THE EFFECTS OF ORGANIZATIONAL DRIVERS ON
CONTEXTUAL AMBIDEXTERITY
Master Thesis Jeroen Coenraads
10884076
Executive MSc Business Administration - Strategy April 2017
Supervision
Statement of originality
This document is written by J. Coenraads and I am fully responsible for the content of this document. The text presented in underlying thesis is completely original and there are no other sources used than the sources that I mentioned in this text. The faculty of economics and business of the university of Amsterdam is only responsible for the supervision, not for the content of this thesis.
J. (Jeroen) Coenraads 10884076
Abstract
In this thesis, the influence of organizational drivers on contextual organizational ambidexterity is analyzed through a mediation effect using data gathered at a single company named Van Lanschot Bankiers. The underlying data was gathered by an online survey, which was taken by 99 respondents. These 99 respondents are all carrying the same job title. The organizational drivers that are used are: Monetary incentives and transformational leadership. The research model, which includes two mediators, is constructed to show that both effort and goals can potentially have influence on organizational drivers when striving for ambidexterity at an individual level. A multiple regression analysis true a mediation effect was used to test the formulated hypothesis. In this specific analysis a bootstrap method is used. The results of the tests show mixed outcomes and not all drivers influence the proposed mediators and therefore they don’t influence contextual ambidexterity.
Table of contents
1. Introduction 6
1.1 Research problem and research question 6
1.2 Outline of this study 8
2. Literature review, theoretical framework and hypothesis 8
2.1 Contextual Ambidexterity 8
2.2 Organizational Drivers 11
2.3 The mediating effect of effort and goals 13
3. Research Methodology 20
3.1 Sample 20
3.2 Recoding 21
3.3 Cronbach’s Alpha limitation 21
3.4 Descriptive statistics 22
3.5 Individual measures 23
4. Results 24
4.1 Correlations 24
4.2 Regression 25
4.3 Regression process Hayes include mediator 25
4.4 Hypothesis results 28
5. Discussion & implications 31
5.1 Theoretical Implications 33
5.2 Practical Implications 34
5.3 Limitations 35
5.4 Future Research 36
References 37 Appendix 1: Mediation output 41
1. Introduction
1.1 Research problem and research question
Business as it is in 2017 shows that the current environment changes in a rapid pace from a more stable environment to a highly dynamic environment. This requires that organizations need to be able to be more dynamic in the way they conduct business and manage their internal organization (Burns and Stalker, 1961; Morgan, 2006). Therefore if organizations want to make sure they maintain a fit with their environment and keep a sustained competitive advantage amongst their competitors, it is important to operate on an exploratory level simultaneously with an explanatory level. Combining these two leads to long term adaptions to new developments and short-term alignment with existing markets (Gibson & Birkinshaw, 2004). In recent studies it is proven that combining both exploration and exploitation can lead to nine times higher superior performance, than when organizations only pursue exploration or exploitation (Gibson & Birkinshaw, 2004). Furthermore, pursuing exploration and exploitation simultaneously works self-reinforcing (Levinthal & March, 1993) and pursuing them both yields a synergy effect amongst exploration and exploitation (He & Wong, 2004). There are several different types of Ambidexterity. For example organizational ambidexterity and contextual ambidexterity (Benner & Tushman, 2002). This thesis is focused on contextual ambidexterity. This form of ambidexterity focuses more on the individual level of ambidextrous behavior instead of ambidexterity on an organizational level (Good & Michel, 2013). There are several study’s conducted which have proven the effect of ambidexterity. Creating ambidexterity within an organization remains difficult. There are multiple studies, which investigated if there is a relation between organizational drivers and ambidexterity. These studies are mainly focused on the organizational level rather than the individual level (He & Wong, 2004). This is interesting because personal actions can lead to achieving a higher form of ambidexterity.
The two different organizational drivers that are explained in this thesis can potentially influence contextual ambidextrous behavior (Carmeli & Halevi, 2009). This thesis focuses on Monetary incentives. Monetary incentives are a way to add individual and/or collective value to an organization (Bridoux, Coeurderoy & Durand, 2011). Some individuals are highly motivated by monetary incentives (Bridoux et al., 2011) and this could lead to better performance which in terms can lead to more contextual ambidextrous behavior. Furthermore, incentives can lead to a higher level of motivation (Terborg & Miller, 1978), which in term helps individuals in accomplishing their goals. The other driver is Transformational leadership. There is an effect between transformational leadership and the effect this has on the level of contextual ambidexterity of individuals (McColl Kennedy & Anderson, 2002). There is an assumption, that when you are being forced to operate on an more exploration/exploitation level this work less than when you are stimulated in doing so or incentivized. The influence of leadership can have a big impact on individuals (McColl-Kennedy & Anderson, 2002).
This research investigates whether monetary incentives and transformational leadership have an effect on contextual ambidexterity and if effort and goals mediate, fully or partially, the relationship between the organizational drivers, monetary incentives and transformational leadership, on contextual ambidexterity. The research question underlying this study is:
What are the effects of organizational drivers upon contextual ambidexterity and is there a mediation effect when effort and goals are involved?
1.2 Outline of this study
The next part of this thesis will provide a review of literature and formulation of the hypothesizes (chapter 2). Then the research methodology will be discussed (chapter 3) followed by an overview of results (chapter 4). Next, the results will be discussed (chapter 5) followed by the conclusion (chapter 6).
2. Literature review, theoretical framework and hypothesis
In this section a literature review is presented about ambidexterity, the different types of ambidexterity and organizational drivers in general. Also presented is a review regarding the potential connection between contextual ambidexterity and the organizational drivers monetary incentives and transformational leadership. After a short introduction what ambidexterity is and how exploration and exploitation combined form ambidexterity, the organizational drivers will be explained followed by the suggest relation between ambidexterity (dependent variable) and the organizational drivers (independent variables) through the mediators effort and goals.
