The effect of transformational leadership on organizational ambidexterity as a function of environmental dynamism.

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Master Thesis

The effect of transformational leadership on

Organizational Ambidexterity as a function of

environmental dynamism

Student: A.C. Zeestraten

10291741 – EP business studies – Master thesis, track Strategy Arco.Zeestraten@gmail.com

Supervisor: Dr. Dipl.-Wirt.-Ing. S. Kortmann

Assistant Professor of Strategy and Innovation S.Kortmann@uva.nl

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ABSTRACT

This research presents the influence of transformational leadership on the coexistence of explorative and exploitative activities (Organizational Ambidexterity), moderated by environmental dynamism. Data was collected both national and international, mainly in the Netherlands and Asia. The data was retrieved from 290 respondents, from which 242 respondents completed the questionnaire. Findings indicate that transformational leadership behaviors, in the English data, significantly correlate with Organizational Ambidexterity. On the other hand it is found that transformational leadership behavior in the Dutch data is not significantly correlated with Organizational Ambidexterity. In addition, I argue that environmental dynamism should be taken into account to deepen the understanding of the effects of transformational leadership behavior on the coexistence of the exploitative and explorative activities. Findings indicate that a moderating effect of environmental dynamism is not supported, for both the English and Dutch data. In addition it is found that environmental dynamism and Organizational Ambidexterity do correlate significantly. This leads to an opportunity for further research on environmental dynamism as an antecedent of Organizational Ambidexterity. Hence, I contribute to further understanding and debate on the role and effects of transformational leadership on Organizational Ambidexterity, including the impact of transformational leadership upon dynamic environmental conditions.

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TABLE

OF

CONTENTS

ABSTRACT ... 2 TABLE OF CONTENTS ... 3 INTRODUCTION ... 4 LITERATURE REVIEW ... 9 Organizational ambidexterity. ... 9 Transformational leadership... 14 THEORETICAL FRAMEWORK. ... 18

Transformational leadership and Organizational Ambidexterity... 20

METHODOLOGY ... 25 Measurements of variables. ... 27 Organizational Ambidexterity. ... 27 Transformational leadership. ... 29 Environmental dynamism. ... 30 Statistical procedure. ... 30 RESULTS ... 34 Correlation analysis. ... 34 Regression analysis. ... 35

DISCUSSION AND CONCLUSION ... 40

IMPLICATIONS ... 44

Implications for theory. ... 44

Implication for practice. ... 45

Limitation and future research... 45

REFERENCES ... 48

APPENDIX ... 54

Appendix 1: Dutch questionnaire. ... 54

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INTRODUCTION

“Firms are increasingly confronted with paradoxical challenges of exploiting existing competencies and exploring new ones” (Vera & Crossan, 2004). The capability of simultaneously exploiting current capabilities and exploring new competencies is called organizational ambidexterity (Raisch et al., 2009; Jansen et al., 2009; Gibson & Birkinshaw, 2004). Research on Organizational Ambidexterity began with Duncan (1976 in Gibson & Birkinshaw, 2004), which firstly described ‘the ambidextrous organization’, with a typical view about managing the trade-offs between the conflicting demands organization’s face. To be more concrete, I quote the definition of Organizational Ambidexterity from Lubatkin et al. (2006, p. 647): “ambidextrous firms are capable of exploiting existing competencies as well as exploring new opportunities with equal dexterity”.

The definition of Lubatkin et al. (2006), and the early view on ambidextrous organizations by Duncan (1976 in Gibson & Birkinshaw, 2004), have three important aspects in it. At first, Duncan (1976 in Gibson & Birkinshaw, 2004) introduced ‘dual structures’ in order to manage the conflicting demands an organization faces. This ‘dual structures’ means that certain business units focus on exploitative activities, while other business units focus on explorative activities. The second aspect is derived from the definition of Lubatkin et al. (2006), which defines Organizational Ambidexterity as a capability. Third, Lubatkin et al. (2006) mentioned the way how explorative and exploitative activities should relate to each other, with the words ‘equal dexterity’. The interpretation of these three aspects further form this research on: the level of analysis, the measurement of Organizational Ambidexterity, and the antecedents of Organizational Ambidexterity.

Organizational Ambidexterity is considered to be an important concept for organizational performance. It is argued that sustained organizational performance is rooted in the exploitation and exploration activities of an organization (He & Wong, 2004; Birkinshaw & Gibson, 2004; Jansen et al., 2009). Although, the pursuit of Organizational Ambidexterity is no

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guarantee to performance, because it’s harsh to balance exploitative and explorative activities.

The exploitative and explorative activities apart might even have a dark side on performance when operationalized apart (Rothaermel & Alexandre, 2009; Yang & Li, 2011). For example, a potential risk is that exploration leads to failure, which leads to more explorative activities to compensate this failure (Gupta et al., 2006). These firms will never gain return of its knowledge and suffer (Levinthal & March, 1993 in Lubatkin, 2006).

An earlier researched antecedent of Organizational Ambidexterity is transformational leadership (Jansen et al., 2009). I expect this relationship to be important, because of the integrative efforts needs to be done to appropriate the potential value from these separated activities (Jansen et al, 2009). Because of the separated activities, leaders should manage contradictory goals, engage in paradoxical thinking, and fulfill multiple roles (Raisch et al., 2009, p. 687). This in order to prevent the firm from the drawback from separating the activities, which can lead to isolation (Jansen et al., 2009).

A leader makes strategic choices, which are representing ‘weak situations’ that are complex and ambiguous. In these situations, the choices leaders make can vary, which allows them to insert aspects of themselves, and thus distinguish the firm from others (Waldman et al., 2004). Therefore, I argue the importance of leadership to be the foundation of the firms’ success.

Transformational leadership is the most effective leadership style in general because of the achieved performance of the employees, and the rate of satisfaction the employees indicate (Lowe et al., 1996). Transformational leaders are also able to formulate and communicate a vision towards the employees, and can even be seen as marking a new stage (Levay, 2010). Transformational leadership is seen as giving a sense of meaning to work.

To further conceptualize the construct of transformational leadership, and making the relationship with Organizational Ambidexterity explicit, I quote a definition of De Hoogh et al., (2005, p. 840): “Transformational leaders […] are believed to change the status quo by infusing work with meaning so that followers’ energies are mobilized to respond quickly and effectively

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to demands of the [organizational] environment”. An aspect of this definition, ‘change the status

quo’, can be related to the explorative activities of the Organizational Ambidexterity concept. I see this as a direct reference that organizations shouldn’t only focus on exploitative activities, but also need to focus to change the ‘status quo’.

At the first place, exploration became relevant due to the dynamics in the world (Andriopoulos & Lewis, 2009). This because innovation (exploration) may be the ultimate advantage and challenge for firms in a dynamic environment. I also extend this view, that environmental dynamism is an important driver for Organizational Ambidexterity.

Environmental dynamism is an early researched construct in relation with organizational behavior. This early research argued that customers, suppliers, competitors, and regulatory groups have the greatest impact on goal attainment (Dill, 1958, p. 424). Environmental dynamism refers to the rate of change, absence of pattern, and unpredictability of the environment (Dess & Beard, 1984 in Priem et al., 1995). Confronting the elements from Dill (1958) and conditions of Dess & Beard (1984) leads to for example: change in technology, fluctuation in product demand or supply of materials, and variations in customer preferences, as characteristics of environmental dynamism.

