The relationship between transformational leadership and innovative ambidexterity : and the mediating role of strategic orientations

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The relationship between transformational

leadership and innovative ambidexterity

And the mediating role of strategic orientations

Faculty of Economics and Business Executive Programme in Management Studies

Strategy Track

Master Thesis

Supervisor : Dr. Sebastian Kortmann

Name : Sebastiaan Röben (10475613)

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Statement of Originality

This document is written by Sebastiaan Röben who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

In the current dynamic environment, firms need to innovate relentlessly to secure their long term existence. The inherent challenge of innovative ambidexterity lies in balancing the conflicting demands of the innovation efforts aimed at exploration versus those efforts that are aimed at exploitation. Building on upper echelon theory, it is proposed that transformational leaders with the natural ability to resolve conflicting interests, have a positive effect on the degree of innovative ambidexterity within their firms. Additionally and building on strategic process and ambidexterity theories, it is proposed that resource orientation, proactive and responsive market orientation are cultural implementation mechanisms that mediate the relation between transformational leadership behavior and innovative ambidexterity. In this study a dataset of 150 cases from a wide variety of companies from the Netherlands confirms the overall positive effect in this construct and the mediating power of resource orientation and proactive market orientation. By doing so, this study contributes to the literature by providing two cultural implementation mechanisms that are readily implementable and have a positive effect on ambidexterity of an organization. Further, this study contributes to the understanding on the influence of a transformational leadership style on the ambidextrous behavior of an organization, both through a direct effect and by mediation through cultural implementation mechanisms.

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1 Introduction

Firms are challenged by the need to develop fundamentally new products, services and/or markets whilst simultaneously having to incrementally improve their current portfolio. In research published in the last two decades, there has been a rising consent on the importance of combining both incremental and radical innovation in relation with superior performance. (He & Wong, 2004; Gibson & Birkinshaw, 2004) Combining these types of innovation is complex and difficult to achieve, as it requires different organizational architectures, competencies, processes and/or cultures. (Tushman & O’Reilly, 1996; Benner & Tushman, 2003; Gibson & Birkinshaw, 2004) Firms that manage to overcome these difficulties and succeed to strategically integrate exploitation of current and exploration of future activities are considered Ambidextrous (Duncan, 1976; March, 1991; O’Reilly and Tushman, 2008). Several approaches to accommodate ambidexterity within an organization have been proposed: structural solutions that allow two activities to be carried out in separate organizational units (Tushman & O’Reilly, 1996; Adler et al., 1999; Benner & Tushman, 2003), contextual solutions to do so within the same unit (Gibson & Birkinshaw, 2004), and leadership-based solutions that rely on the top management team to govern the tensions between the two activities (Smith & Tushman, 2005; Jansen, George, Van den Bosch, Volberda, 2008). Recently, the latter solution is gaining momentum in research. Top management teams take their role by utilizing and redeploying well-developed exploratory or exploitative competencies from around the firm to fill the vacancies elsewhere. They can dynamically shift resources between innovation in existing products-market combinations and innovations into new product-market combination, to develop both simultaneously (Smith, 2006). Overall, on conflicting demands, Raisch and Birkinshaw (2008, P389) note that ‘strategic integration [of exploration and exploitation] requires a common set of values, a shared vision and an overarching governance process’ and many scholars conclude that this is indeed under the primary influence of the top management team (Gibson & Birkinshaw, 2004; Smith & Tushman, 2005). This research regards two aspects of top management’s influence on the development of an ambidextrous organization.

First, it is proposed that managers with the natural ability to resolve conflicting interests of explorative and exploitative learnings, have a positive effect on the ambidexterity of their firms. Transformational leaders (Bass, 1985) encourage followers to go beyond the call of duty, put the interest of the collective over that of the individual and build the trust amongst followers to take their own decisions and challenge the status quo. By doing so, it is

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assumed that these leaders directly influence the ambidexterity of their organizations. This reasoning is built on upper echelon theories, and assumes that top management teams have a personnel behavioral influence that can be used to resolve the tension in their organizations coming from combining exploration and exploitations. Upper echelon theory suggests that top management teams in general and their background characteristics (roots, education, career and financial position) in particular, have a major impact on strategic choices and the companies’ performance (Hamrick & Mason, 1984). Scholars have called for more research on how this influence can be used to foster Ambidexterity (Gibson and Birkinshaw, 2004; Smith and Tushman, 2005). In response, Beckman (2006) has found empirical evidence backing the notion that in general top management team background is an important antecedent in supporting ambidexterity. Jansen, Van den Bosch & Volberda (2008) have particularly investigated the moderating effect of transformational leadership on the effectiveness of ambidextrous traits, but not on ambidexterity directly.

Secondly, top managers exert above mentioned influence through the formal strategic process, in which the course of the firm’s future is laid out. From the strategic process, which consists of a formulation phase and implementation phase (Bourgeois & Brodwin, 1984), this study focusses on the implementation phase. The weight of the organizational effort for each phase, depends on the type of approach. With a cultural approach, or ‘How do I involve the whole organization in implementation?’, the emphasis lies on the implementation phase and requires a coaching role of the top management team (Bourgeois & Brodwin, 1984, p242). The power of a cultural approach is that a culture is “the pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide norms for behavior in the organization” (Deshpandé and Webster, 1989 p4) and thus has an effect down to the core behavior of employees. Strategic orientations can be considered a sub dimension of the culture construct (Noble, Sinha & Kumar, 2002) and strategic orientations are a reflection of the values and beliefs of top management teams (Hitt, Dacin, Tyler & Park, 1997). Therefore, in line with Kortmann (2015) and building on strategic process and ambidexterity theories, it is proposed that strategic orientations are in fact cultural implementation mechanisms and that they mediate the relation between transformational leadership behavior and innovative ambidexterity. Resource orientation is proposed as it focuses on a firm’s resources base to exploit opportunities and to neutralize treats. (Paladino, 2006) Market orientation is proposed as it focusses on external developments and allows the organization the sense and seize future opportunities. (Kohli & Jaworski, 1990; Deshpandé, Farley & Webster, 1993)

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In this study a dataset of 150 cases from a wide variety of companies from the Netherlands is used to analyze the mediating role of Resource Orientation and Market orientation on the relation between a transformational leadership style and innovative ambidexterity. By doing so, this study contributes to the literature by providing two cultural implementation mechanisms that are readily implementable and have a positive effect on ambidexterity of an organization. Further, this study contributes to the understanding on the influence of a transformational leadership style on the ambidextrous behavior of an organization, both through a direct effect and by mediation through cultural implementation mechanisms. This report is organized as follows: first, the concept of ambidexterity is introduced and linked to the sustained existence of firms. Ambidexterity is proposed as a predictor for prolonged survival and growth, because it enables firms to adapt to or even be the source of changes in its environment. Transformational leadership is introduced as a prerequisite to the effective execution of afore mentioned strategic orientations and as a direct influencer on resolving the tension of Ambidexterity. Then, two strategic orientations, Resource Orientation and Market Orientation, are proposed as antecedents and linked to ambidexterity. This leads to a set of hypotheses that are presented at the conclusion of the theoretical background. Next, the research methodology, measures and statistical procedures are presented, followed by the results of the data analysis. Finally, the discussion, implications and recommendations are presented.