2.1 Types of ambidexterity
The type of ambidexterity which is most known amongst researchers is organizational ambidexterity. O’reilly and Tushman (2011) argue that if firms want to perform ambidextrous behavior this is at the core of a dynamic capability. O’reilly & Tushman (2011) state that organizational ambidexterity can be compared with a dynamic capability. Organizational ambidexterity is a complex set of organizational routines, which include differentiation, integration, decentralization and the ability of managers to simultaneous pursuit exploitation and exploration. The literature implies there is a constant trade-off between exploration (outside) and exploitation (inside), or as Gibson & Birkinshaw (2004) state, combining these
two leads to long-term adaptions to new developments and short-term alignment with existing markets. There is not one correct way of handling this “trade-off” and therefore there are different types of ambidexterity, namely structural-, sequential- and contextual ambidexterity. The demands on an organization are always in conflict to some degree, this is the idea behind the value of ambidexterity (Gibson & Birkenshaw, 2004). These trade-offs need to be made. As indicated by Duncan (1976) organizations can manage these trade-offs by putting in place dual structures. In this way some business units can focus on alignment and others on adaption (Duncan, 1976). This type of ambidexterity is referred to as structural ambidexterity (Gibson & Birkenshaw, 2004). Sequential ambidexterity is also type of ambidexterity where different structures are used. However, instead of dual structures, in this type the structures shift in a sequence (Duncan, 1976; Siggelkow & Levinthal, 2013). The type of ambidexterity used in this study is contextual ambidexterity. Contextual Ambidexterity is the behavior capacity to simultaneously demonstrate alignment and adaptability across as entire business unit (Birkinshaw & Gibson, 2004). Contextual ambidexterity is also defined in terms of conceptualization, as finding a balance between opposing yet interdependent and complementary attributes (Ghoshal & Bartlett, 1994). Contextual ambidexterity is very different than structural ambidexterity. The main differences lays in the fact that contextual ambidexterity is more about creating individual processes and skills by which individuals are able to make their own decision in terms of how to divide their time and recourses (Duncan, 1976). In the literature two important concepts are linked which together create contextual ambidexterity, exploration and exploitation. Exploration implies firm’s behavior characterized by variance-increasing activities, search, discovery, experimentation, risk-taking and innovation (Cheng & Van de Ven, 1996). Exploitation is characterized by variance decreasing, disciplined problem solving, refinement, implementation, efficiency production and selection (March, 1991). As described, exploration and exploitation executed
simultaneously at a business-unit level creates contextual ambidexterity, therefore in this research the means of these two outcome variables are added to measure the computed mean of contextual ambidexterity (Lubatkin, Simsek, Ling, & Veiga, 2006). Therefore in this research we refer to contextual ambidexterity, which is computed out of two variables, exploration and exploitation. Combining exploration and exploitation has several advantages. When both are pursued simultaneously, exploration and exploitation works self-reinforcing (Levinthal & March, 1993) Furthermore jointly pursuing exploration and exploitation yields synergies (He & Wong, 2004). Ambidexterity is in essence a dynamic capability what can be crucial in highly dynamic environments. Ambidextrous firms build future business while operating mature business, which creates continuous renewal (Argawel & Helfat, 2009).
There are several organizational drivers that have a potential influence on ambidexterity. These can be contextual drivers (Gibson & Birkenshaw, 2004), drivers from an informal network (Gulati & Puranam, 2009) or drivers linked to leadership styles (Lubatkin et al., 2006). In this thesis the focus will be on the organizational drivers monetary incentives and transformational leadership style.
2.2 Organizational drivers
In this research two organizational drivers are used to measure if there is an influence between these organizational drivers and ambidexterity and if these drivers are mediated by the mediators goals and effort. The organizational drivers monetary incentives and transformational leadership will be explained and why these organizational drivers are included in this study. Each organizational driver is described separately.
2.2.1 monetary incentives and contextual ambidexterity (C-path)
In this research it is predicted that monetary incentives has an influence on contextual ambidexterity. Monetary incentives are seen as an independent variable because it presumably may affect ambidexterity, which is seen as a dependent variable. Monetary incentives are frequently used as a motivating method for employees. Motivation is hard to measure directly (Birch & Verrof, 1966) and therefore performance can be seen as a surrogate for motivation. Bonner & Sprinkle (2002) investigated whether monetary incentives have an influence on performance and the results of that study show a varying conclusion. Additionally, monetary incentives are a way to add individual and/or collective value to an organization (Bridoux et al., 2011) and some individuals are highly motivated by monetary incentives or other forms of incentives like leisure (Bridoux et al., 2011). This can, in term, lead to a competitive advantage for the organization and is therefore a very interesting organizational driver. Prior research has shown a significant relation between monetary incentives and ambidexterity (Ahammad, Lee, Malal & Shoham, 2015). Birkenshaw (2004) also expected in his research that salary and performance bonuses have an influence on ambidexterity. Monetary incentives are studied as an organizational driver, since this study wants to find out whether there is a relationship between being monetary incentivized and the level of contextual ambidexterity. An assumption is made that monetary incentives influences contextual ambidexterity and the following hypothesis was formulated:
Hypothesis 1: Monetary incentives positively influence contextual ambidexterity
2.2.2 Transformational leadership and contextual ambidexterity (C-path)
There are several studies conducted which have proven that there is a significant relation between different types of leadership and the performance of individuals (Wang, Chou &
Jiang, 2005; McColl-Kenney & Anderson, 2002; Lin & McDonough, 2011). Leadership is a container understanding, which refers to a large amount of different leadership styles. This study focuses on transformational leadership and will be used as an independent variable. Leadership styles have different negative and/or positive effects on performance of individuals. For example, charismatic leadership can have a big impact on overall performance (Wang et al, 2005). In general we can assume that “leaders” want what is best for their subordinates and that they strive for growth in performance because this results in better organizational goals (McColl-Kenney & Anderson, 2002). In this study is chosen for transformational leadership since prior studies have proven the significant relation between transformational leadership and ambidextrous behavior (McColl-Kenney & Anderson, 2002). Transformational leaders are being known for the ability to change organizations through motivation, inspiring and create a personal connection with their subordinates. Some studies suggest that the type of leadership that is being used in an organization is not relevant because this is only partially important according to McColl-Kenney & Anderson (2002). This study is focused on the relation between transformational leadership and contextual ambidexterity. Does transformational leadership influences the ability of individuals to perform more exploratory behavior and simultaneous exploitative behavior i.e. contextual ambidextrous behavior? According to Lin & McDonough (2011), different types of leadership styles are connected to ambidexterity. They found that a more strategic oriented type of leadership style has a focus on the internal organization (exploitation) simultaneous external organization (exploration) enhances individuals to share knowledge, which leads to ambidexterity. O’Reilly, Harreld &Tushman (2009) state that when organizations strive for ambidexterity at the firm level, an active form of leadership combined with dedicated leadership is necessary. Furthermore has prior research proven that effective leadership is very important, even critical when striven for ambidexterity (Lin & McDonough, 2011). Exploratory and exploitative
behavior of individuals requires different skills of senior management in order not to create conflict (Lin & McDonough, 2011). Because earlier research has proven there is a relation between transformational leadership and ambidexterity this study tested whether this relation is significant amongst the participants in this research. Therefore an assumption is made that the organizational driver transformational leadership has an influences on contextual ambidexterity and the following hypothesis was formulated:
Hypothesis 2: Transformational leadership positively influences contextual ambidexterity.