A part of environmental dynamism, environmental uncertainty, is found to be positively moderating the relationship between transformational leadership and performance (Waldman et al., 2001 in De Hoogh et al., 2004). Other parts of the construct environmental dynamism, are argued to increase the effectiveness of transformational leadership on followers (De Hoogh et al., 2004, p. 452). These assumption is reinforced by Nemanich & Vera (2009, p. 28) suggesting that transformational leadership is likely to be more effective in situations that are exceptional, where the transformational leader helps the employee to see the dynamic environment as an opportunity.

It’s obvious to state that Organizational Ambidexterity exists because of environmental dynamism. If environmental dynamism wouldn’t exist, it is suggested that there will be no

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change in customer preferences, no change in customer demand, and no change in technology.

This would suggest that products won’t ever be obsolete. In practice, environmental dynamism is an antecedent for Organizational Ambidexterity, which makes exploratory activities necessary in order to overcome obsoleteness (Jansen et al., 2006).

So far, Organizational Ambidexterity is an under researched topic. This research will provide answers to a gap found in the literature, and will contribute to the existent literature about the effect of transformational leadership on Organizational Ambidexterity, moderated by environmental dynamism.

The literature provides insight in the effect of transformational leadership on Organizational Ambidexterity. Even literature is found which examined the relationship between transformational leadership on the exploitation and exploration constructs apart. A gap is found how environmental dynamism moderates the effect of transformational leadership on the co-existence of exploitation and exploration together, which I refer as Organizational Ambidexterity. I expect that under a high degree of environmental dynamism, the effect of transformational leadership on Organizational Ambidexterity is stronger than under a low degree of environmental dynamism. The rationale is that, as earlier stated, transformational leadership is more effective under environmental dynamism. This will increase the effect of transformational leadership in general.

On the other hand, I expect Organizational Ambidexterity to be more important under a high degree of environmental dynamism. In this situation, the product-life-cycles shorten, so the firm must make the product or services profitable, before it’s obsolete (exploitation). On the other hand, also because of the short life-cycle and rapidly changing technology, and customer demands, new products should be invented continuously in order to prevent obsolescence (exploration).

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By combining these insights, I propose that under high environmental dynamism,

transformational leadership is more effective, and firms need to be more ambidextrous under high environmental dynamism. I thus propose that these concepts strengthen each other. This will lead to the following research question:

Does the effect of transformational leadership on organizational ambidexterity differ as a function of environmental dynamism?

The research starts with a literature review on the constructs of Organizational Ambidexterity, transformational leadership, and environmental dynamism. The following section will provide insight in the hypothesis. The third section will contain the research method, measures and investigated types of organizations. The fourth part will present empirical data. The results will be discussed in the fifth part. This part will include the main findings, and how these finding will contribute to the existing knowledge on the subject of Organizational Ambidexterity. Final part are the restraints of the conducted research and future directions.

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LITERATURE

REVIEW

In this section I will present relevant existing literature on the topic of organizational ambidexterity, and transformational leadership.

O

RGANIZATIONAL AMBIDEXTERITY

.

To begin, it’s important to deeply understand the meaning of the word ‘ambidexterity’. Ambidexterity is derived from two Latin words: ‘amber’ and ‘dexter’, which means ‘both’ and ‘right’ (Simsek, 2009). ‘Right on both sides’ is a reference towards doing two different things equally well at the same time.

The underlying concepts of Organizational Ambidexterity, are exploitation and exploration. Early research have already referred to these concepts, although not that explicit, by mentioning the tension between efficiency and flexibility (Adler et al., 1999). The characteristics for the concepts of exploitation and exploration are elaborated in past years. The exploitation concept is mostly characterized in the literature as: efficiency, selection, execution (Nemanich & Vera, 2009), centralization, and tight cultures (Benner & Tushman, 2003, p. 247). On the other hand, the exploration concept is mostly characterized as: risk-taking, experimentation, innovation (Nemanich & Vera, 2009), flexibility, decentralization, and loose cultures (Benner & Tushman, 2003, p. 247).

The idea behind Organizational Ambidexterity is that the demands of the environment of an organization are always in conflict (Gibson & Birkinshaw, 2004). For example there are decisions which has to be made whether to invest in a current project, or high potential future project. Also technological downturn or political instability (environmental factors) can drive up the tension between today and tomorrow. These tradeoffs have to be managed. To be more concrete, it’s important for an organization to adapt to the changing environment, and move quickly to new opportunities in order to avoid complacency (Birkinshaw & Gibson, 2004). On the other hand, it’s also important to not only be innovative and proactive, but also emphasize

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the exploitation activities like exploiting currents assets, rolling out existing business models

quickly, and lower exploitation costs (Birkinshaw & Gibson, 2004).

Although it’s quite clear that there’s a tension between the concept of exploitation and exploration, it’s not clear how these concepts should be structured in order to strengthen each other. In order to get a deeper understanding of Organizational Ambidexterity, I describe four different types of Organizational Ambidexterity (as in example of Kortmann, 2012) and the relation between exploration and exploitation. The forms I describe are: sequential, innovative, contextual, and structural Organizational Ambidexterity.

Sequential Organizational Ambidexterity is a form of ambidexterity based on the evolutionary and dynamic capability theories. Zollo and Winter (2002) have captured the exploitative and explorative activities in the evolutionary theory loop (variation, selection, and retention). The argument is that each cycle begins with the variation stage (exploration stage), where a group or individuals generate a set of ideas how to approach a problem in novel ways (Zollo & Winter, 2002, p. 343). The third phase of the cycle is the initiative of leveraging the novel solution into the organizational context (exploitation). With this view, Venkatraman et al. (2007) argues that the organization faces two different temporal orientations (present and future). This form of Organizational Ambidexterity is a form of punctuated equilibrium model. This theory differs from the convention that Organizational Ambidexterity is being explorative and exploitative at the same time. However, modern contingency theory shows that alignment is a dynamic process, rather than a static one. Organizations have to continuously reconfigure their activities to meet the demands (Raisch et al., 2009).

Innovative Organizational Ambidexterity is the ability to pursue simultaneously both incremental and discontinuous innovation within the same firm (Tushman & O’Reilly, 1996). The leader should increase the fit among structure, culture, strategy, and processes, while at the same time preparing for the next revolution. Tushman & O’Reilly argue that focusing on either one is easy, but will lead to short-term success and long-term failure (1996, p. 11). Organizations

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face a pattern with periods of incremental change punctuated by discontinuity or revolutionary

change. The discontinuity change are mostly driven by major shifts in the environment (competition shifts) or organizational performance problems. The focus of this research on Organizational Ambidexterity is to pursuit ambidextrous behavior in order to prevent organizational performance problems. This focus doesn’t match the punctuated equilibrium thoughts of Innovative Organizational Ambidexterity.

