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MBA Master Thesis
Organize to Survive
- Design of an Ambidextrous Organization for a Family-owned SME
Author Pokon Ganguli
Email pokon.ganguli@gmail.com Submission date 31 August 2017
Supervisor Dr.C.Boon
The Amsterdam MBA program 2015 – 2017
Master of Business Administration Company Project
Amsterdam Business School - University of Amsterdam © 2017
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Abstract
An organizations’ long-term survival depends on its ability to profitably exploit existing assets while successfully explore new growth opportunities (Duncan, 1976; March, 1991, Raisch et al., 2009). Ambidextrous organizations are those organizations that have a strategic intent to exploit and explore simultaneously (O’Reilly and Tushman, 1996). However, and not much different as the struggle of a novice piano player to play with both hands, exploitation and exploration activities differ fundamentally and require different organizational designs (Burns and Stalker, 1961).
The company under investigation is Renolit MEDICAL (RM), a business unit of the German Renolit group and active as industrial manufacturer of specialty plastic components for the medical packaging industry. In this thesis, an extensive literature review is combined with a company survey and case studies describing industrial best practices with the ultimate objective to generate an ambidextrous organizational design for Renolit Medical. Findings show that at its very core, the ambidextrous tension can be framed as an organizational learning challenge (March, 1991). Due to resource constraints and high integration costs the recommend approach for Renolit MEDICAL is to implement a
contextual ambidextrous organizational design consisting of a hybrid structure with a fully developed project based organization inside the operational organization. A new structure is proposed that will safeguard organizational learning by managing all product & process exploration projects in a single organizational entity. Survey results point to the current implementation context and innovation process management as focus areas for the new organizational design. Finally, reinforcing the position and role of middle management is recommended to further build and sustain Renolit MEDICAL’s ambidexterity.
“It is clear that strategy of exploitation without exploration is a route to obsolescence. It is equally clear that a strategy of exploration without exploitation is a route to elimination. But, it is not clear where the optimum lies
between these two extremes”
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Content
I. Introduction - 5 -
A. Company Introduction - 6 -
B. Research question and scope - 7 -
II. Theoretical Framework - 9 -
A. The Ambidexterity Premise - 10 -
B. Construct Analysis - 13 -
C. Organizational Ambidexterity Research Model - 15 -
III. Literature Review - 17 -
A. Method and Data Collection - 17 -
B. Qualitative Analysis - 18 - B.1 Environmental factors - 18 - B.2 Organizational antecedents - 20 - B.3 Other moderators - 25 - B.4 Organizational ambidexterity - 27 - B.5 Performance outcomes - 29 -
B.6 Summary and conclusions - 31 -
C. Quantitative Analysis - 32 -
C.1 Direct effect on organizational ambidexterity - 33 -
C.2 Direct effect of ambidexterity on organizational performance - 34 -
C.3 Moderation of the antecedent-ambidexterity relationship - 35 -
C.4 Moderation of the ambidexterity-performance relationship - 35 -
C.5 Summary and conclusions - 36 -
D. Ambidexterity as Dynamic Capability - 36 -
E. Limitations - 38 -
IV. Company Survey - 39 -
A. Method & Data Collection - 39 -
B. Results - 40 -
B.1 Ambidexterity balance - 40 -
B.2 Ambidexterity barriers - 43 -
C. Conclusions & Limitations - 48 -
V. Industry Best Practices - 49 -
VI. Final Conclusions - 52 -
A. Recommended Organizational Design - 54 -
VII. References - 57 -
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Acknowledgements
An MBA-degree has been my personal white whale for the last 10 years. Obviously, far less maniacal in its pursuit as Moby Dick’s famous Captain Ahab, I do firmly believe that an MBA-education can deliver essential experience and insights to further advance in life both professionally but as well as personally. From an ambidexterity perspective, the subject-matter of this thesis, it is absolutely clear that for continuing growth, a certain degree of exploration is required!
Obviously, the last 2 years of hard work were not done in isolation and here, at the start of my thesis, seems the most suitable place to offer my gratitude’s. First of all, I’d like to thank Detlef Wolf for his support and faith in me with the company support of my MBA. The numerous, light-spirited, discussions very much sharpened the focus on the practical side of innovation. Shaping and reviewing the final 70-page thesis is a challenging task in itself and I’m grateful to Corine Boon for her supervision, guidance and all the good conversations we had since November last year. Both my parents have been a continuing support in the background where especially my fathers’ “there is no royal road to learning” saying stressed the value of learning which is very much at the heart of this thesis.