2.3 The mediating effect of effort and goals
Since many studies have investigated the direct relation between the organizational drivers monetary incentives and transformational leadership on contextual ambidexterity, this study is more focused on the mediation effect of effort and goals between them. It is presumed that effort and/or goals have a full or partial mediation effect between the variables described above. In the paragraph above it is presumed that monetary incentives influences contextual ambidexterity and transformational leadership influences contextual ambidexterity. The paragraph beneath will discuss the mediation effect, the literature and the following hypothesizes. 2.3.1. Monetary incentives and effort, effort and ambidexterity (A-path + B-path) Monetary incentives – Effort: In this research it is predicted that effort mediates fully or partially the relation between organizational drivers and contextual ambidexterity. Therefore this thesis first investigates whether there is a relation between the organizational drivers and effort, and then whether effort has an effect on contextual ambidexterity. In this section it is predicted that monetary incentives have an effect on effort. Prior research has proven that monetary incentives have a significant influence on effort (Bonner & Sprinkle, 2002). This means that when individuals are being incentivized their level of effort increases.
It is unclear what the amount of incentives should be in order to increase effort (Bonner & Sprinkle, 2002). Effort is closely related to performance. It is assumed that more effort leads to a higher level of performance. Reason for this assumption is that when individuals are being monetary incentivized for specific tasks their effort and willingness to perform this specific task increases and therefore performance increases. When individuals do not possess the specific skill set to perform this task correctly, monetary incentives will not lead to a higher level of effort (Bonner & Sprinkle, 2002). When individuals do posses a certain skill set to perform their job correctly effort should increase when being monetary incentivized. Therefore we assume that monetary incentives influences effort.
2.3.2. Effort – Ambidexterity: In this research it is predicted that effort mediates fully or partially the relation between organizational drivers and contextual ambidexterity. Therefore this thesis first investigates whether there is a relation between the organizational drivers and effort, as is described above and then whether effort has an effect on contextual ambidexterity. In this section it is predicted that effort has an effect on contextual ambidexterity. Effort is often seen in terms of how hard individuals work and how much work is being put in a specific task (Brown & Leigh, 1996). Griffen, Neal & Parker (2007) describe effort as task proactivity and the extent to which individuals are able to change their work environment. In this study effort is defined as the level of hard work and proactivity that is being put in a specific task. More specific, the level of effort bankers at Van Lanschot Bankiers put in a specific task. As described in the research model effort is used as a mediator and this study wants to find out if effort mediates fully or partially the relation between monetary incentives and contextual ambidexterity. Therefore an assumption is made that monetary incentives influences effort, which in turn influences ambidexterity. Therefore the following hypothesis where formulated:
Hypothesis 3: Monetary incentives influences effort, which in turn influences ambidexterity
2.3.3. Monetary incentives and goals, goals and ambidexterity (A-path + B-path) Monetary incentives – goals: In this research it is predicted that goals mediates fully or partially the relation between organizational drivers and contextual ambidexterity. Therefore this thesis first investigates whether there is a relation between the organizational drivers and goals, and then whether goals have an effect on contextual ambidexterity. In this section it is predicted that monetary incentives have an effect on goals. A positive relationship between monetary incentives and task performance or goal attainment was found in several empirical studies. For example Jenkins, Mitra, Gupta & Shaw (1998) found a correlation between incentives and quantity performance. Furthermore, in 2007 Schmidt and Deshon investigated the influence of incentives (like financial incentives) on goal attainment. When multiple goals were set, they predicted that more progress was associated and greater time was allocated to the goal with an incentive than the goal without an incentive (Schmidt & Deshon, 2007). The results demonstrated that people focused more on the goal with the incentive than the goal without the incentive. This study wants to find out if the participants in this study show a more goal oriented focus if they are being monetary incentivized than their level of goal setting when not being monetary incentivized and therefore an assumption is made that monetary incentives influences goals.