The contextual form of Organizational Ambidexterity is based on the trust in the employee’s judgment about how to divide their time. The employee decides if he should work to meet the target at current customers account or he should chase new customers with different needs. Research from Birkinshaw & Gibson (2004) shows that an individual needs four ambidextrous behaviors for successfully executing contextual Organizational Ambidexterity. First an ambidextrous individual need to take initiative and being alert towards opportunities. Second, ambidextrous individuals needs to be cooperative and look out to combine their efforts with other individuals. Third, ambidextrous individuals should be alert to build internal linkages in the organization in order to combine their knowledge. At last, ambidextrous individuals needs to be multitaskers, or in other words: ‘wearing more than one hat’. We can state that when an individual is ambidextrous in terms of mentioned behaviors, the individual is more likely a generalist than specialist.

Structural Organizational Ambidexterity is achieved through structurally separating the contradicting explorative and exploitative activities (Benner & Tushman, 2003). The logic behind separating the explorative and exploitative activities is allowing the coexistence of inconsistent and paradoxical efforts while not harming each other because of the different focus. This separation builds a sense of ownership over specific work activities which generates some form of flexibility to adapt to challenges in the specific task environment (Jansen et al., 2009). A lot of attention is given to the competitive benefits of combining exploration and exploitation, but less attention is given to the fundamentally different and inconsistent competencies that

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create paradoxical challenges (Jansen et al., 2009). The downside of separating exploratory and

exploitative activities is that separation can lead to isolation (Birkinshaw & Gibson, 2004). When coordinating efforts fail, the exploratory unit’s new innovation won’t be accepted because they miss the linkage to the core of the business.

All four forms of Organizational Ambidexterity agree about the tension between exploration and exploitation, and that this should be managed properly. However, no one gives direction to which extend the exploration and exploitation activities should match to each other. Should a firm have an equal amount of explorative activities as exploitative activities, or should a firm strive for the greatest sum of Organizational Ambidexterity?

Illustration of Different Conceptualizations of Organizational Ambidexterity. Exploration

score Exploitation score Assessment of balance dimension of Ambidexterity Assessment of combined dimension of Ambidexterity

Firm A 10 5 Low High

Firm B 5 5 High Low

Table 1. source: Cao et al., 2009, p. 783.

The assessment of the balanced dimension of Organizational Ambidexterity is based on the orientation to maintain a close balance between explorative and exploitative activities (Cao et al., 2009). The logic is that in this view exploration and exploitation compete for resources and orient for different organizational goals. Balancing Organizational Ambidexterity contributes to the firm performance through controlling performance risks. When a firm’s magnitude of exploitation exceeds that of its exploration, the firm faces the risk of obsolescence. On the other hand, when a firm overemphasize the exploration activities despite of the exploitation activities, the firm faces the risk of failing to appropriate returns from its experimentation (Cao et al., 2009).

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Central to the concept of combined Organizational Ambidexterity is that exploratory and

exploitative activities are not always in conflict, and not always compete each other. In fact, Cao et al. (2009) argue that exploratory and exploitative processes can be supportive to each other, and may help leveraging the effects of the other. I relate this theory to a sequential form of thinking, because it is based on developing resources, which support other resources. A high degree of exploitative efforts can improve the firm’s effectiveness on exploring new knowledge and developing resources (Cao et al., 2009). By using existing knowledge and resources, management have a deeper understanding of the functionality of the existing resources. This deeper understanding is a basis for reconfiguration of the existing knowledge and novel discoveries in the markets.

The option whether to pursue balanced or combined Organizational Ambidexterity depends on the amount of resources a firm has available, and how munificent the environment is in relation towards the availability of resources. It is found that when a firm is more resource constrained, like small firms, it benefits more from balancing exploitation and exploration than combining the activities. Conversely, when a firm is operating in a more munificent environment, combined Organizational Ambidexterity is more beneficial (Cao et al, 2009). This because it’s easier to obtain the necessary resources to effectively pursue high level of exploration and exploitation.

In this paper, the focus on Organizational Ambidexterity is based on the assumption that the distinction between exploration and exploitation must contribute to the capacity of meeting the needs of emerging customers or markets. Studies have shown that exploration and exploitation requires different structures, processes, strategies, capabilities and cultures. Exploration is associated with organic structures, loosely coupled systems, path breaking, improvisation, autonomy and chaos, and emerging markets and technologies (He & Wong, 2004). Exploitation on the other hand, is associated with mechanistic structures, tightly coupled

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systems, path dependency, routinization, control and bureaucracy, and stable markets and

technologies (He & Wong, 2004).

In line with the definition, mentioned in the introduction, the tensions of exploratory and exploitative activities are managed through dual structures. This assumption has implications for the level of analysis. Organizational Ambidexterity can manifest itself at the organizational level or at the individual level (Raisch et al., 2009). This can be done by creating two different subdivisions, or allocating different roles at each individual within the team (Jansen et al., 2008, p. 987).

The separation of the different activities in different business units creates a different mindset, functions and time orientation between the business units. This is because differentiation refers to difference in goal orientation, time orientation, and interpersonal orientation (Golden & Ma, 2003, p. 485). These differences between the business units needs to be coordinated within the firm, because structural differentiation results in dispersed exploratory and exploitative business units at different locations (Benner & Tushman, 2003).

The ‘dual structures’ ensures that the distinctive process of exploratory units won’t be overwhelmed by the forces of the exploitative culture from the exploitation unit (Simsek, 2009). These dual structures can also lead to isolation (Jansen et al., 2009). This is where transformational leadership becomes important. The leader must act in an integrative manner in order to prevent the firm from the drawback of separating the activities. More specifically, the leader must be able to manage contradictory goals, engage in paradoxical thinking, and fulfill multiple roles (Raisch et al., 2009, p. 687).

T

RANSFORMATIONAL LEADERSHIP

.

Pursuing simultaneously exploration and exploitation activities within an organization is considerably a challenge (Jansen et al., 2008). The leader should facilitate collective action and

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strategic coherence (O’Reilly & Tushman, 2004 in Raisch et al., 2009). Therefore, the leader must

encourage employees to work for the greater good, promote adaptive behavior, and provide a clear vision of the overall strategy (Nemanich & Vera, 2009, p. 19). In order to understand the construct transformational leadership, I give a brief overview of the concept of leadership in general, before going into detail at the concept of transformational leadership.

“Leadership is the process of influencing others to understand and agree about what needs to be done and how it can be done effectively, and the process of facilitating individual and collective efforts to accomplish a shared objective” (Yukl, 2002, p. 3, in Ensley et al., 2006). For Jago (1982, p. 315), “leadership is both a process and a property”. The process of leadership is characterized as using non coercive influence to direct and coordinate the activities. These activities are performed by the members of an organized group. The property which Jago (1982) refers to, is related to the set of qualities or characteristics for successfully employing such influence.

The prevailing convention is that there are two types of effective leadership styles. These are transactional leadership, and transformational leadership (Hartog & Koopman, 2001). These two leadership styles differ on the relation with the subordinates. While transactional leadership is more transaction based (exchange between the leader and the employee), the latter is more based on influencing the intrinsic behavior of the employee. Influencing the intrinsic behavior leads to better performance, and better satisfaction of the employees (Lowe et al., 1996).