Finally, there is little value in anything in life if it cannot be shared. My deepest gratitude goes to Liselotte who listened to my endless MBA-stories while in parallel somehow managing an almost perfect storm of family logistics, expanding her own business and leading the renovation of our new home. Masha danki, dushi !
Amsterdam, 30 August 2017 Pokon Ganguli
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I. Introduction
One of the persisting management great-unknowns are the critical drivers behind a firm’s long-term survival. Despite a vast body of empirical research and case studies, little more than generic guidelines are known. One of these guidelines and todays
all-encompassing panacea is innovation which is used as mantra for most pressing business or societal issues ranging from lacklustre growth, health care’s cost explosion to climate change. With regard to innovation companies however encounter a dilemma between directing resources to optimize existing capabilities and exploiting its current (knowledge) domain or investing in building new capabilities and exploration of new domains. Burns and Stalker (1961) showed that for successful exploitation or exploration companies need fundamentally different organizations. To solve this apparent paradox and to ensure long-term survival Duncan (1976) postulated that ambidextrous organizational designs are required which can simultaneously optimize existing assets while search for new
opportunities. However, these ambidextrous organizations are schizophrenic by nature as convincingly showed by March (1993) who identified organizational learning as the
exploitation-exploration trade-off zone wherein exploitative gains will inevitably come at the expense of exploration and vice-versa. Tushman and O’Reilly (1996) argue that
ambidextrous organizations can be successfully designed by structurally separating both activities or by providing the organizational context wherein both exploitation and exploration can be executed in parallel. (Birkinshaw and Gibson, 2004). Since 2004, a growing body of research identified several context specific antecedents, moderators and environmental factors related to ambidexterity.
This thesis aims to identify the optimal ambidextrous organizational design for the company under investigation. An extensive literature review is applied as outside-in perspective which is combined with a company survey, representing an inside-out perspective. Both
perspectives are combined with the ultimate objective to generate a context-specific organizational blueprint.
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A. Company Introduction
The company under investigation is Renolit MEDICAL (RM) which is part of the German Renolit Group. The origins of the Renolit Group dates back to 1946 when the company’s founder started to supply the growing automotive industry with PVC-based artificial leather to replace natural leather sheets which was scarce in post-war Germany. Nowadays, the still family-owned corporation consists of 8 different BU’s which all specialize in manufacturing of plastic film products used in roofing, agricultural plastics, construction, etc. In 2006 Renolit acquired the Medical Foils business from Belgian Solvay Group creating a company today of approx. 4,500 fte’s with 1 billion € turnover. The Renolit Group could have been the poster child for the hidden champion category (Simon, 1990) describing SME companies with high market share, turnover below 4 billion €, less than 10,000 employees and low public visibility. These, mostly manufacturing companies are often located upstream in the value chain and are by nature exploitation oriented with a high degree of incremental innovation. The exploitation orientation is reflected in the corporate slogan “Rely on It“, showing its commitment to quality, consistency and reliability.
As part of the Renolit Group, RM specializes in the manufacturing of Medical grade plastic films, tubing and injection moulding intermediates. These are supplied to customers that convert them into flexible medical packaging for various liquids (e.g. IV-fluids, blood, nutrition, etc.) which are subsequently sold as Medical Devices; a global market segment valued at 315 $/year1 (2016) with a structural above-GDP growth. RM is actively supplying
global customers from four key operational sites, 1) Commerce, LA (US) 2) Enkhuizen (NL) 3) Thansau (DE) and Beijing/Guangzhou (CN) further denoted as respectively COM, ENK, THA and RBM. The sites are organized to act independently and report into the Medical Board which is the highest management team within RM. The Sales & Marketing function is organized separately in order to effectively coordinate strategy to global customers (see figure 1).
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Figure 1 Simplified 2017-organizational chart Renolit MEDICAL
In 2015 RM implemented, as part of group-wide initiative, a new innovation management software, corresponding governance rules and a new Innovation Process Office. The objective is to increase visibility on the innovation pipeline and ultimately to increase the value generation of RM’s innovation efforts. Although not explicit targeted, the new software will also measure RM’s ambidexterity and provide lagging control on the balance between exploitation and exploration.