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2 Theoretical foundation

In this chapter a theoretical discussion of the concepts of ambidexterity, transformational leadership and resource and market orientation is presented. The proposed interaction between the concepts is discussed and hypotheses are formed accordingly. At the end of this chapter the hypotheses are summarized in a structural model.

2.1 Ambidexterity

In his often cited article, March (1991) expands the concepts of ambidexterity and lays the foundation for a whole stream of research by recognizing that the ability to explore and exploit is vital to long term survival of firms. Exploration is the process of finding fundamentally new products, markets, processes or routine and the exploration process itself is characterized by path breaking, research, experimentation and risk taking. Explorative activities are commonly believed to thrive on organic structures and autonomy of the workforce. Exploitation is about increasing the efficiency and productivity through local search, refinement and variance reduction. It is more associated with machine organizations, path dependencies, and routines and process optimization. (Brown & Eisenhardt, 1998; Lewin, Long & Carroll, 1999)

Both exploration and exploitation require the organization to learn from previous experience and to build on current knowledge. (March, 1991) The 4I framework of Crossan, Lane & White (1999) disentangles the process of organizational learning by defining four distinct streams: a ‘top down’ flow, related to learnings coming from higher management (e.g. strategic changes) that transfers to the group level and eventually to the individual level. And reversely, the ‘bottom up’ flow, related to individual learning (e.g. ideas), gaining momentum through team levels and eventually be institutionalized at an organizational level. Both explorative and exploitative learnings can have these bi-directional flows, showing the complexity of these processes. (Jansen, Vera & Crossan, 2009)

Since the introduction of the concept of ambidexterity there has been debate whether it is possible, and if so in what manner, to combine exploration and exploitation within an organization. Although various researchers warned that trying both inherently results in lack of focus and therefore loss of competitive advantage (Levinthal & March, 1993), others quickly have concluded that strict commitment to the status quo is linked with rigidity to change and escalating commitments which inevitably have negative performance implications. (Ross & Staw, 1993) A valuable clarification has since been given by Gupta,

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Smith and Shally (2006), who state that exploration and exploitation may be mutually exclusive for a single individual, but in teams and firms these processes are generally orthogonal to each other. This view has been echoed by scholars since (e.g. Nemanich & Vera, 2009) and is assumed to be true in this research as well. The initial promoters of the concept of ambidexterity like March (1991) and Levinthal (Levinthal & March, 1993) have since received strong backup for their conclusion that ambidextrous firms achieve above average performance. (Tushman & O’Reilly, 1996, Gibson & Birkinshaw, 2004)

Conflicting demands of exploration and exploitation

Firms need to innovate in order to achieve and sustain above normal returns which are needed to secure long term existence, but firms also need to find a balance in dedicating time and resources into innovation efforts aimed at exploration versus efforts aimed at exploitation (March, 1991; Danneels, 2002). The process of innovation is in most theoretical models split in distinct phases: a generation phase that requires creativity to ‘think outside the box’ and challenge the status quo with new ideas and views. Making use of this creativity requires the capacity to implement ideas into an organization of existing practice, routines and conventions. (West, 2002) This is generally an iterative process and multiple innovation processes will exist in a firm at any given moment, stressing the importance of the ability to execute both simultaneously. (Rosing, 2011) The capability to execute both activities simultaneously is defined as Innovative Ambidexterity. Revenues from explorative innovation, aimed at entering new product-market domains (He & Wong, 2004) are more uncertain, more variable and on a longer time horizon. Revenues from exploitative innovation, aimed at improving existing product-market positions (He & Wong, 2004) are in general more certain and more direct. The exploitation trap (Levinthal & March, 1993) originates from the relative certainty and temporal proximity of revenues from exploitation activities, which makes it attractive for managers to designate an overweight amount of capabilities and resources to exploitation, at the cost of the investments in exploration. However, on a longer horizon, excess focus on the short term profit can lead to core rigidity and this will weaken a firm’s perspective on survival through innovation. Additional risk lies in the fact that strategic changes towards more exploration take time to generate results. (Auh & Menguc, 2005)

There is however also an exploration trap, as too much focus on exploration can capture a firm in a continuous cycle of search, discarding activities and unrewarding change while gaining not enough benefits from new activities. As with the exploitation trap, the

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overweight assignment of resources to exploration leads to underdeveloped exploitation activities and in turn makes a firm inefficient by reducing the ability to reap short term benefits though optimizing of the current processes and makes it overly vulnerable to short time variation. (Levinthal & March, 1993) Successful incumbents are often caught by the liabilities of age as exploitation drives out exploration, while entrepreneurial newcomers are often trapped in their exploratory routines when their context shifts towards different needs. (Smith & Tushman, 2005)

In the long-term survival of organizations both types of activities are essential, but the contradictions from managing two fundamentally different competences is challenging. Successful organizations in a dynamic environment that are regarded as ambidextrous are aligned and efficient in their mature manufacturing process and pro-actively aware of relevant trends and changes in markets, technology, politics, social and cultural preferences and capable to digest them. As Levinthal and March put it, a firm should engage in enough exploitation to ensure its current viability and engage in enough exploration to ensure future viability. In most accounts in recent research, the simultaneous pursuit of both exploration and exploitation is showed to add superior value than a significant imbalance between the two. (Levinthal & March, 1993; Gibson & Birkinshaw, 2004; He & Wong, 2004; Tushman & O’Reilly, 1996)