Transformational leadership effects certain feelings of the follower. When effectively executed, transformational leadership leads to followers who feel trust, admiration, loyalty, and respect towards the leader (Yukl, 1999). Because of the awareness the leader has, and give attention towards the importance of the tasks the subordinate performs, the subordinates are doing more than expected to do.

Early research already showed that “transforming leaders are leaders who lead on the basis of motivation and morality” (Burns, 1979). These leaders ‘transform’ the relationship from

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the employees working as an independent individual towards working together with a group for

a common purpose. Zhang et al. (2012) complements this with that followers will act beyond self-interest for the common good. House and Shamir (1993 in Shamir & Howell, 1999), argues that the interaction between the transformational leader and the follower will result in (1) followers self-esteem contingent on the vision and mission, (2) internalization of goals and values of the leader, (3) strong personal commitment to this values, and (4) willingness to operate for the sake of the collective. These characteristics complement the definition on leadership of Yukl (1999), specifically on the influencing part (commitment towards the leader) and collective effort.

The reason why transformational leaders have a positive effect on the followers, is funded in the self-concept (Shamir et al., 1993). The self-concept of the motivational theory is based on five underlying sub-dimensions: expressiveness, esteem and worth, consistency, role-identities, and faith (Shamir et al., 1993, p. 580). The first sub-dimension, self-expressiveness, is based on the assumption that humans are not only pragmatic and goal-oriented. Humans will ‘do’ things because of what they ‘are’. Because of doing things, humans establish an identity for themselves. This assumption enables to explain behaviors of humans, which do not entirely contribute to self-interest of that person. Self-esteem and self-worth are respectively based on competence, power, and norms and values. These dimensions are the basics for evaluative standards. This self-evaluation is important as self-reaction to their own performance and serve as basic for reward and sanction. This reflection provides a link between the individual and the collective. The third sub-dimension, self-consistency, responds to the behavior at a given point in time, and further point in time. It reflects the difference between the self-concept and the real behavior that is showed by the individual. The sub-dimension ‘identities’, refers to different groups, because of the categories people can make. Human derive meaning from being linked to social collectiveness. The last sub-dimension which humans are motivated by is faith. When goals cannot clearly be specified, and rewards are not high, people

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may be motivated by faith or begin hopeful of having faith in a better future. This can

intrinsically satisfy the individual.

So far, I described the effects of transformational leadership on the individual, and why individuals are receptive to intrinsic motivation by leaders (the self-concept). An important element is how leaders actually motivate the followers, in order to respond to the sub-dimensions of the self-concept. Transformational leaders will motivate the followers in five ways (Shamir et al., 1993, p. 582-583). The first is increasing the intrinsic valence of effort. Hereby the transformational leader will strengthen follower’s belief of the necessity of the action the follower makes. This makes the effort more meaningful for the follower, which directly relates to the sub-dimension of identities. Hereby, transformational leaders use existing identities and emphasize their uniqueness. This shared identity will stimulate individuals going beyond self-interest, and work for the collective. Increasing effort-accomplishment expectancies, is related to the followers self-esteem and self-worth. The dimension self-esteem is enhanced by high expectations and confidence in the follower to meet the expectations. Self-worth is enhanced by emphasizing the relation between efforts and important values. The third element is increasing

the intrinsic valence of goal accomplishment. The meaningfulness of the goals can be increased

and related by actions that are consistent with the collective past and future. This will create a sense of evolving, which gives a sense of meaningfulness and is important for the self-consistency. This meaningfulness brings a connection between the individual and the larger entity. The fourth element is instilling faith in a better future. This is resort to the assumption that having faith in the future is satisfying itself. For this reason, it’s why followers will follow a leader which provides hope for the future, even when this cannot be transferred into specific goals. The last element is creating personal commitment. This element is about the creation of commitment by the follower towards the vision and mission of the leader. This commitment is achieved when the action is related to the relationship between the follower and the leader, and is consistent with the self-expressiveness. Strauss (1969 in Shamir et al., 1993, p. 583) put it in other words: “action is not merely a means of doing but a way of being”.

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THEORETICAL

FRAMEWORK.

Some studies have investigated the ability of the leader to obtain Organizational Ambidexterity. These papers mostly lacked to take the environmental context of the firm into account. In order to provide a clear explanation for the effect of transformational leadership on Organizational Ambidexterity, I argue that environmental dynamism should be taken into account.

As stated before, Organizational Ambidexterity in this paper is based on the assumption that the distinction between exploration and exploitation should contribute to the capacity of meeting the needs of emerging customers and markets. The difference between the structures, processes, strategies, capabilities and cultures (He & Wong, 2004) of exploration and exploitation is categorized before (e.g. loosely coupled systems, control and bureaucracy). I argue that a leader should contribute to this structures and processes, by effectively coordinating the different activities within the explorative and exploitative unit, in order to contribute to the goal of Organizational Ambidexterity. For the exploratory unit, the activities are characterized as search, discovery, experimentation, risk-taking and innovation. The activities for the exploitative unit are characterized as refinement, implementation, efficiency, production and selection (March 1991; He & Wong, 2004).

In order to assess the relationship between transformational leadership and Organizational Ambidexterity, it is important on the subject of transformational leadership to take the step from ‘motivational elements’, as mentioned by Shamir et al. (1993), towards the ‘behavior’ of the transformational leader. This ‘behavior’ is mentioned by six dimensions of Podsakoff et al. (1990). I argue that the behaviors are drivers of the motivational elements, which control the elements of the self-concept. Thus a leader activates the high-order needs with this behaviors, and transcends the subordinates self-interest to the sake of the organization (Bass, 1985 in Podsakoff et al., 1996).

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Although some approaches differ from each other, there’s a common perspective in the

literature that “by articulating a vision of the future of the organization, providing a model that is consistent with that vision, fostering the acceptance of group goals, and providing individualized support”, transformational leaders change the basic values and beliefs of followers in order to let them perform beyond what is expected (Podsakoff et al., 1996).

The six elements of Podsakoff et al. (1990, p. 112) are: identifying and articulating a vision, providing an appropriate model, fostering the acceptance group goals, high performance expectations, providing individualized support, and intellectual stimulation. I relate these elements towards the motivational elements of Shamir et al. (1993) as follows.

I relate the motivational element of instilling faith in the future (Shamir et al, 1993) to the behavior of articulating a vision of Podsakoff et al. (1990). Articulating a vision is about identifying new opportunities, while inspiring subordinates with a vision. With providing a vision towards subordinates, the leader also provides faith in a better future, in order to get the subordinates motivated.

The motivational element of increasing effort-accomplishments expectancies (Shamir et al., 1993), is operationalized as the behavior of communicating high performance expectations (Podsakoff et al, 1990). I argue that the self-worth and self-esteem of the subordinate can be facilitated by expecting high performance, while simultaneously give the subordinates the leaders confidence.

Increasing the intrinsic valence of effort (Shamir et al., 1993), overlaps with the behavioral elements of Podsakoff et al. (1990) fostering the acceptance of group goals. The latter is aimed at promoting cooperation among subordinates in order to let them work for the common goal, while increasing the intrinsic valence of effort is about letting the followers belief in the necessity of the action he makes. This makes the effort more meaningful for the

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subordinate, which relates to the identity. This identity can lead to individuals going beyond

self-interest and work for the collective. In extend, I argue that individuals are also helped with their identity, if the leader sets an example for employees to follow. This behavior of the leader should be consistent with the behavior the leader espouses.

