors greater than 0.7 and composition reliability (CR) values above 0.7.The average variance extracted (AVE) was above 0.5, so the variable reliability was determined to be good.4, the factor loadings of all items were larger than 0.7; thus, the convergent validity of each item was good.Table 5 shows that the square root of the AVE for each variable was greater than the Pearson correlation coefficient, so the questionnaire in this study has a good degree of discriminate validity, indicating that the validity of the measurement was good.

Hypothesis Testing
To verify our hypotheses, bootstrapping (with 500 resamples) was conducted to obtain estimates of t-statistic values to test the statistical significance of the path coefficients (see Figure 2).

Hypothesis Testing
To verify our hypotheses, bootstrapping (with 500 resamples) was conducted to obtain estimates of t-statistic values to test the statistical significance of the path coefficients (see Figure 2).The correlation coefficient between transactional leadership style and exploitative dynamic capabilities was 0.22 (t = 3.11, p < 0.01), showing a significant positive association between transactional leadership style and exploitative dynamic capabilities.The correlation coefficient between absorbed slack resources and exploitative dynamic capabilities was 0.38 (t = 2.93, p < 0.01), showing a significant positive association between absorbed slack resources and exploitative dynamic capabilities.The correlation coefficient between transformational leadership style and explorative dynamic capabilities was 0.10 (t = 2.65, p < 0.01), showing a significant positive association between transformational leadership style and explorative dynamic capabilities.The correlation coefficient between unabsorbed slack resources and explorative dynamic capabilities was 0.61 (t = 3.70, p < 0.001), showing a significant positive association between unabsorbed slack resources and explorative dynamic capabilities.The mutual correlation coefficients between exploitative dynamic capabilities and explorative dynamic capabilities were 0.45 and 0.38 (t = 2.01, p < 0.05; t = 2.44, p < 0.01), respectively, showing a significant positive association between exploitative dynamic capabilities and explorative dynamic capabilities.The correlation coefficient between exploitative dynamic capabilities and short-term financial performance was 0.08 (t = 2.07, p < 0.05), showing a significant positive association between exploitative dynamic capabilities and exploitative dynamic capabilities.The correlation coefficient between explorative dynamic capabilities and long-term competitive advantage was 0.36 (t = 3.23, p < 0.01), showing a significant positive association between explorative dynamic capabilities and long-term competitive advantage.
Moreover, other results were consistent with our hypotheses.Table 6 shows the results of hypothesis testing.The results show that all hypotheses are supported.The correlation coefficient between transactional leadership style and exploitative dynamic capabilities was 0.22 (t = 3.11, p < 0.01), showing a significant positive association between transactional leadership style and exploitative dynamic capabilities.The correlation coefficient between absorbed slack resources and exploitative dynamic capabilities was 0.38 (t = 2.93, p < 0.01), showing a significant positive association between absorbed slack resources and exploitative dynamic capabilities.The correlation coefficient between transformational leadership style and explorative dynamic capabilities was 0.10 (t = 2.65, p < 0.01), showing a significant positive association between transformational leadership style and explorative dynamic capabilities.The correlation coefficient between unabsorbed slack resources and explorative dynamic capabilities was 0.61 (t = 3.70, p < 0.001), showing a significant positive association between unabsorbed slack resources and explorative dynamic capabilities.The mutual correlation coefficients between exploitative dynamic capabilities and explorative dynamic capabilities were 0.45 and 0.38 (t = 2.01, p < 0.05; t = 2.44, p < 0.01), respectively, showing a significant positive association between exploitative dynamic capabilities and explorative dynamic capabilities.The correlation coefficient between exploitative dynamic capabilities and short-term financial performance was 0.08 (t = 2.07, p < 0.05), showing a significant positive association between exploitative dynamic capabilities and exploitative dynamic capabilities.The correlation coefficient between explorative dynamic capabilities and long-term competitive advantage was 0.36 (t = 3.23, p < 0.01), showing a significant positive association between explorative dynamic capabilities and long-term competitive advantage.
Moreover, other results were consistent with our hypotheses.Table 6 shows the results of hypothesis testing.The results show that all hypotheses are supported.For exploitative dynamic capabilities, we found that transactional leadership style has a significantly positive effect on exploitative dynamic capabilities (β= 0.22, t = 3.11, p < 0.01).H1a is verified.Absorbed slack resources have a significantly positive impact on exploitative dynamic capabilities (β = 0.38, t = 2.93, p < 0.01).H1b is verified.
For competitive advantage, the path coefficient of exploitative dynamic capabilities and explorative dynamic capabilities that impact short-term financial performance and long-term competitive advantage are significant positively (β = 0.08, t = 2.07, p < 0.05; β = 0.36, t = 3.23, p < 0.01), indicating that dynamic capabilities have a direct influence on competitive advantage, and H4a and H4b are verified.The correlation was 0.08 between exploitative dynamic capabilities and short-term financial performance, with a significance level of 10%, while the correlation was 0.36 between explorative dynamic capabilities and long-term competitive advantage, with a significance level of 5%.Thus, the impact of explorative dynamic capabilities on competitive advantage is larger than the impact of exploitative dynamic capabilities on competitive advantage.
The research results show that leadership style has a positive effect on the dynamic capabilities of an enterprise, which is consistent with the view that leadership style is one of the antecedents to the formation of capabilities [20].Slack resources showed a positive effect on the dynamic capabilities of the enterprises, which is consistent with the view that prior resources are the most important resources for developing dynamic capabilities [10,20].The exploitative dynamic capabilities and explorative dynamic capabilities can reinforce and complement each other.This conclusion is consistent with ambidexterity theory and synergy theory [88,89].The results also show that dynamic capabilities lead to competitive advantages.