2.3.4. Goals – ambidexterity: In this research it is predicted that goals mediate fully or partially the relation between organizational drivers and contextual ambidexterity. Therefore this thesis first investigates whether there is a relation between the organizational drivers and goals, as is described above and then whether goals have an effect on contextual
ambidexterity. In this section it is predicted that goals have an effect on contextual
involved in the process of goal-setting. Thereby, employees should get the resources to pursue their goals. A performance management system like this will create a work environment that is supportive, with the result that employees will take their responsibility for getting results (Gibson & Birkenshaw, 2004). In their study, Gibson & Birkenshaw (2004) found a
significant correlation between this performance management and ambidexterity. This study wants to find out whether bankers at Van Lanschot Bankiers, when pursuing the correct goals potentially leads to a higher level of individual ambidexterity. As described in the research model, goals are used as a mediator and this study wants to find out if goals mediate fully or partially the relation between monetary incentives and contextual ambidexterity. Therefore an assumption is made that monetary incentives influences goals, which in turn influences ambidexterity. Therefore the following hypothesis where formulated:
Hypothesis 4: Monetary incentives influences goals, which in turn influences ambidexterity
2.3.5. Transformational leadership and effort, effort and ambidexterity (A-path + B-path) Transformational leadership – effort. In this research it is predicted that effort mediates fully or partially the relation between organizational drivers and contextual ambidexterity. Therefore this thesis first investigates whether there is a relation between the organizational drivers and effort, and then whether effort has an effect on contextual ambidexterity. In this section it is predicted that transformational leadership has an effect on effort. Prior research has proven the effect of transformational leadership on effort (Ling, Simsek Lubatkin, & Veiga, 2008). Effort is often seen in terms of how hard individuals work and how much work is being put in a specific task (Brown & Leigh, 1996). There are study’s conducted where the relation between transformational leadership and effort were significant (Ling et al., 2008). Piccolo, Greenbaum, den Hartog & Folger (2010) stated that leaders with a strong
commitment and demonstrate normative behavior can have a significant influence on the level of effort of individuals. In other prior research is proven that when individuals experience happiness in their job environment this leads to a higher level of effort and therefore better performance. When individuals experience a high level of motivation this works on their psychological state and therefore their level of effort (Parsons, 1968). The role of leaders should therefore be, to making sure individuals experience happiness in their work environment (Morgeson & Humphrey, 2006), because when individuals do not experience enthusiasm they can loose their level of effort (Manion, 2000). The results of the study from McColl-Kennedy & Anderson (2002) show that organizations should attract specific types of leaders since this enhances work optimism and effort. Since earlier research has proven a significant effect between transformational leadership and effort the assumption in this study is made that, transformational leadership influences effort.
2.3.6. Effort – Ambidexterity: In this research it is predicted that effort mediates fully or partially the relation between organizational drivers and contextual ambidexterity. Therefore this thesis first investigates whether there is a relation between the organizational drivers and effort, as is described above and then whether effort has an effect on contextual ambidexterity. In this section it is predicted that effort has an effect on contextual ambidexterity. Effort is often seen in terms of how hard individuals work and how much work is being put in a specific task (Brown & Leigh, 1996). Griffen, Neal & Parker (2007) describe effort as task proactivity and the extent to which individuals are able to change their work environment. In this study effort is defined as the level of hard work and proactivity that is being put in a specific task. More specific, the level of effort bankers at Van Lanschot Bankiers put in a specific task. As described in the research model effort is used as a mediator and this study wants to find out if effort mediates fully or partially the relation between transformational leadership and contextual ambidexterity. Therefore an assumption is made
that transformational leadership influences effort, which in turn influences ambidexterity. Therefore the following hypothesis where formulated:
Hypothesis 5: Transformational leadership influences effort, which in turn influences ambidexterity
2.3.7. Transformational leadership and goals, goals and ambidexterity (A-path + B-path) Transformational leadership – goals. In this research it is predicted that the mediator goals mediates fully or partially the relationship between transformational leadership and contextual ambidexterity. Therefore this study wants to find out whether transformational leadership has an effect on goals; goals have an effect on ambidexterity and if there is a mediation effect between this. Prior research has proven the effect of leadership on goals. Leadership is seen as an independent variable because it presumably may affect ambidexterity, which is seen as a dependent variable. Prior research has proven the effect of leadership on goals. Managers or team leaders play a crucial role in in the goal setting, achieving of teams or individuals. It is important that they create the correct climate and use the right motivation in order for
individuals and teams to achieve their goals (Barczak & Wilemon, 1989). Griffin (1979) adds that team leaders/managers have a primary goal in achieving goals. They need to clarify and lay out the correct path for individuals in order for them to achieve goals. An important aspect for leaders is to make sure their subordinates achieve their goals and create a structure. The literature describes two important types of structure: Structure, which focuses on the outlining of goals (result oriented) and structure which focuses more on the activities (process oriented) (Cleland, 1999). Bolman & Deal (1993) furthermore state that leaders need to be clear in what they expect of their subordinates by clarifying goals. This stimulates individuals in seeking for information in order to perform their job and therefore achieve their goal. This
study is interested if transformational leadership has a significant relation with goals within this test group. Therefore this study wants to find out whether transformational leadership has an effect on goals, goals have an effect on ambidexterity and if there is a mediation effect between this.
2.3.8. Goals – ambidexterity: In this research it is predicted that goals mediate fully or partially the relation between organizational drivers and contextual ambidexterity. Therefore this thesis first investigates whether there is a relation between the organizational drivers and goals, as is described above and then whether goals have an effect on contextual
ambidexterity. In this section it is predicted that goals have an effect on contextual
ambidexterity. Employees need to be encouraged to set ambitious goals and they need to be involved in the process of goal-setting. Thereby, employees should get the resources to pursue their goals. A performance management system like this will create a work environment that is supportive, with the result that employees will take their responsibility for getting results (Gibson & Birkenshaw, 2004). In their study, Gibson & Birkenshaw (2004) found a
significant correlation between this performance management and ambidexterity. This study wants to find out whether bankers at Van Lanschot Bankiers, when pursuing the correct goals potentially leads to a higher level of individual ambidexterity. As described in the research model goals are used as a mediator and this study wants to find out if goals mediate fully or partially the relation between transformational leadership and contextual ambidexterity. Therefore an assumption is made that transformational leadership influences goals, which in turn influences ambidexterity. Therefore the following hypothesis where formulated:
3. Research Methodology
Chapter three (research methodology) gives an overview of the methodology used in this thesis. It gives an overview of the used sample, how the data is collected and which measurements have been used in order to validate the several hypotheses.
