Faculty of Economics and Business - MSc BA Strategy track (6314M0250)
Author: Jeroen Hangx (10660518)
Supervisor: Dr. Dipl.-Wirt.-Ing. Sebastian Kortmann Date: 30-01-2015
The relationship of Transformational Leadership on Innovative
Ambidexterity: The mediating effect of Market Orientation
Abstract
Innovative ambidexterity (i.e. simultaneously engaging in exploratory- and exploitative innovations) is essential for the survival of a commercially oriented organization. This study examines the role of transformational leadership and market orientation (responsive and proactive) as an antecedent to innovative ambidexterity. The findings confirm this hypothesized relation and conclude that both antecedents have a positive influence. Because of these findings, managerial implications arise. Furthermore this study explores the nature of the relationship of transformational leadership on innovative ambidexterity. In more detail, results indicate that market orientation serves as a mediator in this relationship. The culture created by market orientation is known for uniting opposing capabilities and therefore explains how organizations can simultaneously engage in exploratory- and exploitative innovations (i.e. innovative ambidexterity). This study aims to provide more clarity in how innovative ambidexterity can be achieved and poses areas for future research.
Keywords: [innovative ambidexterity, transformational leadership, responsive market orientation, proactive market orientation]
Statement of originality
This document is written by Jeroen Hangx, 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.
Table of content
Abstract ... 2
Chapter 1: Introduction ... 4
Chapter 2: Literature review ... 7
2.1 Ambidexterity ... 7
2.2 Innovative ambidexterity ... 8
2.3 Transformational leadership ... 9
2.4 The effect of transformational leadership on innovative ambidexterity ... 11
2.5 Market orientation... 13
2.6 The effect of market orientation on innovative ambidexterity ... 14
2.7 The effect of transformational leadership on market orientation ... 16
2.8 The mediating effect of market orientation ... 17
Chapter 3: Conceptual model... 19
3.1 Research design ... 22 Chapter 4: Methodology ... 23 4.1 Sample ... 23 4.2 Descriptive statistics ... 23 4.3 Measures ... 25 4.3.1 Transformational leadership ... 25 4.3.2 Innovative ambidexterity ... 26 4.3.3 Market orientation ... 27 4.4 Control variables ... 29 Chapter 5: Analyses ... 32 5.1 Bivariate correlations ... 32 5.2 Regression analyses ... 34
5.3 Results regression analyses ... 41
5.4 Mediating effect ... 43
5.5 Results mediating effect ... 47
Chapter 6: Discussion ... 48
6.1 Managerial implications ... 51
Chapter 7: Limitations and future research ... 52
Chapter 8: Conclusion ... 53
Chapter 1: Introduction
The ultimate goal of a commercial firm is to ensure performance. Researchers have argued that sustained organizational performance is rooted in exploiting existing competences and exploring new opportunities (He & Wong, 2004; Gibson & Birkinshaw, 2004). In this sense, organizations need to be efficient enough to exploit today’s business, but at the same time engage in sufficient explorative activities to being able to exploit tomorrow’s business. Ambidexterity refers to the ability of organizations to combine these to contradictory activities at the same time. But simultaneously managing exploration and exploitation appears complex and difficult to achieve since they require fundamentally different and inconsistent architectures and competences that can create paradoxical challenges (Jansen, George, Van den Bosch & Volberda, 2008). Therefore research has focussed on how ambidexterity can be achieved. Initial research was done on structural ambidexterity, which mainly focussed on spatially separating activities into separate organizational units (Gupta, Smith & Shalley, 2006). Although this form of ambidexterity has proven useful, this research focuses on the capability of organizations to simultaneously develop incremental [exploitative] and discontinuous [exploratory] innovations within one organizational unit. This capability of achieving high levels of both incremental and radical innovation is labelled ‘innovative ambidexterity’ (Lin & McDonough, 2011). Different factors have been taken into account that could enable ambidexterity such as the appropriate structure (Gilbert, 2005; Tushman & O’Reilly, 1996) and context (Gibson & Birkenshaw, 2004). In line with this, Ghoshal and Bartlett (1994) argue that organizational context is created and renewed by management, and this is thus highly dependent on managerial actions and practices. Therefore, more recent research highlights the role of top management in supporting innovative ambidexterity (Alexiev, Jansen, Van den Bosch & Volberda, 2010). And because tasks of exploring and exploiting involve radical different activities, they often require
Jansen, Vera & Crossan (2009) made a distinction between leadership styles and their effect on innovative ambidexterity. They stated that transformational leadership behaviours contribute significantly to adopting generative thinking and pursuing exploratory innovation. Transactional leadership behaviours, on the other hand, facilitate improving and extending existing knowledge and are associated with exploitative innovation. However, Nemanich & Vera (2009) state that transformational leadership is overall positively related to ambidexterity (Nemanich & Vera, 2009). This finding challenges existing wisdom associating transformational leadership with exploration and transactional leadership with exploitation. Therefore, to provide more clarity on the subject, this study begins with re-examining the relationship between transformational leadership and innovative ambidexterity.
The contribution of this study lies in incorporating market-orientation in this relationship. In general, market orientation is seen as a unifying belief that emphasizes serving and creating value for customers (Ruekert, 1992). In fact, market orientation is an overarching culture or context that unites and integrates disparate and opposing capabilities (Menguc & Auh, 2008). And since innovative ambidexterity is concerned with such opposing capabilities (i.e. exploratory- and exploitative innovation), it is expected that market orientation mediates the relationship between transformational leadership and innovative ambidexterity. This view is supported by Gima (2005) who stated that market orientation guides managerial decisions toward simultaneously allocating resources to exploit existing product innovation as well as develop new innovation capabilities. Taken together, it is expected that market orientation serves as a boundary spanning culture through which innovative ambidexterity is achieved.
This study contributes to the current body of research by examining the mediating effect of market-orientation on the relationship between transformational leadership and
innovative ambidexterity. The findings of this study could be of value to managers if it would prove that incorporating transformational leadership and market orientation could lead to achieving innovative ambidexterity, and by doing so improve performance.
This research is divided into 7 chapters. This first chapter serves as the introduction and partly emphasizes the need for this research. Chapter 2 reviews the literature on transformational leadership, innovative ambidexterity and market orientation and presents the gaps in the literature that form the basis of this research. Chapter 3 presents the conceptual model with an overview of all hypotheses that followed from the literature review. Chapter 4 describes the methodology including the sample, descriptive statistics, measures and control variables. The analyses used in this study and results of these analyses will be presented in Chapter 5. Chapter 6 includes the discussion of all previous chapters and examines the effects found in the study. The limitations and areas for future research are also founds in Chapter 7. The final conclusion is presented in the last part of this research, Chapter 8.