Framework for antecedents

Early concepts prescribed dual structures to resolve the tension between exploitation and exploration. However, it is recognized that both capacities are complex, causally ambiguous, widely dispersed and time consuming to build (Barney 1991, Prahalad and Hamel 1990) and that a lot of cross-fertilization is missed by keeping them separated within the firm. Contextual ambidexterity was introduced by Gibson & Birkinshaw (2004) and is a more sustainable model, as it relies on the ambidextrous transformation of an entire business unit and does not leave the adaptation ability at the separate units or functions for new business development. The emerging awareness is that the entire organization, so organizational architectures, competencies, processes and culture needs to be ready to handle the conflicting demands for alignment and adaptability. (Duncan, 1976; Tushman & O’Reilly, 1996)

Presently, empirical evidence on the root causes of effective simultaneous execution of exploration and exploitation is still scarce (Lavie, Stettner & Tushman, 2010). It is safe to assume that a combination of factors leads to ambidextrous behavior; to structure these

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factors, this paper adopts of the ‘competency based framework’ of Lado, Boyd and Wright (1992); it identifies four general categories of competences that contribute to sustained

competitive advantage: Managerial based, resource-based, output-based and

transformation-based competencies. Three of these are used to build the structural model of predictors.

Upper echelon theory suggest that Managerial based competencies have a central role in shaping a firm’s future. The long-standing conviction is that the influence of a leadership team on innovation cannot be overestimated (Hambrick & Mason, 1984; Day, 1994), and in a recent literature review, Helfat & Martin (2015) conclude that there still is a wide consent among researchers that innovativeness within organizations can only be fostered by management teams willing and able to do so. Leaders must provide suitable strategic context, but it is also argued by scholars that direct, personal leader-employee interaction plays an important role in achieving this innovativeness. (Mumford, Scott, Gaddis & Strange, 2002; Lee, 2008) As such, leadership is proposed to be an antecedent to ambidexterity and is further discussed in chapter 2.2.

Resource based competencies are based on “anything forming a strength or weakness of the firm” (Wernerfelt, 1984 p172). Resource based competencies exist in the internal environment of a firms and can thus be leveraged outward towards the market as drivers for innovation (Barney, 1986; Paladino, 2007). However, to develop and maintain a resource base that brings this advantage, conscious and consistent resource-building is needed. The strategic decision to develop resource based competencies is formulated as a resource orientation and its role as antecedent to ambidexterity is further discussed in chapter 2.3. Transformation based competencies are defined by Day & Wensley (1988) as the competence to successfully convert inputs into outputs. The awareness of external market inputs and the ability to use them internally for innovation is formulated as market orientation. The competence to create and sustain superior value for customers by responding to their current needs and indeed actively lead them in their future needs, is a transformational based competency. The processes involved are tacit and hence cannot be readily imitated by competitors (Hunt, Shelby and Lambe, 2000). As such, market orientation and its role and its role as antecedent to ambidexterity is further discussed in chapter 2.3.

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2.2 Leadership and Ambidexterity

To become ambidextrous on an organizational level, it is crucial that a proper division and balancing time, money and other resources is done right down to an individual level. (Jansen et al., 2009; Gibson and Birkinshaw, 2004) Direct leadership is proposed to play an important role in enabling individual employees to make such choices. (Lee, 2008) Leadership itself is defined as the process of defining the goals and visions, and influencing the activities of an organized group of people in order to achieve these goals. (Behling and Rauch, 1985)

As the key actors in managing the division of resources between innovating of the current state and innovating for the future, senior managers are of vital importance in setting a stage that enables an organization to become ambidextrous. Tushman and O’Reilly (1996) already highlighted the importance of a common culture and vision, supportive leaders and flexible managers as the key antecedents to ambidexterity. Smith and Tushman (2005) add that the articulation of distinct goals for the existing portfolio and the portfolio under development are essential to facilitate its acceptance and transforming them into common goals. On a higher level does a well-articulated and relentlessly communicated vision and set of values help building a common identity across the exploitative and exploratory units. (Tushman & O’Reilly, 2011) More concrete on leadership behavior, Goshal and Bartlett (1989, 1994) highlighted four focal elements to enhance ambidextrous behavior: managers should create discipline, stretch, support and trust amongst their followers. These elements aid to voluntarily exhibit initiative, cooperation and learning, but also motivates to strive to meet and exceed all implicit and explicit expectations. In a slightly different vein, Jansen et al. (2008) specified the senior managements behavior required to motivate followers throughout the organization as inspirational whilst focusing on intellectual stimulation and individual considerations. In general, O’Reilly & Tushman (2004) linked ambidextrous managers to ambidextrous organizations, on the premises that managers with the natural ability to tolerate and resolve conflicting interests of exploration and exploitation also have this effect on their followers.

Many of the above mentioned behavioral aspects are naturally found in transformational leaders. The foundations of the theory around transformational leadership were built by House (1977) and Burns (1978) and has been extended since. Transformation leadership is used to describe the behavior of charismatic, inspirational and visionary leaders that encourage followers to go beyond the call of duty, put the interest of the collective over that

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of the individual. (House, 1977; Burns, 1978; Bass, 1999; Shamir, House and Arthur, 1993). Scholars indicate four types of behavior transformational leaders exhibit: Charismatic behavior to inspire followers on an emotional level to an appealing vision. This increases loyalty to the collective, builds trust, enthusiasm and faith. MacKenzie, Podsakoff & Rich (2001) capture this behavior as the ‘core’ of transformational leadership’. Leaders must communicated high expectations and clear standards for conduct, performance and content of work. These standards must be enforced consistently, without making exceptions for individual employees or circumstances. However, individual considerations are important in individual task and goal settings and support by personal attention with a genuine interest. And finally intellectual stimulation that challenges followers into new ideas by stimulating rethinking of old ways of doing things. (Goshal and Bartlett 1994; Jansen et al., 2008; MacKenzie et al. 2001).

As such, Transformational leaders are natural promoters of change and, not surprisingly, many scholars have linked transformational leadership with innovation. Rosing et al. (2011) performed a meta-analysis of 31 studies of this subject and found an overall positive relation between transformational leadership and innovation. To analyze the effect of transformational leaders on Innovative Ambidexterity, a separation of exploration and exploitation allows the adoption of the afore mentioned 4I framework to map the streams of learning and the impact of a transformational leader on this.