3.1 Sample
The participants of this study are all employees of Van Lanschot Bankiers and carry the same job title. This is desirable for this study because this reflects the specific type of employees (bankers) within Van Lanschot Bankiers. This thesis research is performed on an individual level, therefore the validity of this study is more secured. The questionnaire that was used is based on all the constructs in the research model. The questionnaire was emailed throughout the organization by the regional managers secretary in order of the regional manager and was open from the eighteenth of November 2016 till fifteen December 2016. The questionnaire reached 150 individuals, which lead to a data set of 109 respondents. This is an initial response rate of 72%. After excluding the data set the total amount of N was N=99. This is not the largest data set but it is sufficient. The average age of the participants in this thesis is 43 years old. The youngest participant is 21 years old and the oldest participant is 58 years old. Of the 99 participants 31,96% was female and 68,04% was male. The average educational level of the 99 participants is a bachelor level education. The average years of employment at Van Lanschot Bankiers of the 99 participants is 7,54 year, where the most
3.2 Recoding
A check was performed if this dataset needed recoding. This was necessary because a seven-point liker scale was used where one was: agree a lot and seven was: disagree a lot. This would imply that a low output is negative and a high output is positive. This survey was exactly the opposite, therefore recoding was necessary. The data was recoded where a seven is now agree a lot and one is disagree a lot. This was better for further data analysis and interpretation.
3.3 Cronbach’s Alpha limitation
Cronbach’s alpha shows .830 for the overall data, which is very good. When alpha was checked for all the individual variables they didn’t show an alpha of >.700 for all the
variables, which would imply that certain items should not form a construct. As can be seen in table 1: Monetary incentives, transformational leadership, exploitation and Ambidexterity are > .700 which indicates a high level of internal consistency. The rest of the variables are < .700, which indicates a low reliability.
Table 1: Variables, Cronbach’s Alpha Variables Cronbach's Alpha Ambidexterity .720 Effort .615 Exploitation .829 Exploration .524 Goals .328 Tr. Leadership .919 Monetary incentives .738
3.4 Descriptive statistics.
In order to create measurable variables, means where computed. The variables are set up by the defined constructs in the survey. SPSS calculated al the means of the items, which can be seen in the table 2.
Table 2: Descriptive statistics.
N Minimum Maximum Mean Std. Deviation
Exploration 99 4,00 7,00 5,5202 0,60153 Exploitation 99 2,50 6,25 5,0758 0,78851 Ambidexterity 99 6,50 13,0 10,596 1,23065 Monetary 99 2,00 7,00 4,4061 1,04411 Leadership 99 2,80 6,60 5,3041 0,83191 Crossfunction 99 3,25 7,00 5,5690 0,81110 Effort 99 2,75 7,00 5,7121 0,74605 Goals 99 2,00 6,25 4,8030 0,73651 Valid N 99
What is interesting to see in the mean overview is that there appears to be some kind of skewness in the data. Participants had a choice between one and seven; therefore we can expect that that most means should be around three and a half. In this data set the means are around five, so slightly positive skewed.
3.5 Individual measures
3.5.1. Ambidexterity: Ambidexterity is a construct formulated by adding the means of exploration and exploitation (Lubatkin, Simsek, Ling, & Veiga, 2006). Therefore first, the construct exploration (Patel, Messersmith and Lepak, 2013) was measured by questioning the respondent’s seven questions and exploitation (Jansen, Tempelaar, Bosch & Volberda, 2015)
was questioned by five questions. A seven point likert scale questioned both constructs. Cronbach’s alpha measured .720 (see table 1), which is proven to be reliable.
3.5.2. Monetary incentives: The construct monetary incentives (Hsiu-Fen Lin, 2007) are measured by questioning the respondent’s seven questions. A seven point likert scale was used to in order to answer this questions. Cronbach’s alpha measured .738 (see table 1), which is proven to be reliable.
3.5.3. Transformational leadership: The leadership construct (McColl-Kenney & Anderson, 2002, A. Arnold, Arad, A. Rhoades and F. Drasgowwas 2016) measured by questioning the respondent’s sixteen questions. A seven point likert scale was used in order to answer these questions. Cronbach’s alpha measured .919 (see table 1), which is proven to be reliable. 3.5.4. Goals: Goals are a construct, which is measured by questioning the respondent’s five questions. A seven point likert scale was used in order to answer this question. Cronbach’s alpha measured .328 (see table 1), which is not reliable. I proposed potential reasons for this in chapter two, limitations.
3.5.5 Effort: The construct effort is measured by questioning the respondent’s five questions. A seven point likert scale was used in order to answer this question. Cronbach’s alpha measured .615, which is not reliable enough. Just as goals, I proposed potential reasons for this in chapter five, limitations.
4. Results
Chapter four gives an overview of the analysis conducted in SPSS. Based on the analyses conducted in SPSS and the results of this analyses the proposed hypothesis were rejected or accepted. Chapter four will start with a correlation overview to see if and were there are any correlations between the independent and dependent variable. Following, the results of the tests of the hypothesizes will be presented.
4.1 Correlations
In SPSS a bivariate correlation was performed in order to give an overview of relations between all the variables. There are a lot of correlations amongst all the variables (see table 3)
Table 3: correlations amongst all variables
Correlations
Ambidex Explorat Exploitat Monetary Leaders Effort Goals
Ambidexter 1 0,847** 0,914** 0,157 0,323** 0,265** 0,184 Exploration 0,847** 1 0,560** 0,005 0,269** 0,213* 0,214* Exploitation 0,914** 0,560** 1 0,242* 0,299* 0,251* 0,124 Monetary 0,157 0,005 0,242* 1 -0,014 0,000 -0,255** Leadership 0,323** 0,269** 0,299** -0,014 1 0,402** 0,372** Effort 0,265** 0,213* 0,251* 0,000 0,402** 1 0,182 Goals 0,184 0,214* 0,124 -0,255** 0,372** 0,182 1
4.2 Regression
To test whether the relation between the dependent and independent variables are significant a regression analysis was conducted. Lubatkin, Simsek, Ling, & Veiga (2006) suggest adding the means of Exploration and Exploitation to create a new mean: Ambidexterity. The coefficients results shows that the correlation between leadership and ambidexterity with a P=0,001, B*0,481 and t=2,540 is significant and the correlation between monetary incentives and ambidexterity with a P=0,092, B*0,191 and t=2,032 is not significant. Therefore, significant correlation exists between leadership and ambidexterity. Consequently, leadership has a positive impact on ambidexterity. If the leadership measurement increases by one point, ambidexterity increases by 0,481.