Main Findings
The aim of this study was to explore the roles of entrepreneurial leadership style and slack resources in the development of dynamic capabilities and the different effects of exploitative dynamic capabilities and explorative dynamic capabilities on competitive advantages.Based on a sample of 328 Chinese firms, our empirical results show that having a transactional leadership style and absorbed slack resources can encourage the development of exploitative dynamic capabilities, while transformational leadership style and unabsorbed slack resources are conducive to the development of explorative dynamic capabilities.We also found that exploitative dynamic capabilities promote explorative dynamic capabilities and that explorative dynamic capabilities enhance exploitative dynamic capabilities.Exploitative dynamic capabilities have a significant influence on short-term financial performance, and explorative dynamic capabilities are positively related to long-term competitive advantage.The impact of explorative dynamic capabilities is larger than the impact of exploitative dynamic capabilities on competitive advantage.

Theoretical Contribution
This research extends the literature on dynamic capabilities in three specific ways.Firstly, our findings advance the research on the formation mechanisms of exploitative dynamic capabilities and explorative dynamic capabilities by highlighting the roles of heterogeneous entrepreneurial leadership style and slack resources.Although many scholars have highlighted the role of dynamic capabilities in reconfiguring and improving a firm's existing resource base to maintain its competitive advantages over time, they did not empirically explore the role of heterogeneous entrepreneurial leadership style and slack resources in influencing the formation of exploitative and explorative dynamic capabilities.This study empirically investigated the formation of exploitative and explorative dynamic capabilities.The results suggest that transactional leadership style and absorbed slack resources are related to the formation of exploitative dynamic capabilities and that transformational leadership style and unabsorbed slack resources encourage the formation of explorative dynamic capabilities.Our findings support those of previous research, which found that prior related knowledge is the most important antecedent to firm capabilities [33].Many studies have shown that prior related knowledge is important for the formation of capabilities [20].Entrepreneurial leadership can promote the development of dynamic capabilities [20].As a result, dynamic capabilities can be deepened by enriching high-level slack resources and by fostering an explorative leadership style.This study enriches our understanding of exploitative and explorative dynamic capabilities from the perspective of heterogeneous entrepreneurial leadership style and slack resources.
Secondly, this research helps to close the gap in the literature concerning the relationship between different dimensions of dynamic capabilities and competitive advantage.This paper evaluated the different effects of exploitative and explorative dynamic capabilities on competitive advantage.Although previous studies have suggested that dynamic capabilities are key to innovation and competitive advantage [6,26], they did not explore the different effects of exploitative dynamic capabilities and explorative dynamic capabilities on competitive advantage.The empirical results of this study show that both exploitative and explorative dynamic capabilities exert significant influences on competitive advantage.It is worthwhile to emphasize that exploitative dynamic capabilities have an important effect on short-term financial performance, and explorative dynamic capabilities are positively related to long-term competitive advantage.The results show how explorative dynamic capabilities surpass exploitative dynamic capabilities in competitive advantage, even if both have a positive influence on such competitive advantage.These results are consistent with studies by Monferrer (2015), Dixon (2014), and Ferreira (2018), who reported that explorative dynamic capabilities are valuable to firms [2][3][4].
Thirdly, the study sheds some light on a research stream that explains the relationship between exploitative dynamic capabilities and explorative dynamic capabilities.This paper reveals that exploitative dynamic capabilities and explorative dynamic capabilities can enhance each other.Although many scholars have introduced the concepts of exploitative dynamic capabilities and explorative dynamic capabilities and indicated that they are important to firm innovation, they have not studied the mutual effects of exploitative and explorative dynamic capabilities.We empirically tested the effect of exploitative dynamic capabilities on explorative dynamic capabilities and the effect of explorative dynamic capabilities on exploitative dynamic capabilities.Therefore, this paper validates and develops the theory of dynamic capabilities.

