Contract manufacturing exporters (CMEs) play a significant role in the global economy. Exports by CMEs account for over half of the global trade in non-fuel goods (Gereffi and Lee, 2012; WTO, 2011). They are typically located in developing countries and produce and export goods according to a lead firm’s specifications. CMEs receive orders from lead firms, run production and subsequently export goods following the lead firms’ specifications (Buckley, 2009; Gereffi et al., 2005). Understanding the performance and behaviors of CMEs, which are the supply side of international outsourcing relationships, is important as they are strategic players in such relationships and their success or failure is likely to impact value chain effectiveness. Although participating in global value chains is widely recognized as a mode of fast access to the international market for CMEs (Buckley, 2009; He and Wei, 2013), their share in value chain returns is meagre primarily because of their low bargaining power and the mundane nature of the activities they perform (Dedrick et al., 2010; Lavie, 2007; Shin et al., 2012). CMEs’ low bargaining power results from their dependence on lead firm’s resources while their own resources are much less needed by the lead firm (Casciaro and Piskorski, 2005). CMEs are not scarce and lead firms have the options to switch to other suppliers which again increases the CME’s dependency on the lead firms (Lippman and Rumelt, 2003). Moreover, their activities are mundane and exploitative in the sense that they manufacture as per the lead firm’s specifications and have little opportunity to explore beyond the given specifications (Buckley, 2009; Gereffi et al., 2005). So, the question arises as to how CMEs can enhance their performance. The answer lies in capitalizing on their exploitation strategy. In summary, we posit that exploitation strategy triggers exploration strategy which requires building marketing capabilities for enhanced performance. Exploitation strategy relates to competition-based activities to exploit current capabilities and knowledge while exploration strategy implies entrepreneurship behavior driven by risk-taking activities to explore new competencies and opportunities (Hitt et al., 2011). Examples of exploitation strategy for CMEs include leveraging existing capabilities such as manufacturing their existing products with more efficiency through process upgrading which includes improvement in machinery and production capability. Exploration strategy, on the other hand, includes both product and functional upgrading. Product upgrading is making new or higher value added products while functional upgrading is moving up the value chain. Adding value to existing products for current buyers or modifying current products to sell them to new markets are the examples of exploration strategy. We borrow insights from the resource dependency theory and the ambidexterity organization hypothesis to explain how CMEs can capitalize on their exploitation strategy to enhance their performance. The ambidexterity hypothesis argue that though path dependencies favor choosing only one strategy based on their experience and learning, firms strive to balance both the exploratory and exploitative activities in the long run (Lavie and Rosenkopf, 2006; O’Reilly and Tushman, 2004).