Exploration is the process of finding fundamentally new products, markets, processes or routines. Institutionalized learnings need to be altered in order to achieve this. By using their individual consideration, transformational leaders build trust and self confidence amongst their followers. This gives them the confidence to take risk and challenge the institutionalized learnings. Combined with the intellectual stimulation, a force that inspires individuals to think outside the box and challenge conventional ideas, transformational leaders are a very powerful enablers of explorative innovation (Vera & Crossan, 2004). This effect causes bottom up learning, based on ideas from individual employees, flow up towards teams and eventually changing the organization. The reverse flow, a top down change in corporate direction for example, is aided by the transformational leader’s core ability to motivate followers to accept and implement and really engage in strategic decisions from a top management team. This is the top down learning and flows from an organizational level down to the teams and individuals. (Jansen et al., 2009)

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Exploitation on the other hand is about increasing the efficiency, productivity and quality of existing products, routines and processes and is thus about reinforcing institutionalized learnings. (March, 1991) Transformational leaders are foremost associated with explorative innovation, but there is also prior research indicating that exploitative innovation does in fact benefit from this leadership style. In a longitudinal study, Keller (2006) has investigated the effect of transformational leadership in R&D organizations and found a positive effect on both research projects (associated with explorative innovation) and, albeit smaller, effect on development projects (which are associated with exploitative innovation). In their research based on a single multinational in the context of an acquisition, Nemanich and Vera (2009) also found a positive effect on both exploration and exploitation. It seems plausible that intellectual stimulation and personal considerations give followers the necessary backup to come up with new ideas on incremental changes in existing product, routines and processes. And similarly, that a transformational leaders gives employees the motivation and belief to follow a more top down decision on incremental innovations. Therefore, transformational leaders stimulate the top down and the bottom up process of learning, regardless of the content of that learning is of an explorative or exploitative nature. And thus H1 is formulated:

H1: Transformational leadership has a direct, positive effect on Innovative Ambidexterity

2.3 Strategic Orientations and Ambidexterity

Top managers exert above mentioned influence through the formal strategic process, in which the course of the firm’s future is laid out. In line with Kortmann (2015) and building on strategic process and ambidexterity theories, it is proposed that strategic orientations are cultural implementation mechanisms that mediate between transformational leadership behavior and innovative ambidexterity. The internally oriented resource orientation is proposed as it focuses on a firm’s resources base to exploit opportunities and to neutralize treats. (Paladino, 2006) The externally oriented market orientation is proposed as it focusses on external developments and allows the organization to sense and seize future opportunities. (Kohli & Jaworski, 1990; Deshpandé, Farley & Webster, 1993) Both are discussed in the sections below.

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Resource orientation

Within the resource based view (RBV), Scholars aim to clarify how firms create and leverage an appropriate resource base to achieve a sustained competitive advantage. (Barney, 1991; Teece, Pisano & Shuen, 1997; Helfat & Peteraf, 2003). Resources that are valuable, idiosyncratic, immobile and hard or impossible to acquire by competitors are seen as internal sources for competitive advantage, if they are capable of yielding revenue (Barney, 1991; Dierickx and Cool, 1989; Hart, 1995) The RBV of the firm suggests that a firm can achieve a competitive advantage through the conversion of its resources into capabilities. Capabilities are the more actionable skills and routines that firms develop to react to dynamic changes in their environment. (Day, 1994; Teece et al. 1997) To make a distinction between the two, one could say that "resources are stocks of available factors that are owned or controlled by the organization, and capabilities are an organization's capacity to deploy resources" (Amit & Schoemaker, 1993, p. 35)

The RBV, or actually putting the principles of de RBV into practice, is seen as a strategic itself tool because it is based on a longer term assessment of the internal and external environment and provides directions for a firm to develop and leverage its resources and capabilities (Paladino, 2007). However, the RBV is a wide arching theory that focusses on the heterogeneity of firms, and in its current form it is impossible to evaluate to what degree a firm engages in activities that are in line with what is implicitly defined by the RBV. It is lacking the necessary analytical precision (Foss & Knudsen, 2003). Resource orientation (Paladino, 2007) is introduced to add this analytical precision and is defined as a measurement for the strategic orientation that aims towards development and deployment of resources in line with the resource based view.

Ambidexterity describes the ability of firms to pursue incremental and discontinuous innovation, simultaneous. Innovation itself can be distinguished in an idea generation phase and an implementation phase. Whether an innovation’s place of origin lies at the individual level or at the firm level and regardless of being of exploitative or explorative nature, all innovations need an implementation structure to become a real product or service. (West, 2002) The way a firm cultivates its resources is proposed to be of influence on this implementation structure. The connection between resources and ambidexterity has been made many times before, for example by Kyriakopoulos & Moorman (2004), who propose that larger or richer firms are able to dedicate more resources to exploration and exploitation and thus can become ambidextrous more easily; Benner and Tushman (2003),

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who argue that resource and capability management forms the foundation for both exploitative and exploratory activities; Jansen et al. (2006), who warn that the combined pursuit of exploration and exploitation puts strain on a firms resource slack capacity. Researchers generally agree that the ability of firms to dynamically develop and deploy resources into capabilities determine a firm’s success in executing exploration and exploitation strategies. (Eisenhardt & Martin, 2000)

Despite this general consensus, there is however little research available on the specific attributes of a resource base should possess in order to effectively execute explorative or exploitative innovation strategies. Resource orientation is proposed to make the these attributes more tangible and is measured along three independent focal points – uniqueness, synergy and dynamism - that are proposed to be important prerequisites for a resource bases that is facilitating innovative ambidexterity.

The RBV focusses on the heterogeneity of firms and their resources and capabilities. The superior returns generated by valuable resources are sustained by the fact that competitors are not in the position to acquire them within a reasonable timeframe or budget (Barney, 1991). The uniqueness of resources and capabilities aids both explorative and exploitative innovation as it enables firms to deliver products and services with innovative attributes that other firms cannot match and that augment the attractiveness of the innovation (Grant, 1991). Actively striving for this will enable a firm to “[…] accumulate unique bundles of resources that are difficult to replicate by competitors that enable them to increase profitability and, in the long term, market share.” (Paladino, 2008 p578)

Exploration is about discovering new products and services, but it is very likely that new capabilities are built on a base of core capabilities. Core capabilities can form the basis of different branches of product-market combinations (Prahalad and Hamal, 1990), so actively building resources and capabilities that can have synergy effects, aids explorative innovation. Exploitation is about making small incremental changes in products, services or routines and can benefit from learning from best practices currently existing in a firm (Adler et al, 1999). Actively looking for synergy effects facilitates the transfer of existing best practices to other activities and therefore aids exploitative innovation.