Chapter 2: Literature review
2.1 AmbidexterityOne basic contribution from the study of organizations was that different organizational forms were associated with different strategies and environmental conditions (Lawrence & Lorsch, 1967; Woodward, 1965). Traditionally, a distinction was made between firms operating in turbulent or stable environments. In response, Burns & Stalker (1961) defined organic structures, characterized by flexibility, informality and authority vested in situational expertise, best suited for turbulent environments. On the other hand, they defined mechanistic structures, characterized by rigidity, formality, bureaucratic values and principles best suited for stable environments. This shows previous research was concerned with a trade-off on which organizational form to choose that suited the company and the environment best.
More recently, studies of adaptive processes focussed on the exploration of new possibilities and the exploitation of old certainties (Schumpeter, 1934; Kuran, 1988). ‘Exploration includes things captured by terms such as search, variation, risk taking, experimentation, play flexibility, discovery, innovation. Exploitation includes things such as refinement, choice, production, efficiency, selection, implementation, execution’ (March, 1991. But exploitation and exploration required different architectures and competences that could create paradoxical challenges (Jansen, George, Van den Bosch & Volberda, 2008).
Tushman & O’Reilly (1996) made a considerable contribution to this body of research in which they showed the need for a different approach. ‘Almost all successful organizations evolve through relatively long periods of incremental change punctuated by environmental shifts and revolutionary change. These discontinuities may be driven by technology, competitors, regulatory events, or significant changes in economic and political conditions’ (Tushman & O’Reilly, 1996). To foster incremental change and react to revolutionary change, both exploration and exploitation are needed. Therefore, successful
business demands, while also adaptive enough to changes in the environment that they will still be around tomorrow (Duncan, 1976; Tushman & O’Reilly, 1996). While this captures the basic notion of ambidexterity, further distinctions can be made. For example, structural ambidexterity supposes that employees and business units are either focussed on exploration or exploitation and that managers at the top need to act ambidextrously by integrating exploitative and exploratory activities (e.g., Smith and Tushman 2005). Contextual ambidexterity refers more explicitly to the context and culture that enable employees to conduct both exploratory- and exploitative activities. This research will focus specifically on another form of ambidexterity, namely innovative ambidexterity.
2.2 Innovative ambidexterity
Sustained performance in a particular product class is anchored in a firm’s ability to compete at multiple points in a firm’s innovation space – in continual incremental improvements at the technology/market origins as well as innovation at one or more other points in a firm’s innovation space (March, 1991). To achieve innovative ambidexterity firms should develop exploratory and exploitative innovation simultaneously in different organizational units (e.g. Benner and Tushman, 2003; Tushman and O’Reilly, 1996). However, as the ambidexterity paradox implies, exploitative and exploratory innovations are associated with different tasks, time frames and search routines (Katila and Ahuja, 2002). Exploratory innovations are radical innovations and are designed to meet the needs of emerging customers or markets (Benner and Tushman 2003, p.243). They are aimed at offering new designs, new markets and new channels of distribution (Abernathy and Clark, 1985). Exploitative innovations are incremental innovations and are designed to meet the needs of existing customers or markets (Benner and Tushman, 2003 , p.243). They broaden existing knowledge and skills, improve established designs, expand existing products and services, and increase the efficiency of existing distribution channels (Abernathy and Clark, 1985, p.5).
In contrast to ambidexterity in general, innovative ambidexterity refers explicitly to the ability to simultaneously develop incremental [exploitative] and discontinuous [exploratory] innovation. This means that innovative ambidexterity can be achieved at multiple levels in the organization, i.e. different units can cope with the contradicting activities as well as single individuals (Kortmann, 2012). Furthermore, innovative ambidexterity is related to an organization’s actual exploration- and exploitation performance (Simsek, 2009) as the development of tangible product innovations refer to a value creating process (Tsai and Ghoshal, 1998). By focussing on innovative ambidexterity there is a closer link to an organization’s actual financial performance. And since any commercial firm needs to ensure performance to survive, this research explicitly investigates the effect on innovative ambidexterity.
In mediating between contradictory forces of exploration and exploitation, ultimately strategic leaders need to make decisions and take actions to balance the two. Therefore, this research re-examines the role of transformational leadership as an antecedent to innovative ambidexterity.
2.3 Transformational leadership
In describing leadership in general, a distinction can be made between transactional- and transformational leadership. Burns (1978) was the first to contrast transactional and transformational leadership. Transactional leadership involves an exchange-relationship between leaders and followers such that receive wages or prestige for complying with a leader’s wishes (Rafferty & Griffin, 2004). On the contrary, transformational leadership motivates followers to achieve performance beyond expectations by transforming follower’s attitudes, beliefs, and values as opposed to simply gaining compliance (Bass, 1985; Yukl, 1999). Leaders define a need for change, create new visions, and mobilize commitment to these visions, and ultimately transform the organization (Tichy & Devanna, 1990). Leaders
that display transformational leadership are described as: charismatic, ‘leaders’ (as opposed to managers), transforming, inspirational, visionary, or value-based’ (Den Hartog & Koopman, 2001).
Transformational leadership comprises of four dimensions, which can be used to assess the display of transformational leadership. The first dimension, charisma, is about providing vision and a sense of mission, instilling pride, gaining respect and trust and increasing optimism (Bass, 1985). Judge & Piccolo (2004, p.755) describe it as ‘the degree to which the leader behaves in admirable ways that cause the followers to identify with the leader. The second dimension is inspiration, which is centred around the communication of a vision and the use of symbols to focus efforts (Den Hartog & Koopman, 2001). The third dimension is individual consideration and is believed to significantly contribute to a subordinate achieving his/her fullest potential (Yammarino & Bass, 1990). ‘It provides continuous feedback and links the individual’s current needs to the organization’s mission (Bass, 1985). The last dimension, intellectual stimulation, is about intellectually stimulating subordinates with a flow of challenging new ideas to rethink old ways of doing things (Bass, 1985; Bass & Avolio, 1990).
Podsakoff et al. (1990) stated that transformational leadership is multidimensional in nature and can be measured through six dimensions. The first factor, identifying and articulating a vision is related to the behaviour of the leader. This factor is aimed at identifying new opportunities for his or her unit, and developing, articulating, and inspiring others with his or her vision of the future (Podsakoff et al, 1990). The second factor, providing an appropriate model is about the leader setting an example for employees to follow that is consistent with the values the leader espouses (Podsakoff et al, 1990). The third factor, fostering the acceptance of group goals is aimed at promoting cooperation among employees and getting them to work together toward a common goal (Podsakoff et al, 1990).