Table 4: Regression Results Ambidexterity
Testing of independent variables against Ambidexterity
Model Standardized
Unstandardized Coefficients Coefficients
B Std. Error Beta t Sig.
1 (Constant) 7,202 0,909 4,686 0,000
Monetary 0,191 0,112 0,162 2,032 0,092
Leadership 0,481 0,141 0,325 2,540 0,001
a. Dependent Variable: Ambidexterity F= 5.065
4.3 Regression process Hayes include mediator
This research proceeded with adding a mediator effect. In order to test this mediation effect, the Process macro written by Andrew F. Hayes PhD for SPSS was used. Figure 2 shows: M represents the mediator, X the independent variable, Y the dependent variable. The mediators that are used are: effort and goals. Does putative causal X influences outcome Y through one
or more mediator variables (M)
Figure 2: Process model 1
As stated in figure 1 research model, this thesis wants to test the indirect effect if leadership (X) influences contextual ambidexterity (Y) through the mediator goals and effort (M), (X) à (M) à (Y). The direct/total effect is already explained by regression as can be seen in table 4.
4.3.1. Leadership (X), ambidexterity (Y), mediator’s effort and goals (M). The data, as can be seen in appendix 1, provides output that leadership has a significant relationship with effort P=0,000 = <0,05. The organizational driver leadership also has a significant relationship with goals P=0,0002 = < 0,05. The proposed model explains 13,39% of variance in ambidexterity (R2 = .1339) that is significant since P=0,0185. Both of the mediators are significantly and positively related to ambidexterity when we hold leadership as constant since al P values are >0,05.
Total effect. The total effect of X on Y is significant with P=0,0011 and Booth LLCI of 0,1957 and Booth ULCI of 0,7600. There is no direct effect of leadership (X) on ambidexterity (Y), with a P value of P=0,0651. The indirect effect of leadership (X) on
includes zero so not significant. Since the indirect (a-path * b-path) is not statistically significant, no mediation has occurred. The mediator goals are also not significant since booth includes zero. The data shows that there is a total effect that can be seen in the regression table (table 4), this can also be tested without the use of this model. There is no direct effect between leadership (X) and ambidexterity (Y). Furthermore there is no indirect effect (a-path * b-path = c-path) and therefore no mediation has occurred.
4.3.2 Monetary incentives (X), ambidexterity (Y), mediator effort, commitment, goals stress (M). The data, as can be seen in appendix 1, shows that monetary incentives do not have a significant relationship with effort P=0,9972 = <0,05. Monetary incentives do have a significant relationship with goals P=0,0110 = < 0,05. The proposed model explains 14,30% of variance in ambidexterity (R2 = .1430) that is significant since P=0,0123. Effort is significantly and positively related to ambidexterity when we hold monetary incentives as constant since P= <0,0220. Goals are not significant.
Total effect. The total effect of monetary incentives (X) on ambidexterity (Y) is not significant with P=0,1196 and Booth LLCI of 0,0490 and Booth ULCI of 0,4201. There is a direct effect of monetary incentives (X) on ambidexterity (Y) since P=0,0365, Booth LLCI 0,0162 and booth ULCI 0,4869. The indirect effect of monetary incentives (X) on ambidexterity (Y) through effort and goals are both not significant since the booth strap model shows that Effort includes zero in the Booth model and therefore not significant. Goals also include zero in the booth model and therefore are not significant. The data shows that there is a direct effect between monetary incentives and leadership. There is no indirect effect (a-path * b-path = c-path) since this value is not statistically significant, and therefore no mediation has occurred.
4.4 Hypothesis results
Hypothesis 1: Monetary incentives positively influence contextual ambidexterity. To test whether the independent variable monetary incentives have a direct relation with contextual ambidexterity, the dependent variable, a regressions analysis was executed. The regression model executed in SPSS shows not a significant correlation between the independent and dependent variable with a sig. of 0.092 and a ß of 0.191. This means that monetary incentives explain 19% of the variance in contextual ambidexterity. Hypothesis 1 not accepted.
Hypothesis 2: Transformational leadership positively influences contextual ambidexterity. To test whether the independent variable transformational leadership has a direct relation with contextual ambidexterity, the dependent variable, a regressions analysis was executed. The regression model executed in SPSS shows a significant correlation between the independent and dependent variable with a sig. of 0.013 and a ß of 0.372. This means that transformational leadership explains 37% of the variance in contextual ambidexterity. Hypothesis 4 is confirmed.
Hypothesis 3: Monetary incentives influences effort, which in turn influences ambidexterity. To test whether the independent variable monetary incentives has an effect on the dependent variable contextual ambidexterity through the mediator effort a mediation effect was tested. This test was conducted via SPSS and the process Hayes macro was used. Relation a1 explains the relation between monetary incentives and effort which tested P = 0,9972 and therefore not significant. Relation b1 explains the relation between effort and contextual ambidexterity. B1 has a P value of P = 0,0220 and therefore significant. A1b1 relation, the indirect effect of monetary incentives on contextual ambidexterity through effort is non-significant (LLCI and ULCI include zero). Moreover, the effect size of effort (-.0001) is very
close to zero, so there’s basically no effect. Effort does not mediate, fully or partially the relation between monetary incentives and contextual ambidexterity in this study and therefore hypothesis 3 was not accepted.