Base assumption of the RBV is that sustainable competitive advantage requires a constant building, integrating, reconfiguring and shedding of resources and capacities in order to keep ahead of the demands from a changing environment. (Teece et al., 1997, 2007) The analogy between the need for this dynamic capability (Eisenhart & Martin, 2000) and the

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firm’s need to constantly renew and develop its products and services is apparent. To facilitate these innovations, firms must create dynamic capabilities to foster collective learning and to transfer information and skills within the organization (Paladino, 2006). By managing a firm’s resources base according to these principles, the foundation is laid on which firms can innovate their explorative and exploitative activities alike.

Based on earlier research that showed a significant effects between resource orientation and a number of indicators of firm performance (Paladino, 2009), it is proposed that the constant attention to cultivate and develop a firm’s resource base, in line with the principles of the RBV and measurable by concept of Resource Orientation, will have a positive effect on ambidexterity.

H2: Resource Orientation is positively correlated with ambidexterity

Market Orientation

Market orientation is the organizational practice which aims to create and sustain superior value for customers and, by doing so, creating a competitive advantage for the firm. Studies have showed that the successful implementation of a market orientation has a positive relation to performance. (Deshpandé, Farley & Webster, 1993; Kennedy, Goolsby & Arnould, 2003; Beverland & Lindgreen, 2007).

Market orientation is a set of beliefs that puts the customer’s interest first (Deshpandé et al. 1993) but it is supposed to go beyond ‘putting the customer on top of the organizational chart’. It consists of routines and processes that create superior customer value through the generation, dissemination and use of information about the value chain and the current and future needs of customers. (Kohli & Jaworski, 1990). These routines and processes however, need to be so imbedded in every fiber of the organization that it is can be defined as a culture rather than a practice - “market orientation is a culture in which all employees are committed to the continuous creation of superior value for customers” (Narver, Slater & Tietje 1998 p242) Market orientation will provide a firm in-depth knowledge of customer needs and behavior that can be used to offer products and services that appeal to those needs, leading to above normal returns. (Day, 1994) Market disruption, for example by the entrance of a new firm that offers revolutionary new products or technology, may diminish its influence but will not eliminate the importance of its mechanisms in the long run. (Jaworski & Kohli, 1993). Market orientation is a more complex concept than just a well-accepted and logical management tool.

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Although Market orientation provides clear advantages though increased learning capabilities and optimizing the offered products and services to the customers’ needs, there are scholars who fear that it may also have a damping effect on the ability to achieve exploratory innovation (Levinthal & March, 1993). Seeing everything in the company through the current customers’ eyes has the inherent risk of diverting too much attention from the challenges of ‘tomorrow’ (Hamel & Prahalad, 1994). Narver et al. (2004) counters by proposing that this critique is based on an overly narrow perspective of market orientation and asserts that market orientation consists of a responsive and a proactive dimension. Atuahene-Gima, Slater and Olson (2005) have refined the dimensions responsive and proactive Market Orientation and have empirically collected supportive arguments that the market orientation is indeed composed of these two dimension.

Responsive Market Orientation is the capability to generate market intelligence through continuously monitoring market developments and by listening to the needs expressed by existing customers. This market information must be disseminated and used to optimize current products (Atuahene-Gima, Slater and Olson, 2005; Jaworski, Kohli and Sahay, 2000; Slater and Narver, 1995). The responsive dimension is as such focused on the incremental innovation than stems from mainly listening to and acting on the current experience of existing customers. Atuahene-Gima, Slater and Olson (2005) found a positive the relation between responsive market orientation and new product or service development, with the remark that being overly focused on the expressed and current needs of existing customers may put a damper on radical innovation. Firms that exhibit responsive market orientation are expected stay within their current mental models and refine established routines and processes (Baker and Sinkula, 2007). Therefore, this study proposes that a responsive market orientation is positively associated with exploitative innovations.

Proactive Market Orientation is the behavior to uncover the latent and unarticulated needs of current and future customers. It is a complementary and opposite pole to responsive market orientation and it boils down to discovering, disseminating and using the latent and unarticulated need of customers for new product development. This should be done by observing their current behavior, by keeping intimate cooperative relations with lead customers and by exploration to discover their future needs. As one of the consequences, the pro-active market oriented firm has to cope the risk of possibly cannibalizing the sales of existing products. (Jaworski, Kohli and Sahay, 2000; Atuahene-Gima et al., 2005) Jaworski, et al. (2000) define this dimension as ‘driving the market behavior’ and firms that exhibit this

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behavior are expected to adopt new mental models that prepare for breakthrough in established routines and processes (Baker and Sinkula, 2007). Proactive market orientation is tied to generative processes and a driving the market culture, therefore this study proposes that a proactive market orientation is positively associated with explorative innovations.

Traditional views dictate that exploration comes a degree of inefficiency and cost, following from the actions based on unfamiliar information and knowledge (March, 1991; Levinthal and March, 1993). If too many resources are dedicated to cascade innovations in new product development, new markets or new services, firms run the risk of not exploiting their current portfolio as much as needed. On the other hand there are fears that over exploitation may have a damping effect on exploratory innovation because the challenges from tomorrow are neglected. (Hamel & Prahalad, 1994; Levinthal & March, 1993). More recent, scholars are beginning to adopt market orientation as a combined construct that can transform a “either or” culture into an “and” culture that follows the current premises of ambidexterity: If executed well, explorative innovations from proactive market orientation can break the inertia caused by incremental innovations, but may also generate customer insights that can be used to refine existing products and services for current customers. On the other hand, initial inefficiencies of exploratory innovation can be effectively addressed by increasing efficiency, quality and consistency through refinement that comes from responsive Market orientation. Whereas responsive market orientation may also generate customer insights that can be used for radical innovations. (Kyriapopolous and Moorman, 2004; Menguc and Auh, 2008) Therefore this study proposes that responsive and proactive market orientation together can create a complementary effect that is positively related to the level of ambidexterity.

Both the responsive and proactive Market Orientation dimension are important and hard to imitate capabilities, because the information generation and use processes involved require complex interactions among individuals and departments within the firm (Jaworski and Kohli, 1993) The two individual dimensions and the higher order construct of Market Orientation relate to those of Ambidexterity, as proposed in the following hypotheses:

H3: Market Orientation is positively correlated with ambidexterity. In this relation, proactive market orientation exploration (H3b) and responsive market orientation has its strongest effect on innovative exploitation (H3c).