The fourth factor, high performance expectations is the behaviour of the leader that demonstrates the expectations for excellence, quality and/or high performance (Podsakoff et al, 1990). The fifth factor, providing individualized support shows that the leader respects followers and is concerned about their personal feelings and needs. The sixth factor, intellectual stimulation is about challenging followers to re-examine some of their assumptions and rethink how their work can be performed (Podsakoff et al, 1990).
In general one can reason that transformational leadership leads to raising performance of the employees and transforming the follower’s personal values to move them to higher level of aspirations (Bass & Avolio, 1993; Podsakoff et al, 1990). Transformational leadership is therefore considered more effective than transactional leadership, especially in terms of uncertainty or crisis (Jansen, Vera & Crossan, 2009). With the basic notion of transformational leadership explained, the next paragraph will describe the effects transformational leadership can have on innovative ambidexterity.
2.4 The effect of transformational leadership on innovative ambidexterity
Most organizations operating today, face a dynamic environment in which shortening product life cycles, rapid technologic change and globalization are present (Gumusluogu & Ilsev, 2007). This puts more emphasis on how creative and innovative an organization can be. Transformational leadership, with its focus on support for innovation, autonomy, recognition and encouragement has a strong link to creativity and innovation (Ancona & Caldwell, 1987). Promoting intellectual stimulation encourages employees to rethink old ways of doing things, something that is intuitively linked to innovation. Transformational leadership also promotes decentralization and is more likely to “call on individuals to make their own choice between alignment-oriented and adaption-oriented activities in the context of their day-to-day work” (Gibson & Birkenshaw, 2004, p. 209), which would benefit ambidexterity.
Furthermore, transformational leadership is the most effective leadership style in terms of uncertainty. And rapid technologic change adds to the uncertainty of a firm. This gives reason to link transformational leadership to innovative ambidexterity and this is supported by further research.
For example, Lin & McDonough (2011) did not explicitly examine transformational leadership, but rather strategic leadership, which they define as ‘leadership which focuses on the creation of meaning and purpose for the organization’ (p.499). Despite the different definition, it is clear that strategic leadership and transformational leadership are similar in their meaning. Not surprisingly, they found a positive relationship between strategic leadership and innovation ambidexterity.
Janssen, Vera & Crossan (2009) found that transformational leadership is associated with mainly exploratory innovation instead of exploitative innovation. Although the study did not test for the combined effect of ambidexterity, it is noteworthy that no effect of transformational leadership on exploitative innovation is found.
Based on the above literature, it is hypothesized that transformational leadership has a positive influence on innovative ambidexterity. But due to some contradictories in the literature, re-examining this relationship should provide more clarity.
H1: Transformational leadership has a significant positive effect on innovative ambidexterity
H1a: Transformational leadership has a significant positive effect on exploratory innovations
H1b: Transformational leadership has a significant positive effect on exploitative innovations
2.5 Market orientation
If an organization wishes to maintain continuous above-normal market performance, it must create a sustainable competitive advantage (Porter, 1985, p. xv). This means that the buyer perceives an expected value that is higher to him than when choosing an alternative. In return, this creates superior value for the customer. And this is exactly where incorporating market orientation could be beneficial as ‘Market orientation is the organizational culture that most effectively and efficiently creates the necessary behaviours for the creation of superior value for buyers, and, thus, continuous superior performance for the business’ (Kohli & Jaworski, 1990).
Market orientation refers to the firm’s ability to generate and disseminate market intelligence and to respond to it (Kohli & Jaworski, 1990). A business that increases its market orientation will improve its market performance (Levitt, 1960). This quote highlights the importance of market orientation on business performance. A firm’s market orientation has been described as: (1) a unifying belief that emphasizes serving and creating value for customers (Ruekert, 1992); (2) a set of organization-wide processes involving the generation, dissemination, and responsiveness to intelligence pertaining to current and future needs (Narver & Slater, 1990); and (3) a firm capability to anticipate market requirements ahead of competitors and to create durable relationships with customers, channel members, and suppliers (Day, 1994).
Despite the obvious benefits that incorporating market orientation could have, a distinction needs to be made when using the definition. Reason for this is that market orientation is often interpreted too narrowly as adapting products and services to current customer preferences and market structure, compared to proactively shaping customers and/or the market to enhance a company’s competitive position (Jaworski et al., 2000). Because of this reason and the fact that not all organizations display the same level of market
market orientation. Responsive market orientation refers the generation, dissemination and use of market information pertaining to the current customers and product domain and focuses on expressed customer needs (Jaworski, Kohli & Sahay, 2000). In contrast, proactive market orientation is concerned with discovering and satisfying the latent, unarticulated needs of customers through observation of customers’ behaviour in context to uncover new market opportunities, with working closely with lead users, with undertaking market experiments to discover future needs, and with cannibalizing sales of existing products (Jaworksi, Kohli & Sahay, 2000; Naver, Slater & MacLachlan, 2000). This study distinguishes between responsive- and proactive market orientation. However, when referring to ‘market orientation’ in general, responsive- and proactive market orientation are combined into one construct.
2.6 The effect of market orientation on innovative ambidexterity
In general, market orientation is seen as an overarching culture or context that unites and integrates disparate and opposing capabilities (Menguc & Auh, 2008). This is exactly where market orientation could potentially contribute to achieving innovative ambidexterity.
Responding to the paradoxical challenges of ambidexterity, Kyriakopolous & Moorman (2004) found that a firm’s market orientation creates the context within exploration and exploitation can cross-pollinate. For example, they refer to a ‘unified frame of reference’ (p.224) as a frame which ‘focuses on the common goal of serving the customer, which increases the likelihood that insights, information, and processes associated with one strategy approach [exploitation/exploration] facilitate the other. Moreover, they found support for the fact that high market orientation organizations can indeed benefit from pursuing seemingly contradictory strategies.
When examining the effect of market orientation on innovative ambidexterity, it is essential to distinguish between the two kinds. Responsive market orientation is viewed as
‘customer led’, where the company responds to expressed customer needs. A responsive market-oriented firm largely builds on current knowledge and experience and thereby reflects exploitative learning (Atuahene-Gima et al. 2005). In contrast, a proactive market-oriented company explores new knowledge and markets significantly distant from extant experience (Tsai et al. 2008), thereby reflects exploratory learning (Atuahene-Gima et al. 2005). Proactive market orientation has essential elements that centre around innovations for discovering latent customer needs. While responsive market orientation clearly only focuses on expressed customer needs. In general, a higher level of proactive market orientation can enhance market success via its positive effect of innovation success (Bodlaj, Coenders, Zakbar, 2012).