Creating personal commitment (Shamir et al., 1993), is only reached when the actions the follower makes are consistent with the self-expressiveness. In line with the argument before, I argue that subordinates need a role model in order to establish an identity, which controls the self-expressiveness. I also argue that individualized support is an important behavior to create personal commitment. This part is based on the individual who respects the leader because the leader takes care of their personal feelings and needs. If an individual does not respect the leader, I argue that the individual won’t commit to the goals of the leader.

The motivational element of increasing the intrinsic valence of goal accomplishment (Shamir et al., 1993) relates to the behavioral element intellectual stimulation (Podsakoff et al., 1990). By the first, the meaningfulness can be increased and related to the actions that are consistent with the past and future goals. The latter also provides behavior about thinking how actions are done in the past, and can be done in the future.

T

RANSFORMATIONAL LEADERSHIP AND

O

RGANIZATIONAL

A

MBIDEXTERITY

.

The dual structure of structural Organizational Ambidexterity ensures that the different units won’t be overwhelmed by the forces of each other’s culture (Simsek, 2009). The drawback from this dual structure is that it can lead to isolation (Jansen et al., 2009), which argues that there’s a need for leadership in order to behave in an integrative manner. This leadership should prevent the firm from the drawback off separating the activities. Therefore I argue that there’s a need for leadership in order to effectively execute the activities with dual structures.

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In order to argument this statement, I confront the behavior of the transformational

leaders, defined by Podsakoff et al. (1990), with the sub-dimensions exploitation and exploration.

For both the exploratory and exploitative unit, articulating a vision is very important, because of the uncertainty of the outcomes and the challenge the firm faces. Providing faith in the form of a vision will get the subordinates motivated (Shamir et al., 1993). I also argue that providing a vision is important in order to reach strategic coherence. If all employees know which direction the firm takes, the chance that the exploratory unit comes up with an innovation that don’t fit the needs of the customers and markets becomes smaller.

Also for both the exploratory unit and exploitative unit, fostering the acceptance of group goals is important. When the vision states that the costs must drastically turned downwards, it is important to accept this goal for the exploitative unit. If such a goal is accepted, people can start working together for this common goal, which creates better results. This also states for the explorative unit. When a product/service should be increased, and people are working together for these goals, they share with each other what they learned so far. By combining this learning, the goal becomes more reachable. In extend to the acceptance of group goals, I argue that providing individualized support is also important. When a subordinate doesn’t have the trust that the leader takes care of their wellbeing, why should the subordinate accept the goals of the group? If the leader takes care of the individual, and people trust this, they easier follow the group goals because they think these goals are also good for them.

Providing an appropriate role model is also important for both the units. With this, the leader sets an example that is consistent with the values the leader espouses. I argue that this role-modeling will strengthen the personal commitment towards the goals, and strengthen the identity, so subordinates are more motivated to work for the common good. This is important to foster strategic coherence between the units, in order to provide the firm from the drawback of separation.

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Expecting high performance is also important for the exploratory and explorative unit.

Two of the activities of the exploratory unit are experimentation and innovation. Without giving the trust to the subordinate that he can accomplish the innovation of a new product/service, the subordinate can be demotivated by failure. I argue that expecting high expectations and giving trust to the subordinate, can withstand some early failures in the innovation process. For the exploitative unit, the argument is the same, but for example based on a cost reduction. The activity can be refinement or implementation of a new process. These processes can also be paired with failure, from which I argue, high expectations and giving trust to the subordinate, can withstand early failure and let the subordinate push through this failure.

Intellectual stimulation is mainly important for the exploitative unit. I argue that the leader is not omniscient, so subordinates have to come up with improvements too. Intellectual stimulation refers to rethinking how work is done and can be done better. I relate this to refinement, an important activity of the exploitative unit. This intellectual stimulation creates a sense of evolving, which gives a sense of meaningfulness to the subordinates. This might be referred to the innovation process for the exploratory unit as well. Subordinates can think of improved processes for innovation.

I argued that the behavior of the transformational leader is important for both the explorative and exploitative unit. Hence,

Hypothesis 1. Transformational leadership behaviors will have a positive relationship on

the coexistence of exploitative and explorative innovations (Organizational Ambidexterity).

Environmental dynamism refers to the rate of change and the unpredictability of change in the firm’s environment (Dess & Beard, 1984 in Priem et al., 1995). Early research argued that customers, suppliers, competitors, and regulatory groups have the greatest impact on goal attainment (Dill, 1958, p. 424).

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Environmental dynamism leads to uncertainty, characterized by stress, anxiety, and risk

(Waldman et al., 2001). Uncertainty can be defined as the inability to understand the direction in which the environment is moving, and the inability to totally understand the impact of the changes on the organization (Milliken, 1987, p. 136). Subordinates which are facing uncertainty, are more receptive to leader’s behavior (Vera & Crossan, 2004).

I argue that articulating a vision is more important in a dynamic environment. The uncertainty can lead to stress and anxiety by the subordinates (Waldman et al., 2001). This has a devastating effect on the performance. I argue that the environmental dynamism has the effect that the subordinates are more receptive to the vision in order to get a sense of safety (De Hoogh et al., 2004). This will argue that the vision the leader articulates, will be more powerful in a dynamic environment, which improves the motivation of the subordinates and, is important to reach strategic coherence.

Because of the anxiety and the receptiveness of the subordinates to the vision of the leader, I argue that the acceptance of the group goals is higher under environmental dynamism. I argue that these goals can function as a ‘save haven’ for the subordinates, where they don’t face the uncertainty. I argue that this acceptance will be higher when subordinates sense individualized support. This is especially important because of the uncertainty and anxiety the subordinates feel because of the environment. The improved acceptance of the group goals leads to subordinates working together for this common goal. This collaboration will lead to better results than in a dynamic environment, for both the exploratory unit and the exploitative unit. This is also necessary because of the changes the firm must overcome.

When executed properly, role modeling will strengthen the commitment of the subordinates, and strengthen the identity, so subordinates will work for the common good. I argue that under high environmental dynamism, the anxiety of the subordinates leads to more receptiveness. The subordinates are more aware of the behavior of the leader. If the leader acts

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properly, the subordinates will be more motivated for the common goals, which is important for

the strategic coherence between the units. This in order to provide the drawback of separation.

Expecting high performance is important for both the exploratory and exploitative unit under high environmental dynamism. I argue that uncertainty can work paralyzing. When a leader expects high performance, but also gives confidence that the subordinate can reach this expectations, the subordinate will get motivated. In line, I argue that intellectual stimulation is also important under environmental dynamism. When people don’t feel paralyzed, they can be motivated to rethink their work, in order to deal with the uncertainty. This will lead to better, and faster adaptions to the circumstances.