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2.4 Leadership and Strategic Orientations

Strategic orientations can be considered a sub dimension of the culture construct (Noble, Sinha & Kumar, 2002) and strategic orientations are a reflection of the values and beliefs of top management teams (Hitt, Dacin, Tyler & Park, 1997). Market and Resource Orientation are described as such cultures. The power of a cultural approach is that a culture is “the pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide norms for behavior in the organization” (Deshpandé and Webster, 1989 p4) and thus has an effect down to the core behavior of employees. If a firm aims to make all employees committed to participating in the creation of superior value for customers, transformation on a culture level is essential. (Narver, Slater & Tietje, 1998) Top management plays a critical role in changing a firm’s culture in general. (Schein, 1983; Bass, 1990; Senge, 1990; House & Podsakoff, 1994) According to Senge (1990) the modern day roles of a leader are in the designing, teaching and fostering of firms into new and shared visions. Building an organization’s culture and shaping its evolution is the ‘unique and essential function of leadership’. Schein (1983) recognized deliberate role modelling and coaching and commitment and attention to change the most decisive traits of managers capable of transforming cultures. Day (1994, P48) adds “senior management leadership is needed to reshape the culture, through proposing a challenging vision of the future or setting a major performance targets”. The decision to allocate sufficient resources further helps the perceived sincerity of transformation. (Kennedy et al., 2003) By ensuring that top management adopts a strategic orientation, the process of cascading leadership (Kennedy et al, 2003) can be started to move the entire organization towards that orientation. Top management should persuade local managers of its importance and when local leadership has become committed, decision making with market and resource orientation in mind can engrain even deeper into the organization.

Creating a culture of Market Orientation involves achieving organizational commitment to its core values and then develop the required resources, routines and incentives and skills. Webster (1988, P37) concludes: "Customer-oriented values and beliefs are uniquely the responsibility of top management.” And Day (1999) adds that transformations towards a customer orientation require senior leaders who articulate organizational aims that are harmonious with customer satisfaction drivers. While researchers confirm the importance of the general role top management team, far fewer have relation between a leadership style

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and market orientation. Harris and Obgonna (2001) did do an empirical analysis on leadership style and found that over 27% of the variation in market orientation could be attributed to the style of leadership, confirming that it is indeed a critical antecedent of market orientation.

This research proposes that a transformational leadership style is especially effective in creating a market orientation. The very core ability of transformational leaders is to articulate an appealing vision towards a goal, to make sure that the goal is broadly accepted and to provide an appropriate environment to achieve that goal. All scholars cited in the previous paragraph share in the conclusions that cultural rooted capacities, like market orientation, need this clarity in vision communication, commitment and support (e.g. Narver, Slater & Tietje, 1998) to achieve the organizational commitment needed for a transformation.

Transformational leaders further exhibit supportive behavior that is likely to encourage individuals in the organization to track changing markets, share market intelligence with others in the organization and be responsive to market needs. (Jaworski and Kohli, 1993) Supportive leaders that consider the emotion of their followers and engage them in decisions, boost the self-confidence and enthusiasm of their followers to embrace the principles of market orientation (Harris and Obgonna, 2001) Supportive leaders that have individual consideration create a feeling of ‘leadership proximity’ that is also beneficial to the transformation towards market orientation (Kennedy et al, 2003).

Transformational leaders’ intellectual stimulation, risk taking and acceptance of occasional failures as being natural, encourages followers to propose and introduce new offerings in response to changes in customer needs. (Kohli and Jaworski, 1990) If a firm has the ambition to transform itself to ‘leading customers, not simply following them’ and where ‘every business must see itself as a service business’, a leadership style that challenges everyone to rethink the old way of doing things is required. (Narver, Slater & Tietje, 1998) Transformational leaders are able to reduce the interdepartmental conflict that may arise from this goal, and increase connectedness and decentralized decision making. (Narver et al, 1998)

This leads to the following hypothesis on the effect of transformational leadership on market orientation:

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Resource orientation

The role of a leadership team in building a competitive advantage bringing resource base has been under the interest of many researchers of the resource based view (for example Mahoney, 1995; Barney, 1991; Castanias & Helfat, 1991; Hambrick & Mason, 1984). Barney (1991, p117) describes the ability of a leadership team “to understand and describe the economic performance potential of a firm’s endowments” as an important factor in a firm’s success. By making strategic decisions on resource investments and divestures, leaders have a major contribution in the development of valuable resources and capabilities. (Eisenhardt & Martin, 2000) Leaders that persistent in a strategy to focus on resource development - even when future results in revenue or new product development are not yet obvious - fill the ‘bathtub’ of resources from which capabilities and competitive advantage can grow. (Dierickx & Cool, 1989) A leadership team’s ability to create a competitive advantage can be seen a resource in itself (Castanias & Helfat, 1991).

The scholars cited above agree that a leadership team has an important role in making managerial decisions that can lead a firm to a competitive advantage bringing resource base, in line with the principles of the RBV. A resource orientation however goes further than managerial decision. It is about rooting an organizational culture in which everyone is concerned about the uniqueness and actively devoting time and effort to building a resource base that is not easily matched by competitors. For established resources, a resource oriented firm strives for maximal interdepartmental synergy and keeps key resources clear of the constraints of an identifiable owner. By constantly building, integrating, reconfiguring and shedding of resources, a resource oriented firm increases operational efficiency and effectiveness and employs it resources for learning and innovation. (Paladino, 2007)

As argued above, the cultural aspects of a strategic orientation requires more than a managerial focus – building a culture is a unique and essential function of leadership. The research on the importance of leadership in the context of firm resources is however fairly scarce. Some evidence on the importance of a leadership team on the resource commitment is found by De Brentani & Kleinschmidt (2015), who conclude that an organization’s culture to commit to a well nurtured resources base (i.e. a resource orientation) has a positive influence on successful new product development, especially when it is supported by a leadership team that is involved as visionaries, sponsors and champions. In line with the reasoning towards market orientation, this research proposes that a transformational leadership style has a positive effect in creating a culture of resource orientation.