Based on the cited previous research it is expected that market orientation in general has a positive effect on innovative ambidexterity. However, a distinction should be made between responsive- and proactive market orientation. And since proactive market orientation has a stronger link to innovation, it is expected that the relationship is stronger for proactive market orientation.
H2: Market orientation has a positive significant effect on innovative ambidexterity H2a: Market orientation has a positive significant effect on exploratory innovations H2b: Market orientation has a positive significant effect on exploitative innovations
H3: Responsive market orientation has a positive significant effect on innovative ambidexterity
H3a: Responsive market orientation has a positive significant effect on exploratory innovations
H3b: Responsive market orientation has a positive significant effect on exploitative innovations
H4: Proactive market orientation has a positive significant effect on innovative ambidexterity
H4a: Proactive market orientation has a positive significant effect on exploratory innovations
H4b: Proactive market orientation has a positive significant effect on exploitative innovations
2.7 The effect of transformational leadership on market orientation
Top management plays a critical role in changing a culture in general, and this is especially the case for a culture of market orientation (Naver & Tietje, 1998). Given the fact that no individual employee can change an organization on its own, the appropriate leadership style is needed. To create a culture of market orientation the leadership style should: reduce interdepartmental conflict, increase interdepartmental connectedness and decentralize decision-making (Narver & Tietje, 1998). And this is exactly what transformational leadership can achieve. Unless an organization gets clear signals from top managers about the importance of being responsive to customer needs, the organization is not likely to be market-oriented (Webster 1988, p.37). To exemplify, Narver & Tietje (1998) found that transformational leadership can form a powerful guiding coalition to determine market orientation, create a vision of market orientation and a related implementation plan, communicate a market orientation vision and empower others to act on that vision, hereby striking the importance of the appropriate leadership style.
In establishing a culture of market orientation, Harris and Ogbonna (1999) found that transformational leadership serves as an antecedent to market orientation. The leadership
constructs they used, supportive- and participative leadership (House, 1971; House & Desler, 1974) are comparable to transformational leadership. Their findings concluded that supportive- and participative leadership are facilitating market orientation. In line with their findings, Menguc, Auh & Shih (2007) stated that transformational leadership positively affects market orientation. Therefore this study hypothesizes that transformational leadership will positively influence market orientation.
H5: Transformational leadership has a significant positive effect on Market orientation
H5a: Transformational leadership has a significant positive effect on Responsive market orientation
H5b: Transformational leadership has a significant positive effect on Proactive market orientation
2.8 The mediating effect of market orientation
Transformational leaders define a need for change, create new visions and mobilize commitment to these visions (Bass, 1985; Yukl, 1999). In this sense, transformational leadership is about creating a culture that exceeds a simple exchange relationship between employer and employee. Employees attain to certain rules and values that are in line with that culture. In other words, transformational leadership uses a mechanism (i.e. culture) in which the goals of the company are made explicit and where employees show commitment to these goals. This is what sets transformational leadership apart from the exchange- relationship that is typical for transactional leadership.
On the other side, market orientation is seen as a unifying belief also embedded in a culture, that emphasizes serving and creating value for customers (Ruekert, 1992). Both transformational leadership and market orientation are thus use the same social mechanism
(i.e. culture). In more detail, market orientation creates a unifying belief of serving customers, which increases the likelihood that insights, information, and processes associated with one strategy approach [exploitation/exploration] facilitate the other. In this sense, the culture creates a context that supports innovative ambidexterity. It is therefore hypothesized that market orientation mediates the relationship between transformational leadership and innovative ambidexterity.
The contribution of this study is that market orientation is seen as an overarching culture through which innovative ambidexterity is achieved. This is supported by Kyriakopouos & Mooreman (2004) who found that firms that pursue ambidextrous-orientation without strong market ambidextrous-orientation display a significant reduction in new product financial performance. Due to the fact that market orientation should be disentangled between responsive and proactive, the study will test three different hypotheses separately.
H6: The relationship of transformational leadership on innovative ambidexterity is mediated by market orientation
H6a: The relationship of transformational leadership on innovative ambidexterity is mediated by responsive market orientation
H6b: The relationship of transformational leadership on innovative ambidexterity is mediated by proactive market orientation
Chapter 3: Conceptual model
Figure 1: Conceptual model regression analysesMarket orientation
a. Responsive market orienation b. Proactive market orientation
Innovative ambidexterity
a. Exploratory innovations b. Exploitative innovationsTransformational
leadership
- H2, 2a, 2b - H3, 3a, 3b - H4, 4a, 4b - H5, 5a, 5bControl for:
a. Size of the organziation b. Age of the organization
Figure 1a: Conceptual model mediating effect
Market orientation
a. Responsive market orienation b. Proactive market orientation
Innovative ambidexterity
a. Exploratory innovations b. Exploitative innovationsTransformational
leadership
Control for:
a. Size of the organziation b. Age of the organization
H1: Transformational leadership has a significant positive effect on innovative ambidexterity H1a: Transformational leadership has a significant positive effect on exploratory innovations H1b: Transformational leadership has a significant positive effect on exploitative innovations
H2: Transformational leadership has a significant positive effect on market orientation H2a: Transformational leadership has a significant positive effect on responsive market orientation
H2b: Transformational leadership has a significant positive effect on proactive market orientation
H3: Market orientation has a significant positive effect on innovative ambidexterity H3a: Market orientation has a significant positive effect on exploratory innovations H3b: Market orientation has a significant positive effect on exploitative innovations
H4: Responsive market orientation has a significant positive effect on innovative ambidexterity
H4a: Responsive market orientation has a significant positive effect on exploratory innovations
H4b: Responsive market orientation has a significant positive effect on exploitative innovations
H5: Proactive market orientation has a significant positive effect on innovative ambidexterity H5a: Proactive market orientation has a significant positive effect on exploratory
innovations
H5b: Proactive market orientation has a significant positive effect on exploitative innovations
H6: Market orientation mediates the relationship between transformational leadership and innovative ambidexterity
H6a: Responsive market orientation mediates the relationship between transformational leadership and innovative ambidexterity
H6b: Proactive market orientation mediates the relationship between transformational leadership and innovative ambidexterity
3.1 Research design
To test for the hypotheses in the study a survey has been distributed among employees, middle- and top managers in the Netherlands. Organizations from all kinds of industries have been asked to participate that ranged from 0-9 up to +250 employees. The data that this survey will generate is intended for multiple studies and therefore multiple constructs are measured. This study only uses data that results from questions relating to transformational leadership, innovative ambidexterity and market orientation. To ensure a proper length of the survey, a selection had to be made in the questions measuring the construct. After the surveys had been completed the data was analysed and checked on reliability and validity. Bivariate correlations, regression analysis and mediation analysis were used to analyse the data and find support for proposed hypotheses.