The main argument is that the greater uncertainty leads to more receptiveness of the subordinates to follow the leader. With this greater receptiveness, the influence of the leader is bigger. I argue that the direction (vision), strategy and the goals of the company are more clear by the subordinates because of their receptiveness. This will overcome the drawback from separating the explorative and exploitative activities, and create a stronger integration. Hence,

Hypothesis 2. The effect of transformational leadership on Organizational Ambidexterity,

the coexistence of exploration and exploitation, is stronger under perceived environmental dynamism.

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METHODOLOGY

The sample (table 1) consisted of people from Asia (30,6%), Africa (0,4%), North America (8,3%), South America (1,2%), Europe (59,1%), and Australia (0,4%). 74,4% of the sample worked full-time on their job, 21,1% working parttime, and 4,5% indicate to be unemployed (all respondents have working experience). A large part of the respondents (41,7%) was approached via a commercial database (Mechanical Turk – Amazone). These respondents where paid $0,30 for filling in the survey, which takes approximately 5 minutes (hour wage of $3,60). The other 58,3% of the respondents voluntarily cooperated with the research.

From the 290 respondents that started filling in the questionnaire, 242 respondents fully completed the questionnaire (83,4%). Because of using social media, we cannot extract a response rate. From the English questionnaire, 36,6% of the respondents was female. 42,6% from the Dutch respondents were female. The mean age of the respondents from the English questionnaire is 32,3 years, with a SD of 10,3 years. The mean age for the Dutch respondents is 37,0 years, with a SD of 10,4 years. 23,8% of the respondents from the English questionnaire has graduated. The graduate level at the Dutch respondents was 28,3%. The mean tenure of the respondents from the English questionnaire was 6,7 years, with a SD of 6,3 years. The mean tenure of the Dutch respondents was 15,1 years, with a SD of 10,8 years.

Taking all respondents together, the mean age was 35,1 years, with a SD of 10,6 years. From the respondents 40,1% were female. 26,5% graduated, while 71,9% completed an applied education program. The average tenure was 11,6 years, with a SD of 10,1 years. From the 12 industries, Finance/Insurance/Real estate was covered most with 31,8%, followed by services with 17,8%. Most of the organizations have 501-1.000 number of employees (26,9%). Almost half (48,9%) of the respondents worked in a company with 251-1.000 employees.

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English quest. Dutch quest. Total

N % N % N % Number of respondents Male Female 64 37 63.4 36.6 81 60 57.4 42.6 145 97 59.9 40.1 Age Mean (years) SD (years) 32.3 10.3 37.0 10.4 35.1 10.6 Continent Asia Africa North America South America Europe Australia 74 1 20 3 2 1 73.3 1.0 19.8 3.0 2.0 1.0 - - - - 141 - - - - - 100 - 74 1 20 3 143 1 30.6 .4 8.3 1.2 59.1 .4 Educational level

High school (Middelbaar) Some college (MBO) Bachelor’s degree (HBO) Master’s degree (WO) Professional degree (PhD) 2 9 66 22 2 2.0 8.9 65.3 21.8 2.0 2 27 72 36 4 1.4 19.1 51.1 25.5 2.8 4 36 138 58 6 1.7 14.9 57.0 24.0 2.5 Employment form Fulltime Parttime Unemployed 72 18 11 71.3 17.8 10.9 108 33 - 76.6 23.4 - 180 51 11 74.4 21.1 4.5 Tenure Mean (years) SD (years) 6.7 6.3 15.1 10.8 11.6 10.1 Industry Agriculture, Mining Construction Finan./Insurance/Real Es. Government Health Care Internet Manufacturing Retail, Wholesale Services Transportation Communications, Utilities Nonprofit 2 3 12 6 6 25 11 2 21 2 6 5 2.0 3.0 11.9 5.9 5.9 24.8 10.9 2.0 20.8 2.0 5.9 5.0 11 8 65 9 6 3 4 4 22 2 1 6 7.8 5.7 46.1 6.4 4.3 2.1 2.8 2.8 15.6 1.4 .7 4.3. 13 11 77 15 12 28 15 6 43 4 7 11 5.4 4.5 31.8 6.2 5.0 11.6 6.2 2.5 17.8 1.7 2.9 4.5 Number of employees 1-25 26-50 51-250 251-500 501-1.000 >1.000 27 17 24 9 10 14 26.7 16.8 23.8 8.9 9.9 13.9 27 4 23 29 55 3 19.1 2.8 16.3 20.6 39.0 2.1 54 21 47 38 65 17 22.3 8.7 19.4 15.7 26.9 7.0 N. Total 101 100 141 100 242 100

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M

EASUREMENTS OF VARIABLES

.

I conducted this research within two different languages, Dutch & English. All items used in de questionnaire where derived from English studies. For the English questionnaire, I used this original items. For the Dutch questionnaire, the items were translated, and back translated by another person. Small refinements were made in the Dutch questionnaire to correspond with the English version.

All items were measured at a 5-point likert scale, even when original items were measured at 7-point scale. The adjustment was made in order to keep the questionnaire clear for the respondents. The scale went from 1 (strongly disagree) to 5 (strongly agree).

O

RGANIZATIONAL

A

MBIDEXTERITY

.

As summarized before, the Organizational Ambidexterity construct consists of exploratory innovation and exploitative innovation (Cronbach’s α English version = .859, Cronbach’s α Dutch version = .716, and the Cronbach’s α Total version = .798). The measures I used to operationalize Organizational Ambidexterity at structural form. At structural form, the measure is also suited for divisional level as team level, where individuals get different roles (Jansen et al., 2008).

Exploratory innovation.

To measure the exploratory activities, the scale of Jansen et al. (2006) was used (Cronbach’s α English version = .757, Cronbach’s α Dutch version = 0.540, Cronbach’s α Total = .658). The Cronbach’s α at the Dutch version couldn’t be increased significantly (<0.1) by deleting an item. The items were originally measured at 7-point likert scale. No item was reversed. An example item is: “Our organization accepts demands that go beyond existing

28

products and services”. This 4-item scale captures the extent to which organizations deviate

from current knowledge to radical innovations. These innovations are done for emerging customers or markets (Jansen et al., 2009).

Exploitative innovation.

For measuring exploitative innovation, the scale of Jansen et al. (2006) was used (Cronbach’s α = .779, Cronbach’s α Dutch version = .642, Cronbach’s α Total =.715). The Cronbach’s α at the Dutch version couldn’t be increased by deleting an item. The construct consists of 4-items, which were originally measured at a 7-point likert scale. An example of an item is: “We frequently make small adjustments to our existing products and services”. This captures the extend on which firms build on current knowledge (Jansen et al., 2008).

Because I expect a stronger relationship between transformational leadership and Organizational Ambidexterity under high environmental dynamism, I should consider measuring Organizational Ambidexterity as a balanced construct (subtracting the mean of exploitation from exploration). This because combined Organizational Ambidexterity is more valid in a munificent environment, while balanced Organizational Ambidexterity is more appropriate in a resource constraint environment (Cao et al., 2009). On the other hand, the research targets at all firm sizes in all industries, thus with and without munificent environments. This argues for running analysis for both balanced and combined Organizational Ambidexterity.