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Transformational leaders excel in articulating an appealing vision towards a goal, facilitating acceptance and providing a suitable environment to achieve a culture of resource orientation. Transformational leaders exhibit supportive behavior and personal considerations that boosts the self-confidence and enthusiasm of their followers to share resources throughout the firm. Transformational leaders are able to reduce the interdepartmental conflict and increase connectedness, increasing the potential for synergy. Intellectual stimulation, risk taking and acceptance of occasional failures, encourages followers to propose and introduce new ideas that can lead to unique and hard to imitate resources. By challenging traditional conventions transformational leaders facilitate the shedding of old resources.

This leads to the following hypothesis on the effect of transformational leadership on resource orientation:

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3 Structural model

Summarizing the theoretical foundation, it is proposed that transformational leaders with the natural ability to resolve conflicting interests of explorative and exploitative learnings, have a positive effect on the ambidexterity within firms. Secondly, leaders exert influence through the strategic orientations. Both resource and market orientation are introduced as sub dimension of the culture construct, in the sense that they form a “pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide norms for behavior in the organization”. (Deshpandé and Webster, 1989 p4) Strategic orientations are cultural implementation mechanisms that partially mediate the relation between transformational leadership behavior and innovative ambidexterity. Resource orientation is expected to increase innovative ambidexterity as it focuses on a firm’s resources base to exploit opportunities and to neutralize treats. (Paladino, 2006) Market orientation is expected to increase innovative ambidexterity as it focusses on external developments and allows the organization the sense and seize future opportunities. (Kohli & Jaworski, 1990; Deshpandé, Farley & Webster, 1993) This leads to the following structural model: Transformational leadership Resource Orientation Market Orientation Innovative Ambidexterity H5 H4 H2 H3 H1

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4 Research Method

4.1 Data collection and sample

The quantitative data for this research is acquired through a collective online survey, composed by a team of five graduate students from the Business school of the University of Amsterdam. All research based on this data is in the field of ambidexterity, leadership and innovation. The combined survey consist of 101 closed questions and 6 control variables to filter the responses and strengthen the explanatory value of its content.

As an incentive to improve the response rate of the survey, the team made a donation to a charity goal (The Movember foundation) for each completed survey. The survey was send out to relations in the professional networks of the team members. In this way, there was a certain level of control in respondent selection. However, as the online survey tool was open to anyone accessing it, it has been possible that though forwarding of the original invitation, others than the original recipients have filled in the questionnaire. This makes it impossible to objectively determine the response rate.

While the survey was composed in Dutch, we assume that all respondents are Dutch employees working in both domestic and international companies.

The survey was open from 29 October to 14 November 2014 and 173 complete responses were received. Two methods were used to filter the survey database: First, test respondents gave a minimum feasible completion time. All cases that were completed in a shorter timeframe were dropped from the results. Next, all cases with ‘straight-line’ responses (e.g. all answers ‘7’ in a 1-7 Likert scale) were manually filtered and dropped as well. In total 23 cases where dropped, leaving 150 cases. To test the influence of late versus early responses, a t-test comparison was performed, revealing no significant differences between the two groups.

4.2 Measures

The measure for each variable were all derived from published papers and thus all originally in English. As per consensus decision the survey was conducted in Dutch, in order to get the maximum response rate while minimizing the risk errors due to individual translations. To preserve the original and exact contents of each item, all questions where translated from English to Dutch and back to English by different team members. Deviations from the

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original questions where discussed within the team and the necessary adjustments were made in turn. The survey measures the following variables:

Transformational leadership

The measure for transformations leadership is derived from MacKenzie, Podsakoff & Rich (2001) and consists of 13 items in four factors: Core transformational leadership, High

performance expectations, Supportive leader behavior and Intellectual stimulation. These

measures have an internal consistency in the original paper of α = 0.86. The loading and Cronbach’s Alphas reported in the tables below are based on the current survey data.

Resources Orientation

Resource orientation measures the extent to which a firm exerts behavior that is consistent with the RBV. The measure for resource orientation is derived from Paladino (2007) and consists of 15 items that are distributed over three factors: Dynamism, Synergy and

Uniqueness. These measures have an internal consistency in the original paper of α = 0.82.

The loading and Cronbach’s Alphas reported in the tables below are based on the current survey data.

Market Orientation is defined by Narver and Slater as “the organizational culture that most effectively and efficiently creates the necessary behavior for the creation of superior value for buyers and thus, continuous superior performance for the business” (Narver and Slater, 1990, p21). The measure for market orientation is derived from Atuahene-Gima, Slater & Olson (2005) and consists of six items that are distributed over two factors: Responsiveness

and Proactiveness. These measures have an internal consistency in the original paper of α =

0.9. The loading and Cronbach’s Alphas reported in the tables below are based on the current survey data.

Innovative Ambidexterity

The measure for innovative ambidexterity is a second-order factor, derived from Jansen, Tempelaar, van den Bosch, & Volberda (2009) and consists of 8 items and first-order factors:

Exploitative and Explorative Innovation. These measures have an internal consistency in the

original paper of α = 0.86. The loading and Cronbach’s Alphas reported in the tables below are based on the current survey data. Innovative ambidexterity is composed of two measures, which, in line with March (1991), are assumed to be orthogonal vectors.

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Intuitively, taking the mean of all items Exploratory and Exploitative Ambidexterity does not does not fully do right to the concept of Innovative Ambidexterity. As an example in descriptive terms, a firm that scores very low on Exploratory Innovation and very high on exploitative innovation would score, when a mean was calculated, a ‘middle of the scale’ result on innovative ambidexterity. It can be argued that a firm with this kind of imbalance between the two dimensions of Innovation is less ambidextrous than a firm that would score an average result on both dimensions.

Gibson and Birkinshaw (2004) therefore multiply the factors of alignment and adaptability into a single scale for Ambidexterity, following their argument “that these two capacities are non-substitutable and interdependent.” Multiplying the two seems reasonable from a theoretical point of view. However, in their research, Jansen, Tempelaar, van den Bosch, & Volberda (2009) test three different computation methods to compute the level of ambidexterity from the exploration and exploitation dimensions and use the result as independent variable in a regression test with performance data as dependent variable. Their conclusion is that adding both dimensions gives better prediction, albeit marginally better, of performance than multiplication does. Therefore, the method of adding is adopted, in line with Jansen, Tempelaar, van den Bosch, & Volberda (2009).