Chapter 4: Methodology
4.1 SampleThe sample used in this research was compiled using an online questionnaire. This questionnaire was sent out to approximately 1320 respondents, of which 177 responded. The survey was sent to commercial organizations of all sizes that are situated in the Netherlands. To control for the quality, respondents that completed the survey in less than 7 minutes were excluded (respondent 3, 10, 116, 162). This resulted in data from 173 respondents.
4.2 Descriptive statistics
In order to quantify the main features of the database, the following variables have been incorporated in the survey: age of the respondent, number of years working at current employer, management level within the company, industry number of employees at company and age of company. The average age of the respondents was 42.55 year (SD = 12.91). The respondents were on average 9.58 years (SD = 9.45) working at their current employer.
Respondents were asked to specify the industry their company is active in. In total 18 options were available and therefore the most chosen will be presented. Consulting and research 18.3%, Industrial 12.0%, services (other) 11.4%, information and communication 8.0%, healthcare 7.4% and construction 5.6%.
Concerning the job level of the respondent within the organization, it can be seen that all levels are pretty much evenly represented. This means that use of the database will result in an overview that compiles of an entire organization, from employee to top manager.
Table 2: Job-level employees
Frequency Percentage Cumulative Percentage
Employee 45.0 25.7 25.7
Lower management 29.0 16.6 42.3
Middel management 49.0 28.0 70.3
Top management 52.0 29.7 100.0
Total 175.0 100.0
Respondents indicated that most of them are active in a company that employs over 250 employees. The size of the company in terms of number of employees can be interesting since the size of the company can affect ambidexterity. Large companies need to incorporate bureaucracy in order to manage the firm. But bureaucracy could slow down innovation or make companies less adaptive to react to change. Therefore this study wants to control for the size of the organization. As the table below shows, large part (45.1%) of the dataset used in this study represents large companies with over 250 employees.
Respondents were also asked to indicate the age of their company. Companies that have been around for a long time can create inertia and reluctance to change. Innovative ambidexterity is about innovation, which requires a company to adapt to the environment. On the other side, a young company that has not been around for long may be still well adapted to the current environment. Therefore, the age of the company is selected as a control variable. This dataset consist of relatively old companies with 43.4% being over 50 years.
Frequency Percent Cumulative Percent
0 - 9 33.0 18.9 18.9
10 - 49 38.0 21.7 40.6
50 - 250 25.0 14.3 54.9
250+ 79.0 45.1 100.0
Total 175.0 100.0
Table 3: Number of employees at company
Frequency Percent Cumulative Percent
0 - 5 years 14.0 8.0 8.0
6 - 14 years 25.0 14.3 22.3
15 - 49 years 60.0 34.3 56.6
50+ 76.0 43.4 100.0
Total 175.0 100.0
4.3 Measures
To measure the constructs of this study in the survey, measurements were adopted from previous research. All constructs were measured on a seven-point Likert scale, ranging from (1) “strongly disagree” to (7) “strongly agree”. The Cronbach’s alphas indicate the internal consistency of the construct, and are therefore included. Factor analysis provided information about the underlying structure of a construct. Based on the factor analysis it can be concluded if a construct can be better described as a single, general factor, or as consisting of multiple, independent dimensions. In order to use factor analysis, data should meet two requirements. First, the constructs needs to have a score of .50 or higher for the Kaiser-Meyer-Olking Measure of Sampling Adequacy. Second, the construct should have significant P value concerning the Bartett’s Test of Sphericity. All constructs measured in this study met these two requirements, and therefore factor analysis could be applied. When a selection had to be made from questions to ensure a proper length of the survey, those questions with the highest factor loadings were selected.
4.3.1 Transformational leadership
Transformational leadership was measured using the dimensions of MacKenzie, Podsakoff & Rich (2001) and used the questions presented below. This scale measures six dimensions of transformational leadership, including articulating a vision, providing an appropriate model, fostering the acceptance of group goals, having high performance expectations, providing individualized support, and providing intellectual stimulation. Previous research (cf. Podsakoff, MacKenzie, and Bommer 1996b; Podsakoff et al. 1990) has provided strong evidence supporting the hypothesized factor structure and internal consistency reliability. Question 11 (‘Managers in our company treat me without considering my personal feelings’) was a counter-indicative question and therefore had to be reversed.
Following Exploratory Factor Analysis, 51.74% of the total variance is explained by the first component, with an Eigenvalue of 6.2. Although there is a second component that
explains 13.17% of the variance with an Eigenvalue of 1.6, this is considerably less than the first component and transformational leadership is measured as one factor. The twelve items had a Cronbach’s alpha of α = .906 and no items had to be deleted.
Table 5: Measures transformational leadership
4.3.2 Innovative ambidexterity
Innovative ambidexterity was measured using 8 items from Kortmann (2014), which were adopted from Jansen et al. (2009). The construct is comprised of four items that measure exploratory innovation and four items that measure exploitative innovation. The questions used to measure these constructs are presented below. Factor analysis showed that exploratory innovation comprises of a single component. This component explains 63.44% of the variance with an Eigenvalue of 2.5. Exploitative innovation also comprises of a single component that explains 51.66% with an Eigenvalue of 2.1.
The four items that measure exploratory innovation resulted in a Cronbach’s alpha of α = .807 and no items had to be deleted. The four items that measure exploitative innovation resulted in a Cronbach’s alpha of α =.684 and deleting any items would not result in improving the Cronbach’s alpha. Innovative ambidexterity is measured by multiplying the average score of exploratory innovation and exploitative innovation.
Transformational leadership
Managers in our company..