To notice if it is valid to subtract exploitation from the exploration construct, I run a factor analysis to compare the total of 8 items of Organizational Ambidexterity. Kaiser-Meyer-Olkin was adequate (.840), while the Bartlett’s Test of Sphericitiy was significant (Sig. = .000). In contrast with our expectations, the factor analysis composed two factors, but not as expected (see table 2). Because there’s no found distinction between the exploratory variable and the exploitative variable, it’s not valid to compute the variable balanced Organizational

29

Ambidexterity (distracting exploitation from exploration). Further analysis is ran by combined

Organizational Ambidexterity.

Pattern Matrixa Factor

1 2

(exor) Organization-Our organization regularly uses new distribution channels. ,659 ,183 (exoi) Organization-Our organization expands services for existing clients. ,619 -,154 (exor) Organization-We frequently utilize new opportunities in new markets. ,595 -,108 Organization-We increase economies of scales in existing markets. ,592 -,089 (exoi) Organization-We improve our provision’s efficiency of products and _services. ,528 -,084 (exoi) Organization-We frequently make small adjustments to our existing _{products and services.} ,478 -,063 (exor) Organization-We commercialize products and services that are _{completely new to our organization.} ,017 -,890 (exor) Organization-Our organization accepts demands that go beyond existing _{products and services.} ,110 -,501 Extraction Method: Maximum Likelihood.

Rotation Method: Oblimin with Kaiser Normalization. a. Rotation converged in 6 iterations.

Table 2. Factor analysis.

T

RANSFORMATIONAL LEADERSHIP

.

The measures of transformational leadership, used in this study, were developed by Podsakoff et al. (1996). This measure consists of 22-items (Cronbach’s α English version = .920, Cronbach’s α Dutch version = .890, Cronbach’s α Total version .905), covering 6 dimensions of transformational leadership behavior: ‘articulating a vision, providing a role model,

communicating high performance expectations, providing individualized support, fostering the acceptance of group goals, and providing intellectual stimulation’ (Rubin et al., 2005).

To further specify the construct of transformational leadership, I will shortly describe the six dimensions we measure, as defined by Podsakoff et al. (1990). Articulating a vision is behavior about identifying new opportunities for the firm, while inspiring members with a vision. Providing a role model is behavior from the leader to set an example for the subordinates, consistent with the values the leader espouses. Communicating high performance expectations is the behavior that the leader expects for excellence, quality and performance. Providing

30

individualized support is the behavior that the leader respects the followers and is concerned

with their wellbeing. Fostering the acceptance of group goals is behavior at aiming cooperation among subordinates, in order to work for the common goal. At last, providing intellectual

stimulation is the leader’s behavior to let the subordinate re-examine their assumption about the

current work and let them think about how it can be performed.

Examples of the measured dimensions are: “The leader… paints an interesting picture for the future for our group” (articulating a vision); “The leader… gets the group to work together for the same goal” (fostering the acceptance of group goals); “The leader… insists on only the best performance” (communicating high performance).

Because the hypothesis are concerned with overall transformational leadership, the specific dimensions are not tested apart. I collapsed the measure into one single construct: transformational leadership.

E

NVIRONMENTAL DYNAMISM

.

Environmental dynamism was measured with a 5-item scale, designed by Jaworski and Kohli (1993, in Yang & Li, 2011). The Cronbach’s α of the English version is .774, while the Cronbach’s α at the Dutch version is .789. The Cronbach’s α Total is .807. The items consist of to which extent the composition and preference of organization clients tended to change, the rate of uncertainty, and variety of new product introductions in the industry (Jaworski & Kohli, 1993; Yang & Li, 2011). An example of the measured items is: “The actions of local and foreign competitors in our markets were changing quite rapidly”.

S

TATISTICAL PROCEDURE

.

The data were collected with an online survey from 6th _{of November until the 20}th _of

31

kurtosis and normality tests were computed. Missing data (48 respondents) was deleted

(listwise deletion). The question of tenure was not applicable when the respondent indicates unemployment. These missing data (11 respondents) was substituted by imputation of the series mean (6,71years). None of the variables were normally distributed (table 3). This could become because of the sample size, the bigger the sample, the faster the KS-test is significant (Field, 2009). The majority of the respondents reported relatively high scores on transformational leadership. Less high scores were found with environmental dynamism, and Organizational Ambidexterity (although left skewed). The absence of a normal distribution in these variables can be explained by the fact that there’s a minimum level of transformational leadership needed in order to be a leader. This also states for Organizational Ambidexterity. Because of the changes in the environment there’s always a minimum of explorative and exploitative activities needed in order to overcome obsolescence.

Kolmogorov-Smirnov Skewness Kurtosis Statistic Sig.

Transformational Leadership .092 .000 -.754 1.822

Environmental dynamism .084 .000 -.392 .371

Organizational Ambidexterity .075 .000 -.333 1.163

Table 3. Check for normality.

Regression analyses were undertaken to test the hypothesized moderation between the variables. The regression analysis was undertaken for combined Organizational Ambidexterity. In the first step, the control variables age, continent, employementform, number of employees and tenure were entered into the equitation. In the second step, the standardized dependent variable (transformational leadership)was entered. Step three contains of the standardized dependent variables transformational leadership and environmental dynamism. In step four, the product of the standardized variables transformational leadership and environmental dynamism was entered. The data contains no multi-collinearity issues, and is checked by Variance Inflation Factor (VIF) and the Tolerance (Field, 2009). All the data contains Tolerance > 0.1, VIF < 10.

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Items M SD 1 2 3 4 5 6 7 8 9 10 11 1 Transformational Leadership 22 3.78 .60 (.920) 2 Environmental dynamism 5 3.73 .76 ,477** _(.774) 3 Organizational Ambidexterity 8 3.81 .67 ,723** _,599** _(.859) 4 Gender 1 ,081 ,153 ,107 - 5 Age 1 32.3 10.34 ,014 -,122 -,116 ,078 - 6 Continent 1 -,151 -,265** _{-,144 -,205}* _{,098 -} 7 Education 1 ,220* _{,060 ,222}* _{,130 -,004 -,187* -} 8 Employmentform 1 -,223* _{-,015 -,181* -,050 -,166* ,034 -,353}** _- 9 Tenure 1 6.71 6.30 ,028 -,009 ,028 -,088 ,656** _{,095 ,042 -,077 -} 10 Industry 1 -,064 -,103 -,043 -,125 ,059 ,092 -,054 ,001 -,015 - 11 nmbemployees 1 ,003 ,090 ,165* -,095 ,157 ,066 ,137 -,323** _,336** _{,052 -} N: 101. Reliabilities are reported along the diagonal.

* correlation is significant at the .05 level (one-tailed). ** correlation is significant at the 0,01 level (one-tailed). Table 4. Means, Standard Deviation, and Correlation ENGLISH data.