Hypothesis 4: Monetary incentives influences goals, which in turn influences ambidexterity. To test whether the independent variable monetary incentives has an effect on the dependent variable contextual ambidexterity through the mediator goals a mediation effect was tested. This test was conducted via SPSS and the process Hayes macro was used. Relation a1 explains the relation between monetary incentives and goals which tested P = 0,0110 and is therefore significant. Relation b1 explains the relation between goals and contextual ambidexterity. B1 has a P value of P = 0,0611 and is therefore not significant. A1b1 relation, the indirect effect of monetary incentives on contextual ambidexterity through goals is non-significant (LLCI and ULCI include zero). The effect size of goals (-.0586) is substantial. Goals do not mediate, fully or partially the relation between monetary incentives and contextual ambidexterity in this study and therefore hypothesis 4 was not accepted.
Hypothesis 5: Transformational leadership influences effort, which in turn influences ambidexterity. To test whether the independent variable transformational leadership has an effect on the dependent variable contextual ambidexterity through the mediator effort, a mediation effect was tested. This test was conducted via SPSS and the process Hayes macro was used. Relation a1 explains the relation between leadership and effort which tested P = 0,0000 and therefore significant. Relation b1 explains the relation between effort and contextual ambidexterity. B1 has a P value of P = 0,1098 and therefore not significant. A1b1 relation, the indirect effect of transformational leadership on contextual ambidexterity through effort is non-significant (LLCI and ULCI include zero). Moreover, the effect size of effort
(0,1061) so there is an effect but not significant. Effort does not mediate, fully or partially the relation between transformational leadership and contextual ambidexterity in this study and therefore hypothesis 5 was not accepted.
Hypothesis 6: Transformational leadership influences goals, which in turn influences contextual ambidexterity. To test whether the independent variable transformational leadership has an effect on the dependent variable contextual ambidexterity through the mediator goals, a mediation effect was tested. This test was conducted via SPSS and the process Hayes macro was used. Relation a1 explains the relation between transformational leadership and goals which tested P = 0,0002 and therefore significant. Relation b1 explains the relation between effort and contextual ambidexterity. B1 has a P value of P = 0,5716 and therefore not significant. A1b1 relation, the indirect effect of transformational leadership on contextual ambidexterity through goals is non-significant (LLCI and ULCI include zero). Moreover the effect size of effort (0,345), so there is an effect but not significant. Goals do not mediate, fully or partially the relation between transformational leadership and contextual ambidexterity in this study and therefore hypothesis 6 was not accepted.
5. Discussion
In today’s environment it is more and more crucial for organizations and individuals to keep alignment with their environment (Burns and Stalker, 1961; Morgan, 2006). The level of adaptation becomes more important since the world around us is changing in a rapid pace. Technological systems and social media give us an insight in what happens around us. This makes that organizations and individuals are well informed and therefore expect a high level of adaptation (Burns & Stalker, 1961; Morgan, 2006). Organizational drivers play an important role in this level of adaption. This research predicted the relation between the organizational drivers transformational leadership and monetary incentives and if there is a fully or partially mediation effect when the mediators effort and goals are involved between organizational drivers and contextual ambidexterity. Therefore the following research question was formulated: What are the effects of organizational drivers upon contextual ambidexterity and is there a mediation effect when effort and goals are involved?
Since prior research has confirmed the significance of the role that transformational leadership (organizational driver) has on different types of ambidexterity (Wang, Chou & Jiang, 2005; McColl-Kenney & Anderson, 2002; Lin & McDonough, 2011) the assumption was made that this was the case in this study. The results of the data analysis of this study showed that transformational leadership has a significant influence on contextual ambidexterity. Because prior research has proven that effective leadership is very important, even critical, when striven for ambidexterity (Lin & McDonough, 2011) it is satisfying to see that the relation in this thesis is significant. In practice for Van Lanschot Bankiers, this can mean that managers need some form of training to learn more transformational leadership methods. Second, HR can use this data in their hiring process when hiring leaders/managers.
Although prior research has confirmed the relation between monetary incentives (organizational driver) and ambidexterity (Ahammad, Lee, Malal & Shoham, 2015; Birkenshaw, 2004), the results of this thesis show that monetary incentives do not have a significant influence on contextual ambidexterity. This is interesting because an assumption can be made that monetary incentives works as a stimulating effect (Bridoux et al., 2011). There is sufficient prior research on this topic to assume that there was a significant relation between monetary incentives and contextual ambidexterity (Ahammad, Lee, Malal & Shoham, 2015; Birkenshaw, 2004). The reason for a low sig. of 0.092 and a ß of 0.191 can be the number of participants in this study, 99 respondents are sufficient but a bit low. Cronbach’s alpha scored well for this particular hypothesis. Therefore, for further research I suggest to increase the number of participants and it would be interesting to see if the relation between monetary incentives and contextual ambidexterity is significant when the level of participants increases.
The results of this study also show another interesting aspect and that is that there is no significant partially or fully mediation effect. Effort and goals do not have a mediating role when it comes to the relation between organizational drivers, transformational leadership and monetary incentives, and the dependent variable contextual ambidexterity. Prior research, as discussed above, has shown the individual relations between the dependent and independent variables and therefore an assumption was made that there was a significant partially or fully mediation effect. As described above, this thesis does not show a significant mediation effect. Goals and effect do not have a mediation effect on the tested organizational drivers transformational leadership and monetary incentives and the dependent variable contextual ambidexterity. There can be multiple reasons for this. Unfortunately Cronbach’s alpha did not score sufficient for both of the mediators, which can imply that the reliability is not sufficient.
Furthermore, as mentioned above, the number of participants can be a reason that there is not significant relation. Future researchers can investigated whether adding constructs can solve the Cronbach’s reliability issue and potentially leads to a different output.