TL1 … Articulate a clear vision TL2 … Provide an appropriate model
TL3 … Facilitate the acceptance of group goals
TL4 … Make it clear to me that he or she expects me to give 110 percent all of the time TL5 … Insist on only the best performance
TL6 … Not settle for second best
TL7 … Challenges me to think about old problems in a new way TL8 … Show respect for my personal feelings
TL9 … Ask questions that prompt me to think about the way I do things TL10 … Have stimulated me to rethink the way I do some things TL11 … Treat me without considering my personal feelings *
TL12 … Have ideas that have challenged me to re-examine some of my basic assumptions about my work Note: * Counter-indicative item
Table 6: Measures innovative ambidexterity
4.3.3 Market orientation
Market orientation was measured using six dimension of Gima, Slater & Olson (2005). In measuring the level of market orientation, they distinguish between responsive and proactive market orientation. ‘Responsive market orientation refers to the generation, dissemination, and use of market information pertaining to the current customers and product domain and focuses on expressed customer needs’ (Jaworski, Kohli, and Sahay, 2000; Slater and Narver, 1995). In this sense, it has more of an exploitative character. In contrast, ‘proactive MO is concerned with discovering and satisfying the latent, unarticulated needs of customers through observation of customers’ behaviour in context to uncover new market opportunities, with working closely with lead users, with undertaking market experiments to discover future needs, and with cannibalizing sales of existing products’ (Jaworski, Kohli, and Sahay, 2000; Narver, Slater, and MacLachlan, 2000; Slater and Narver, 1998). In return, proactive market orientation has more of an exploratory character. Firms that focus solely on responsive market orientation are unlikely to be successful as they fail to uncover novel ideas and strategies to enter new markets or meet new customer needs. On the other hand, firms that focus solely on proactive market orientation will not be able to reap the benefits of experimentation because they exhibit too many risky ideas and too little refinement on their resources (March’s (1991, p. 71). Despite their different focus, the two concepts are complementary to each other. To exemplify ‘proactive market orientation overcomes the
I nnovative ambidexterity (Explorative- & Exploitative innovations)
Explorative innovation
EXPLOR1 Our organization responds to demands that go beyond existing products and services EXPLOR2 We commercialize products and services that are completely new to our organization EXPLOR3 We frequently seek out new opportunities in new markets
EXPLOR4 Our organization regularly uses new distributions channels
Exploitative innovation
EXPLOI1 We frequently make small adjustments to our existing products and services
EXPLOI2 We continuously improve our production’s efficiency of products and services
EXPLOI3 We continuously increase economies of scale in existing markets
limitations of responsive market orientation such as the lack of breakthrough learning, inability to adapt quickly to shifts in customer needs and market conditions, and concern for expressed rather than for latent needs of customers’ (Gima, Slater, Olsen, 2005). One could reason that the overall measure of market orientation is a combination of responsive- and proactive market orientation. Support for this approach is found in the literature (Tournois, 2013) where the two dimensions of responsive- and proactive market orientation are integrated to form an overall concept of market orientation. Therefore the overall construct of market orientation is a combination of responsive- and proactive market orientation. And both the overall construct as well as the separate constructs are used in this study.
Explanatory factor analysis showed that the first component explained 48.41% of the variance with an Eigenvalue of 2.9. Adding to this, there was a considerable second component explaining 20.58% of the variance with an Eigenvalue of 1.2. Since responsive- and proactive market orientation by themselves, comprise of one component, they should be viewed as separate constructs.
Responsive market orientation comprised of thee questions (originally from Deshpande & Farley, 1998) that are presented below. The Cronbach’s alpha of responsive market orientation was α = .788 and no items had to be deleted. Proactive market orientation also comprised of three questions (originally from Narver, Slater & MacLachlan, 2000) that are presented below. The Cronbach’s alpha of proactive market orientation was α = .714 and no items had to be deleted.
Table 7: Measures market orientation
Note: The definition of lead users was given in the survey via a link
4.4 Control variables
Although numerous variables have been included in the survey to quantify the dataset, only two will be incorporated as control variables. The first control variable that is being incorporated is size of the company. Large organizations need to incorporate bureaucracy into their organizations as they grow. At the same time, bureaucracy together with the sheer magnitude of a firm, can affect the flexibility of an organization (Jansen, Tempelaar, Van den Bosch & Volberda, 2009). There can be both disadvantages as advantages for large organizations; hence, it is important to include the variable. Small organizations may profit from being flexible as they do not need bureaucracy to control for size of the organization. But their disadvantage can be that they lack in resources/slack to engage in exploratory innovations. Therefore, size of the firm, measured in number of employees, is incorporated in the analysis. Respondents could indicate the size of the company by selecting the number of employees at the company: 0-9, 10-49, 50-249, 250+.
The second control variable is the age of the company. Older firms that are still present today are by definition successful over a longer period of time. Otherwise these companies would no longer exist. It can be expected that these older organizations have routines or ‘ways of working’ that have proven successful over the years. In return, an organization can create inertia and reluctance to change. This can have an effect of the pace of innovation and is supported by He & Wong (2004) who found that older firms do have
M arket orientation (Responsive & Proactive)
Responsive Market orientation
RESP1 We have routines or regular measures of customer service
RESP2 We measure customer satisfaction systematically and frequently
RESP3 We constantly monitor our level of commitment and orientation to serving customer needs
Proactive Market orientation
PROA1 We search for opportunities in areas where customers have difficulty expressing their needs
PROA2 We help customers anticipate developments in the market
PROA3 We work closely with lead users who try to recognize customer needs months or even years before
operational efficiency and exploitation compared to exploration and flexibility (Benner & Tushman, 2002). This could be explained by the fact that organizations ultimately want to improve profit. And one of the first steps to improve profit, is to improve operational efficiency i.e. control cots. This focus on operational efficiency is typical for older companies who are more likely to have established a steady market share. Respondents could indicate the age of the company in years by choosing from the following options: 0-5, 6-14, 15-49, 50+.
Variables M ean SD 1 2 3 4 5 6 7 1. Number of employees 2.85 1.18 2. Age organization 3.14 0.93 .638** 3. Transformational leadership 4.73 1.08 -.231** -.200** (.906) Innovative ambidexterity 4. Exploratory innovation 4.95 1.23 -.244** -.233** .282** (.807) 5. Exploitative innovation 5.35 0.90 -.148 -.134 .388** .470** (.684) Market orientation
6. Responsive market orientation 5.12 1.19 .266** .157* .318** .137 .361** (.788)
7. Proactive market orientation 4.86 1.21 -.031 -.101 .360** .528** .440** .391** (.714)
Listwise: N=173
Notes:** Correlation is significant at the 0.01 level (2-tailed).
* Correlation is significant at the 0.05 level (2-tailed).
5.1 Bivariate correlations
Table 9 presents the bivariate correlations of the variables and is based on Pearson’s correlation coefficient r. The bivariate correlation tests whether the variables are linear (i.e. as one variable increases, the other also increases or as one variable increases, the other variable decreases). Pearson’s r then provides information about the strength of this relation. A coefficient of 0 indicates no correlations and the closer the value to -1 or +1, the stronger the relation. Significant and noteworthy correlations are discussed below.