Exploratory Factor analysis

An exploratory factor analysis was carried out to investigate to what extent the individual items of each measure load on the intended variable. All items easily exceed a loading of .40 on their intended variable, except for item 3 and 4 of innovative exploitation. These items have a loading that is higher than .30 but also have a loading on Innovative Exploration. Since we will be using the innovative ambidexterity measure as a combination of Exploration and exploitation, the co-loading of the two items of exploitation is deemed acceptable. The details of the item loadings can be found in the appendices.

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4.3 Control variables

Respondent tenure and rank in the organization were collected allow for potential strengthening of the conclusions. Of the respondents, 29% indicated to be part of their firms’ top management, 24% is part of middle and 16% lower management. 27% of the respondents indicated to have no managerial roles. Two control variables were included to strengthen the explanatory power of the survey. Firm age was introduced as to control for the tendency of established firms to favor stability and exploitation of exploration. Firm size was introduced as larger firms may be in better resource endowment to simultaneously perform explorative and exploitative

innovation, they may on the other hand also lack the flexibility to be actually ambidextrous.

Table 4.1 Managerial position Top management 44(29%) Middle management 24(28%) Lower management 42(16%) Employee 40(27%) Firm size (number FTE)

<10 Employees 27(18%) 10-50 Employees 33(22%) 50-250 Employees 22(15%) >250 Employees 68(45%) Firm age <5 Years 11(7%) 5-15 Years 20(13%) 15-50 Years 51(34%) >50 Years 68(45%)

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5 Analysis and Results

5.1 Statistical procedure

The statistical analysis of the responses was done with the Statistical software Package for Social Sciences (SPSS). All responses were screened for missing data and the reverse coded items where recoded into new variables.

Next, a test of the internal reliability showed Cronbach’s Alphas above or around the advised level of 0.8 for all measures except for innovative exploitation (0.66). Rejecting one or more items from this scale did not improve the scale’s reliability and therefore it is maintained in its original form.

The test for normality showed that the following transformational leadership and resource orientation where normally distributed. Market orientation, innovative exploration, and innovative exploitation were moderately negative skewed and initially failed the Kolmogorov-Smirnov and Shapiro-Wilk tests for normality. For market orientation, all three items of Responsiveness and items 1 and 2 of Pro-activeness were normalized. All four items of innovative exploration and item 1 and 4 of innovative exploitation were normalized. All of these items were normalized with a square root transformation. After normalization of these individual items, all measures showed non-significance in both the Kolmogorov-Smirnov and Shapiro-Wilk tests for normality. The resulting distribution data is found in the appendices.

For the regression analysis, the data was tested for linearity and non-collinearity. The residuals in turn were tested for independence, heteroscedasticity and normality. The linearity of each independent variable with dependent variable was checked and all showed non-significant results, rejecting the hypotheses of non-linearity. The correlation matrix reveals no highly correlated independent variables and thus no suspicion of pairwise collinearity. A Variation Inflation Factor (VIF) analysis showed scores between 1.3 and 1.5, well below the rule-of-thumb limit of 10 (Neter et al., 1990), indicating no risk of multicollinearity problems. With a Durbin-Watson score of 1.88 we assume independence of the residuals. The homoscedasticity of the residuals of each independent variable is checked by observing the scatterplots of residuals versus the predicted values. The histograms and P-P plot of the residuals show a normal distribution around zero. The criteria for Homoscedasticity and Normality of the residuals are thus met.

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A correlation analysis and multiple regression analyses were performed to test the hypothesized effect of the model. The direct effects were examined by performing a series of hierarchical regressions to investigate the presence of mediation. The regression was founded with the control variables in step 1. Transformational leadership was added to the model in step 2 and in the final step 3, the strategic orientations were entered into the equation.

In a next step, the entire construct has been evaluated by using the modeling macro ‘Process’, developed by Andrew F. Hayes. This macro integrates with SPSS and uses an ordinary least square or logistic regression-based framework to analyze and quantify the direct and indirect effects of moderation, mediation or moderation-mediation models. The user of this macro can choose from numerous templates of simple to very elaborate models to pick a framework that matches the hypothesized construct. (Hayes, 2012)

The Process macro makes use of bootstrapping, an advancement over the more traditional causal step approach of testing mediation frameworks as described by Baron & Kenny (1986). The causal step approach is as a method not the most likely one to detect a moderating effect of a proposed variable and is by definition only able to detect but not to quantify the power of an intervening effect. The bootstrap method creates new datasets by resampling from original sample with replacements. These datasets are used to produce values of the indirect effects and use them to create a distribution. If the distribution between the lowest 2.5% and the highest 2.5% (or the 95% confidential interval) does not cross zero, we can say that, with 95% confidence, the indirect effect differs from zero. (Hayes 2009) Another benefit of using bootstrapping is the ability of this method to cope with non-normal distributed variables, which as mentioned before, is the case for the original distributions of Market Orientation and the Ambidexterity variables. The recommended resampling quantity of 5000 times was used. (Hayes 2009)

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5.2 Correlation analysis

Table 5.1: Means, Standard Deviations, Correlations and Reliabilities

Variables Items M SD 1 2 3 4 5 6 7 8 9 10 1. Firm Size 1 3.17 0.93 - 2. Firm Age 1 2.87 1.18 0.636** - 3. Transformational leadership 13 4.72 0.96 -0.197* -0.176* (0.91) 4. Resource Orientation 15 4.56 0.74 -0.049 -0.008 0.438** (0.84) 5. Responsive MO 3 4.64 1.23 0.296** 0.155 0.398** 0.367** (0.80) 6. Proactive MO 3 4.42 1.19 0.004 -0.122 0.364** 0.462** 0.402** (0.73) 7. Market Orientation 6 4.53 1.01 0.182* 0.022 0.455** 0.494** 0.843** 0.832** (0.76) 8. Innovative Exploration 4 4.39 1.18 -0.227** -0.208* 0.300** 0.463** 0.141 0.550** 0.408** (0.80) 9. Innovative Exploitation 4 4.49 0.96 -0.039 -0.082 0.403** 0.452** 0.397** 0.455** 0.508** 0.504** (0.66) 10. Innovative Ambidexterity 8 8.78 1.86 -0.164* -0.174* 0.399** 0.528** 0.294** 0.584** 0.522** 0.895** 0.836** (0.80) Reliabilities are reported along the diagonal; N=150; * p<.05 ** p<.01

The relationship between transformational leadership and innovative ambidexterity : and the mediating role of strategic orientations