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PURPOSE. Prior studies have suggested that organizational and environmental antecedents are influential to the development of a balance dimension of innovation ambidexterity, which are proposed to be central to superior firm performance. However, little is known about how such antecedents affect the shaping of innovation ambidexterity in small to medium‐sized enterprises (SMEs) and how these innovations go on to shape firm performance. This paper aims to examine internal and external antecedents of SMEs' innovation ambidexterity outcomes.\ud\udDESIGN/METHODOLOGY/APPROACH. The research used a survey method to investigate the 1,000 small‐and medium sized enterprises in Scotland. Firms were randomly selected from the FAME database. Of this sample, 265 firms (26.5 percent) responded to the survey.\ud\udFINDINGS. The data analysis reveals that internal organizational structures in a highly dynamic environment stimulate the appearance of innovation ambidexterity. Moreover, it is found that the relationship between organizational and environmental forces and firm performance is partially mediated by a balance dimension of innovation ambidexterity.\ud\udPRACTICAL IMPLICATIONS. The results show how dangerous the lack of adequate research of these issues at the SME level is. By contrast to larger firms, the results show how internal organizational structures and external environmental conditions affect SMEs to pursue a balance dimension of innovation ambidexterity.\ud\udORIGINALITY/VALUE. Prior studies have paid little attention to the effects of internal organizational structures and external environmental conditions on the appearance of a balance dimension of innovation ambidexterity within SMEs. This paper fills some of the gaps

Internal and external antecedents of SMEs' innovation ambidexterity outcomes