Items M SD 1 2 3 4 5 6 7 8 9 10 1 Transformational Leadership 22 3.59 .46 (.890) 2 Environmental dynamism 5 3.15 .79 -,182* (.799) 3 Organizational Ambidexterity 8 3.51 .54 ,120 ,390** (.716) 4 Gender 1 -,115 ,044 -,210* - 5 Age 1 37.0 10.4 -,187* ,174* -,098 ,109 - 6 Education 1 -,081 -,132 -,121 -,047 -,202* - 7 Employementform 1 -,060 -,005 -,081 ,507** ,120 -,022 - 8 Tenure 1 15.1 10.8 -,167* ,191* -,070 ,069 ,937** -,276** ,084 - 9 Industry 1 ,069 -,033 ,120 -,013 ,001 ,209* ,121 ,007 - 10 nmbemployees 1 -,256** ,108 ,013 ,050 ,237** ,114 -,021 ,175* -,258** -

N: 141. Reliabilities are reported along the diagonal.

* correlation is significant at the .05 level (one-tailed). ** correlation is significant at the 0,01 level (one-tailed). Table 5. Means, Standard Deviation, and Correlation DUTCH data.

33

Items M SD 1 2 3 4 5 6 7 8 9 10 11 1 Transformational Leadership 22 3.67 .53 (.905) 2 Environmental dynamism 5 3.40 .68 ,178** _(.807) 3 Organizational Ambidexterity 8 3.63 .61 ,465** _,523** _(.798) 4 Gender 1 -,032 ,061 -,075 5 Age 1 35.1 10.6 -,124* -,027 -,153* _,107 6 Continent 1 -,199** _-,381** _-,261** _{,011 ,227}** 7 Education 1 ,055 -,048 ,032 ,018 -,129* _-,061 8 Employmentform 1 -,128* _{,041 -,098 ,196}** _{-,062 -,127}* _-,172** 9 Tenure 1 11.7 10.1 -,175* _{-,029 -,148}* _{,036 ,838}** _,391** _-,218** _-,038 10 Industry 1 ,062 ,057 ,119* -,072 -,047 -,278** _{,117* ,100 -,129}* 11 nmbemployees 1 -,155* _{,028 ,038 ,000 ,235}** _,188** _{,116* -,203}** _,267** _-,182** N: 242. Reliabilities are reported along the diagonal.

* correlation is significant at the .05 level (one-tailed). ** correlation is significant at the 0,01 level (one-tailed). Table 6. Means, Standard Deviation, and Correlation TOTAL data.

34

RESULTS

C

ORRELATION ANALYSIS

.

An overview of the descriptive statistics, correlation and scale reliabilities are presented in table 4-6 (English, Dutch, and Total). As table 4 indicates, significant correlation support my prediction regarding transformational leadership and Organizational Ambidexterity (r = .723, p ≤.01). In opposite to my prediction, no significant correlation is found in the data from the Dutch questionnaire (table 5). The total data (combined) supports the prediction of the relation between transformational leadership and Organizational Ambidexterity (r = .465, p ≤ .01). Taken together, this means that hypothesis 1 is supported for the overall data, but that there might be cultural difference between continents for the relationship of transformational leadership on Organizational Ambidexterity.

In the data of the Dutch questionnaire I also found a positive relation between environmental dynamism and transformational leadership (r = .477, p ≤ .01). Surprisingly, the English data showed a significant negative correlation between environmental dynamism and transformational leadership (r = -.182, p ≤.05). The total data (r = .178, p ≤ .05) supports the early research that there’s a relationship between environmental dynamism and transformational leadership (Vera & Crossan, 2004), which states that under uncertain conditions the subordinate is more receptive to transformational leadership, which is a soil ground for the occurrence of the transformational leader. Following this data, the relationship between environmental dynamism and transformational leadership might be dependent on the culture (73,3% of the respondents of the English questionnaire lives in Asia).

Not as predicted, there’s a significant correlation between environmental dynamism and Organizational Ambidexterity in both the English data (r = .599, p ≤.01) and Dutch data (r = .390,

p ≤ .01). Hence the data combined showed a positive significant correlation (r = .523, p ≤ .01).

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The control variables from the English data showed significant positive correlation

between education and transformational leadership, and a significant negative correlation between employment form and transformational leadership, while the Dutch data showed no significance between the variables. In the combined data I found significant correlations between continent and transformational leadership, environmental dynamism, and Organizational Ambidexterity (respectively r = -.199, p ≤ .01; r = -.381, p ≤ .001; r = -.261, p ≤ .01). This suggests that the continent where the respondents are living have a strong impact on the correlations between the variables. This might has to do with the cultural aspects.

R

EGRESSION ANALYSIS

.

To examine the effect of environmental dynamism as moderator on the relationship between transformational leadership and Organizational Ambidexterity, I conducted a hierarchical regression analysis for both Dutch, English, and Total data. Table 7 presents the results of these analysis.

The interaction transformational leadership and Organizational Ambidexterity of the English data had a significant effect and added 45,9% of the variance, β = .712, p ≤ .01. in line with the regression analysis, the Dutch data showed no significant effect, β = .080, p ≥ .05, with an added explained variance of 0.6%. The combined data showed a significant positive effect, with an added explained variance of 12,4% (β = .370, p ≤ .01).

Concerning the moderating effect of environmental dynamism, M4 in table 7 of both the English, Dutch and Total data, does not provide support for hypothesis 2. The moderating effect of environmental dynamism has no significant positive effect on the relationship between transformational leadership and Organizational Ambidexterity (Total data β = .062, p ≥ .05). The added explained variance in the Total data is just 0.3% (not significant).

36

Figure 2. Interaction effect environmental dynamism TOTAL (not significant).

Figure 3. Interaction effect environmental dynamism ENGLISH (not significant).

1 1,5 2 2,5 3 3,5 4 4,5 5 Low TL High TL

OA

T

OT

A

L

Low ED High ED 1 1,5 2 2,5 3 3,5 4 4,5 5 Low TL High TL

O

A

EN

G

LI

S

H

Low ED High ED

37

Figure 4. Interaction effect environmental dynamism DUTCH (not significant).

In the analysis I included control variables in order to rule out alternative explanations of the results. I used all control variables (even when not significant correlated in table 4-6) in each regression model for a proper comparison of the data (English, Dutch and Total).

First of all, there seemed to be significant negative relationships in the English data between age and Organizational Ambidexterity (β = -.177, p ≤.05), while in the Dutch data no significant (p ≥.05) relationship is found, although there seemed to be a negative effect either. The overall data showed also a significant negative relationship between age and Organizational Ambidexterity.

In the English data, industry doesn’t have a significant positive effect on Organizational Ambidexterity, while in the Dutch data, industry has a significant positive effect on Organizational Ambidexterity (β = .184, p ≥ .05). Combining the data of the English and Dutch questionnaire showed a significant positive relationship between industry and Organizational Ambidexterity (β = .112, p ≤ .05). 1 1,5 2 2,5 3 3,5 4 4,5 5 Low TL High TL

O

A

DUT

CH

Low ED High ED

38

The control variables in the English questionnaire doesn’t explain variance significantly,

although 12,9%. In the Dutch data, the control variables count up for 11,1% of the explained variance at p ≤ .05. In the overall data, the control variables explained 14,2% of the variance at a significant level of p ≤ .01.

In sum, transformational leadership doesn’t explained Organizational Ambidexterity better under environmental dynamism in both the English data and Dutch data. Cultural aspects (variable continent) seemed to influence the relationship between transformational leadership and Organizational Ambidexterity in the different continents. No evidence was found for the effect of environmental dynamism as a moderator.