Management Implications
Our findings are also relevant for dynamic capabilities management practice.Firstly, we provide a way for firms' managers and practitioners to cultivate exploitative dynamic capabilities and explorative dynamic capabilities.Firms may be able to actively change their leadership styles (transactional leadership style and transformational leadership style) and take advantage of different kinds of resources (absorbed slack resources and unabsorbed slack resources) to foster different types of dynamic capabilities and establish different competitive advantages.
Secondly, our findings suggest that firms should balance explorative dynamic capabilities and exploitative dynamic capabilities.The two kinds of dynamic capabilities can enhance each other.Therefore, the most basic problem for an organization is to engage in effective exploitative activities to maintain existing capabilities while investing enough resources to continuously open up new markets to ensure future viability and enhance long-term competitive advantage.Attention should be paid to staying ahead of competitors and avoiding the "success trap" of over-reliance on exploitative behaviours.In addition, it is necessary to consolidate the short-term competitive advantage brought about by exploitative behaviours, continuously develop new products and markets, improve and deepen the potential benefits of new markets, and bypass the "failure trap" brought about by explorative behaviours.Therefore, it is necessary to strike a good balance between explorative dynamic capabilities and exploitative dynamic capabilities, which can not only guarantee an organization's existing market and short-term financial performance but also help in the continuous development of new products and markets and gaining long-term competitive advantages so that enterprises can continue to grow for a long time.
Finally, as explorative dynamic capabilities are the essential factors of innovation success and long-term competitive advantage, our empirical results suggest their importance for improving explorative dynamic capabilities.We should pay attention to the cultivation of the transformational leadership style and unabsorbed slack resources.

Research Limitations and Future Directions
Although this study followed the logic of scientific research, it still has some limitations.Firstly, the research sample may be geographically limited.The samples mainly came from enterprises in the Yangtze River Delta and Northeast China.The conclusions have not been verified in other regions, which is the future research direction.
In addition, the empirical research in this paper was based on cross-sectional data, which cannot fully reveal a causal relationship with a lagging effect.Future research could use the tracking data analysis method, based on diurnal data, and the panel data method to conduct a more adequate test of causality.
Finally, there is no further analysis in this paper as to whether exploitative dynamic capabilities and explorative dynamic capabilities should be developed simultaneously or sequentially.In the early stages of the establishment of enterprises, the technological base is relatively weak, and enterprises need to exploit existing knowledge.With the accumulation of knowledge, enterprises will explore new types of technological knowledge.Therefore, at different stages of development, enterprises should balance their exploitative dynamic capabilities and explorative dynamic capabilities.However, in the specified stage, whether there is only one kind of dynamic capability at a time or both, dynamic capabilities may be developed simultaneously or sequentially.There are no explanations for these problems, and they are thus opportunities for future research.

Funding:
The authors gratefully acknowledge the support from the National Social Science Foundation of China (grant no: 16AZD006).

Table 1 .
Descriptive statistics of informants.

Table 2 .
Descriptive statistics for the main variables.

Table 3 .
The test results for variable reliability.

Table 4
displays the test results for the convergence validity.As shown in Table

Table 4 .
The test results for convergence validity.
Note:The diagonal values (in bold) are Convergence of Validity.

Table 5 .
The test results for discriminant validity.
Note: The diagonal values (in bold) are the square roots of AVE, others are Pearson correlations.

Table 6 .
Results of the Path Model Analyses.