Table 9 shows that number of employees correlates relatively strongly with age of the organization (r = .638). This is a result that could be expected, since on average, organizations have the tendency to grow as they mature. It also shows that number of employees has a moderate to low negative correlation with transformational leadership (r = -.231) and exploratory innovation (r =-.244). The negative correlation with exploratory innovation can be justified with arguments given earlier in the study (4.4 control variables, p. 31) i.e. bureaucracy can negatively affect the flexibility of an organization which in turn can affect exploratory innovations (Jansen, Tempelaar, Van den Bosch & Volberda, 2009). The low negative correlation with transformational leadership could be explained by the fact that employees feel less appreciated in large organizations. Based on logic arguments, managers in smaller organizations could find it easier to interact and display transformational leadership than in large organizations, where bureaucracy takes away the personal interaction, feedback and gratitude that is essential in transformational leadership. There is a low positive correlation of number of employees with responsive market orientation (r = .266). This could be best explained by considering the exploitative character large organizations have and the fact that responsive market orientation is overall related to exploitation compared to exploration. The age of the organization also is slightly negatively correlated with transformational leadership (r = -.200) and exploratory innovation (r = -.233).
The fact that older organizations create inertia and reluctance to change could provide a justification, however it should be noted that these correlations are very low.
Transformational leadership correlates positively with exploratory innovation (r =.282) and exploitative innovation (r =.388). These findings can be justified by the fact that previous research has found that transformational leadership promotes and supports innovation (Ancona & Caldwell, 1987. However, these results are somewhat contradictory, as one would expect that transformational leadership would be higher correlated with exploration. Transformational leadership also positively correlates with responsive market orientation (r = .318) and proactive market orientation (r =.360). These findings support previous literature that transformational leadership serves as an antecedent to market orientation (Harris & Ogbonna, 1999).
Exploratory innovation correlates strongly with exploitative innovation (r = .470), which could be expected since both constructs together form innovative ambidexterity. More interesting is the fact that exploratory innovation correlates relatively strongly with proactive market orientation (r = .528) and not with responsive market orientation. This further strengthens the view that responsive market orientation is strongly associated with exploration. However, exploitative innovation correlates both with responsive market orientation (r = .361) and proactive market orientation (r = .440). Finally, responsive market orientation correlates positively with proactive market orientation (r = .391). This is logical since, although there are essential differences, both constructs measure market orientation.
5.2 Regression analyses
Regression analysis was used to test for the separate hypotheses. Since bivariate correlation showed that control variables did influence the other variables, they will be included in the in the regression analysis. To check for multicollinearity, variance inflation factors and tolerance were examined for all the variables. All VIF values were lower than 2, and values of tolerance were >0.1. Hierarchical multiple regression was used to determine the proportion of variance in the dependent variable explained by the independent variable, controlling for control variables. Hypothesis were rejected if p>.05. To confirm that the data is normally distributed the data was checked for bell-shaped curved with large widths. This provided an indication of normally distributed data. The variables used in this regression, together with the two control variables were first tested using Stepwise multiple regression. This was done to check for the significance of each of the variables. In none of the regressions was the control variable ‘age of the firm’ significant. For this reason it was not included in any of the regressions. The other control variable, size of the firm, was in some cases significant using Stepwise multiple regressions. If this was the case, the variable was included in the Hierarchical multiple regression.
H1: Transformational leadership has a positive effect on innovative ambidexterity
In the first step of the hierarchical regression, the control variable being size of the company was included. This model was statistically significant F(1,171)=.057, p=.002. After entry of transformational leadership, the total variance explained of the model was 15.5% F(1, 170)=0.155, p=.000. The introduction of transformational leadership explained an additional 14.93% of the model, after controlling for size of the organization (R2change=.098; F(1, 170)=19.780, p=.000). In the final model transformational leadership had a significant positive influence (β=.322 t=4.447 p=.000) and size of the firm a negative less significant
H1a: Transformational leadership has a positive effect on exploratory innovation In the first step of the hierarchical regression, the control variable size of the company was included. This model was statistically significant F(1,171)=.060, p=.01. After entry of transformational leadership, the total variance explained of the model was 11.4% F(1, 170)=0.114, p=.002. The introduction of transformational leadership explained an additional 10.8% of the model, after controlling for size of the organization (R2change=.054; F(1, 170)=10.336, p=.000). In the final model transformational leadership had a significant positive influence (β=.239 t=3.215 p=.002) and size of the firm a negative less significant influence(β=-.189 t=-2.546, p=.012). This provides evidence that hypothesis H1a is supported.
H1b: Transformational leadership has a positive effect on exploitative innovation Stepwise multiple regression indicated that size of the company was not significant and therefore not included in the regression. Transformational leadership explained 15% of the variance of exploitative innovation F(1, 171)=.150, p=.000. Transformational leadership has a significant influence on exploitative innovation (β=.388, t=5.498, p=.000). This provides evidence that hypothesis H1c is supported.
H2: Transformational leadership has a positive effect on market orientation. Age of the company did not have a significant effect and was therefore left out of the hierarchical multiple regression. Transformational leadership explained 12.9% of the variance of market orientation F(1, 171)=0.182,p=.000. Transformational leadership had a significant influence on market orientation (β=.427, t=6.176, p=.000). This provides evidence that hypothesis H1 is supported.
H2a: Transformational leadership has a significant positive effect on responsive market orientation
In the first step of the hierarchical regression, one control variable being size of the company was included. This model was statistically significant F(1, 171)=.071, p=,000. After entry of transformational leadership, the total variance explained of the model was 22.3% F(1, 170)=0.223, p=,000. The introduction of transformational leadership explained an additional 15.2% of the model, after controlling for size of the organization (R2change=.152; F(1, 170)=33.227, p=.000). In the final model both predictors had a significant influence on responsive market orientation. Transformational leadership (β=.401 t=5.764, p=.000) and size of the firm(β.359, t=5.158,p=.000). This provides evidence that hypothesis H1b is supported.
H2b: Transformational leadership has a significant positive effect on proactive market orientation.
Age of the company did not have a significant effect and was therefore left out of the hierarchical multiple regression. Transformational leadership explained 12,9% of the variance of proactive market orientation F(1, 171)=0.129,p=.000. Transformational leadership had a significant influence on proactive market orientation (β=.360, t=5.043, p=.000). This provides evidence that hypothesis H1c is supported.
H3: Market orientation has a significant positive effect in innovative ambidexterity
In the first step of the hierarchical regression, one control variable being size of the company was included. This model was statistically significant F(1, 171)=.057, p=.002. After entry of market orientation, the total variance explained of the model was 34.2% F(1, 170)=0.342, p=.000. The introduction of transformational leadership explained an additional 28.5% of the model, after controlling for size of the organization (R2change=.285; F(1, 170)=73.637 p=.000). In the final model market orientation had a significant positive influence (β=.538 t=8.581 p=.000) and size of the firm a negative influence(β=-.302 t=-4.824, p=.000). This provides evidence that hypothesis H3 is supported.