What are the effects of organizational drivers upon contextual ambidexterity and is there a mediation effect when effort and goals are involved? This thesis has proven that there is a direct effect between the organizational driver transformational leadership and contextual ambidexterity. The data shows that there is no relation between monetary incentives and contextual ambidexterity. Furthermore, goals and effort do not show a significant partially or full mediation effect.
5.1 Theoretical Implications
The theoretical goal of this thesis was to find out whether the organizational drivers monetary incentives and transformational leadership has an effect on contextual ambidexterity and whether these drivers can be mediate by the mediator’s effort and goals. The organizational driver transformational leadership shows a strong significant relation with contextual ambidexterity. This was expected since prior researchers who did research on this topic conforms this relation (Lin & McDonough, 2011). Transformational leadership has a strong significant influence on the level of contextual ambidexterity. This means that when team leaders/managers behave in a correct way this leads to more ambidextrous behavior.
The organizational driver monetary incentives do not show a significant relation with contextual ambidexterity. Birkenshaw (2004) investigated if monetary incentives had an effect on ambidexterity and in his research this effect was significant. An assumption is made in this study that the reason for not showing a significant relation between monetary incentives and contextual ambidexterity is due to the relative low sample size of this study.
This makes sense because lot of research has been done on this topic and the majority shows a significant effect. Furthermore there are no significant mediation effects between the organizational drivers and contextual ambidexterity. Effort and goals do not partially or fully mediate between transformational leadership, monetary incentives and contextual ambidexterity. This study has only proven one significant relation and that is the relation between transformational leadership and contextual ambidexterity.
5.2 Practical Implications
Some practical implications that can be derived from this study are the significant relation between transformational leadership and contextual ambidexterity. The results show a strong significant effect with P = 0,001. This level of significance means that transformational leadership is a very important aspect when striving for contextual ambidexterity. When organizations want to improve the contextual behavior of individuals they need to focus on the behavior of the team leaders/managers in general and a single type of leadership style. Unfortunately this study does not show further significant relations between the other organizational driver and the mediators. There is no fully or partially significant mediation effect proven. As described above an assumption is made that when the level of participant’s increases and a new correlation and mediation analysis is performed the results may be different. This assumption is based on the results of prior results. This could then lead to new practical insights.
5.3 Limitations
5.3.1. Cronbach’s Alpha
There are a number of limitations in this study. First, as is described above do not all the variables show a Cronbach of .700. This is a limitation for this research. A low alpha in this research can have several reasons. Normally n=99 should be sufficient for an acceptable Alpha. It can be that the translation from English to Dutch has caused this problem. The questions gathered for the constructs are from initial papers where there was no Alpha problem mentioned. Furthermore it can be an interpretation problem or the scale reliability is not optimal. For this study there was no further time to increase N but if individuals continue to build on this thesis they should probably increase N. Furthermore a test was conducted whether Cronbach’s alpha could be increased by “scale if item deleted” but this was very minimal. Therefore there are no questions deleted.
5.3.2. Sample size
Second, the sample size that is reached in this study is N=99. This is the minimum what is needed in order to perform research. Therefore the statistical power is relative low. An assumption can be made that when the sample size was larger there was a relation between monetary incentives and that the mediators effort and goals showed a fully or partially mediation effect.
5.3.3 Interpretation of survey
The third and last limitation of this study is the correct translation of the survey questions. The mother language at Van Lanschot Bankiers is Dutch and not all the participants speak English, therefore all the survey questions that where gathered from other studies where translated to Dutch. This could lead to a lower alpha in this study and weaker correlation between the constructs.
5.4 Future Research
When individuals continue building on this thesis an interesting topic would be to find out why effort and goals do not mediate between organizational drivers. There are several studies conducted which explain the relation between organizational drivers and contextual ambidexterity. Current literature does not sufficient explain the relation between the mediators effort and goals and contextual ambidexterity, further research in this topic is recommended since ambidextrous behavior has proven to be very useful.
6. CONCLUSION
In this thesis the influence of organizational drivers on contextual ambidexterity amongst employees at Van Lanschot Bankiers is researched. This study adds knowledge to the existing research that has been done on contextual ambidexterity and organizational drivers. Furthermore, a significant contribution is added to the literature about the relation between effort and goals on contextual ambidexterity and effort and goals as a mediator effect between drivers and ambidexterity. The results of this study show that there is a significant influence between the organizational driver transformational leadership and contextual ambidexterity. However the mediator’s effort and goals do not fully or partially influence the relation between them. The driver monetary incentive does not have a significant influence on contextual ambidexterity. The mediator’s effort and goals do not fully or partially influence the relation between them.
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Appendix I: Mediation output ************************************************************************** Model = 4 Y = Ambidext X = Leadersh M1 = Effort M2 = Commitme M3 = Goals M4 = Stress Sample size 99 ************************************************************************** Outcome: Effort Model Summary R R-sq MSE F df1 df2 p ,4015 ,1612 ,4717 18,6426 1,0000 97,0000 ,0000 Model
coeff se t p LLCI ULCI
constant 3,8023 ,4477 8,4933 ,0000 2,9138 4,6908 Leadersh ,3601 ,0834 4,3177 ,0000 ,1946 ,5256 ************************************************************************** Outcome: Commitme Model Summary R R-sq MSE F df1 df2 p ,1435 ,0206 ,9617 2,0394 1,0000 97,0000 ,1565 Model
coeff se t p LLCI ULCI
constant 3,5147 ,6393 5,4980 ,0000 2,2459 4,7834 Leadersh ,1701 ,1191 1,4281 ,1565 -,0663 ,4064 ************************************************************************** Outcome: Goals Model Summary R R-sq MSE F df1 df2 p ,3719 ,1383 ,4722 15,5679 1,0000 97,0000 ,0002 Model
coeff se t p LLCI ULCI
constant 3,0567 ,4480 6,8238 ,0000 2,1677 3,9458 Leadersh ,3292 ,0834 3,9456 ,0002 ,1636 ,4948