H3a: Market orientation has a significant positive effect in exploratory innovation
In the first step of the hierarchical regression, one control variable being size of the company was included. This model was statistically significant F(1, 171)=.060, p=.001. After entry of market orientation, the total variance explained of the model was 20.7% F(1, 170)=0.267, p=.000. The introduction of transformational leadership explained an additional 20.7% of the model, after controlling for size of the organization (R2change=.207; F(1, 170)=48.046, p=.000). In the final model market orientation had a significant positive influence (β=.458 t=6.932 p=.000) and size of the firm a negative influence(β=-.298 t=-4.506 p=.000). This provides evidence that hypothesis H3a is supported.
H3b: Market orientation has a significant positive effect in exploitative innovation Age of the company did not have a significant effect and was therefore left out of the hierarchical multiple regression. Market orientation explains 26.9% of the variance of exploitative innovation F(1, 170)=0.269, p=.000. Market orientation has a significant influence on exploitative innovation (β=.501, t=7.589, p=.000). This provides evidence that hypothesis H3b is supported.
H4: Responsive market orientation has a significant positive effect on innovative
ambidexterity. In the first step of the hierarchical regression, one control variable being size of the company was included. This model was statistically significant F(1, 171)=.057, p=.002. After entry of responsive market orientation, the total variance explained of the model was 17.1% F(1, 170)=0.171, p=.000. The introduction of responsive market orientation explained an
additional 11.4% of the model, after controlling for size of the organization (R2change=.114; F(1, 170)=23.413, p=.000). In the final model responsive market orientation had a significant positive influence (β=.350 t=4.839 p=.000) and size of the firm a negative influence(β=-.332
t=-4.587 p=.000). This provides evidence that hypothesis H3c is supported.
H4a: Responsive market orientation has a significant positive effect on exploratory
innovation In the first step of the hierarchical regression, one control variable being size of the company was included. This model was statistically significant F(1, 171)=.060, p=.001. After entry of exploratory innovation, the total variance explained of the model was 4.4% F(1, 170)=0.104, p=.004. The introduction of responsive market orientation explained an additional 9.8% of the model, after controlling for size of the organization (R2change=.044 F(1, 170)=8.324, p=.004). In the final model responsive market orientation had a significant positive influence (β=.217 t=2.885 p=.000) and size of the firm a negative influence(β=-.302t=-4.009 p=.000). This provides evidence that hypothesis H3d is supported.
H4b: Responsive market orientation has a significant positive effect on exploitative innovation Age of the company was not significant and therefore left out of the hierarchical multiple regression. Responsive market orientation explains 13% of the variance of exploitative innovation F(1, 171)=1.171, p=.000. Responsive market orientation has a significant influence on exploitative innovation (β=361, t=5.055, p=.000). This provides evidence that hypothesis H3e is supported.
H5: Proactive market orientation has a significant positive effect on innovative ambidexterity Age of the company was not significant and therefore left out of the hierarchical multiple regression. In the first step of the hierarchical regression, one control variable being size of the company was included. This model was statistically significant F(1, 171)=.057, p=.002. After entry of proactive market orientation, the total variance explained of the model was 31.2% F(1, 170)=.369, p=.000. The introduction of responsive market orientation explained
an additional 36.33% of the model, after controlling for size of the organization
(R2change=.312; F(1, 170)=84.105, p=.000). In the final model proactive market orientation had a significant positive influence (β=.559 t=9.171p=.000) and size of the firm a negative influence(β=-.222 t=-3.635 p=.000). This provides evidence that hypothesis H3c is
supported.
H5a: Proactive market orientation has a significant positive effect on exploratory innovation Age of the company did not have a significant effect and was therefore left out of the
hierarchical multiple regression. In the first step of the hierarchical regression, one control variable being size of the company was included. This model was statistically significant F(1, 171)=.060, p=.001. After entry of proactive market orientation, the total variance explained of the model was 33% F(1, 170)=.330, p=.000. The introduction of responsive market orientation explained an additional 32.4% of the model, after controlling for size of the organization (R2change=.271; F(1, 170)=68.677, p=.000). In the final model proactive market orientation had a significant positive influence (β=.520 t=8.287p=.000) and size of the firm a negative influence(β=-.228 t=-3.628 p=.000). This provides evidence that hypothesis H3g is supported.
H5b: Proactive market orientation has a significant positive effect on exploitative innovation Control variables were left out of the hierarchical multiple regression. Proactive market orientation explains 19.4% of the variance exploitative innovation F(1, 171)=0.194,p=.000. Proactive market orientation has a significant influence on exploitative innovation (β=.440, t=6.411, p=.000). This provides evidence that hypothesis H1c is supported.
Table 9: standardized beta weights H1,H1a,H1b
I nnovative ambidexterity Independent variable β
Transformational leadership .332 p=.000
Notes: () inclusion of control variable 'size of organization' ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). Listwise: N=173
Table 10: standardized beta weights H2,H2a,H2b M arket orientation Independent variable β
Transformational leadership .427 p=.000
Notes: () inclusion of control variable 'size of organization' ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). Listwise: N=173
Table 11: standardized beta weights H3,H3a,H3b,H4,H4a,H4b,H5,H5a,H5b I nnovative ambidexterity
Independent variables β Market orientation .538 p=.000 Responsive MO .350 p=.000 Proactive MO .559 p=.000
Notes: () inclusion of control variable 'size of organization' ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). Listwise: N=173
Table 9: standardized beta weights H1,H1a,H1b
I nnovative ambidexterity Explorative innovation Exploitative innovation
(β) β (β) β (β)
(-.165 p= .024) .239 p=.002 (-.189 p= .012) .388 p=.000
Notes: () inclusion of control variable 'size of organization' ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).
Table 10: standardized beta weights H2,H2a,H2b
M arket orientation Responsive M O Proactive M O
(β) β (β) β (β)
.401 p=.000 (.359 p= .000) .360 p=.000 Notes: () inclusion of control variable 'size of organization'
** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).
Table 11: standardized beta weights H3,H3a,H3b,H4,H4a,H4b,H5,H5a,H5b
I nnovative ambidexterity Explorative innovation Exploitative innovation
(β) β (β) β (β)
(-.302 p= .000) .458 p=.000 (-.298 p= .000) .501 p=.000 (-.332 p= .000) .217 p=.000 (-.289 p= .000) .361 p=.000 (-.222 p= .000) .520 p=.000 (-.228 p= .000) .440 p=.000
Notes: () inclusion of control variable 'size of organization' ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).