B. Research question and scope
With the creation of a parallel organization for innovation management RM made a first attempt to change its exploitation-exploration balance. However, at the moment it is fully unclear how a RM-specific ambidextrous organization should be designed,
especially taking the full global nature of the business in scope. With the strong (geographic) growth of existing business lines, it is paramount that RM’s organization maintains sufficient exploration and innovation outside its existing domain to ensure long-term growth. This thesis has the ambition to provide science-based
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The overarching research question is therefore as follows.
Q1 What is the optimal ambidextrous organizational design for Renolit MEDICAL?
To answer this central question, the thesis will provide a theoretical framework (see II), followed by three parts with individual sub-questions.
Part 1 - a systematic literature review (see III)
The review consists of a qualitative and a quantitative part both aimed at
identifying key factors for building a superior ambidextrous organizational design. The review follows the literature research framework from Raisch and Birkinshaw (2008) to review current literature for organizational antecedents, external as well as internal factors and moderators critical for organizational ambidexterity. Sub-questions:
Q1.1 What is the current academic state-of-the art view on organizational ambidexterity?
Q1.2 Which factors have the most significant influence on organizational ambidexterity?
Part 2 – a company survey (see IV)
The survey will establish the current ambidexterity level of each different site of RM. Secondly, performance of those key factors identified in the literature review are investigated to understand areas of improvement.
Sub-questions:
Q1.3 What is the current ambidexterity balance within Renolit MEDICAL?
Q1.4 Which organizational elements can be improved to further strengthen RM’s ambidexterity?
Part 3 – best practice review (see V)
Review of case-studies of successful ambidextrous companies to identify industry ambidexterity best practices. The outcome will be used to further build and support the final recommendations.
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Initial stakeholder interviews showed a strong demand for an organizational design that would cover RM’s international operations. Therefore, scope of the thesis will be the global BU Renolit MEDICAL.
The thesis will apply the following terms for the organizational level as synonyms: firm, company, business or business unit. In contrast, group or cooperation will be used strictly for a multi business-unit combination.
II. Theoretical Framework
A surprisingly well-fitting analogue to the state-of-the-art of ambidexterity research can be found in the field of natural sciences. In 1953, expanding on Einstein’s’ work on quantum physics, three scientists2 published a landmark theory which predicted the
possibility of quantum amplifiers that theoretically could produce a stimulated emission of light particles, in other words a laser-device. However, despite the Nobel-prize winning theoretical foundation it took another 7 years before an actual functional laser could be build. Albeit in a completely different academic area, the concept of ambidexterity seems to be in the same state with a well-established theoretical foundation but without a uniform, empirically supported, blueprint for construction of an actual ambidextrous organization. (O’Reilly and Tushman, 2013, p333)
Ambidexterity can be understood etymologically by its root which refers to the Latin dexter3
meaning “situated on the right side” combined with the Latin pre-fix ambi- meaning “both”. The word was originally constructed to indicate ability of for example piano players to use both hands simultaneously. The concept was first introduced in the management literature by Duncan (1976) to label organizations that were able to maintain a profitable business models while simultaneously working on new business models. Although coined first by Duncan, the true father of the academic field of ambidexterity research is March (1991) with his seminal paper on the exploitation versus exploration dilemma.
2Dr. Townes, Dr. Basov and Dr. Prochorov, Nobel Prize Physics 1964
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This dilemma provided a framework to classify two different types of organizational activities leading to a new perspective on ambidextrous organizations. As usual, the ambidexterity concept has moved from its original inception research area (i.e. organizational learning) into other research areas including strategic management, innovation management, organization theory and operations management resulting in today’s management Rorschach test (Friedman, Lipshitz and Popper, 2005).
For this thesis, the definition from Turner, Swart and Maylor (2013) is used as starting point and adapted to stay as close as possible to the original organizational learning perspective.
Ambidexterity is the organizational ability to use and refine existing knowledge (i.e. exploitation) while simultaneously creating new knowledge (i.e. exploration) to overcome future capability deficiencies required to secure the organizations’ long-term survival
Essential in the definition above is the organizational knowledge as core differentiator between exploitation and exploration, clearly separating the dilemma from for example physical manufacturing processes, strategic portfolio management or even organizational design.
There are obvious differences but also overlaps with other management paradoxes (see II.B) so it’s important to apply definitions as strict as possible.
A. The Ambidexterity Premise
Attractiveness of the exploitation-exploration dilemma is not very surprising as it appeals intuitively to the age-old quest to understand mechanism of long-term survival of companies. March (1991) applied quite broad definitions in his original paper wherein exploitation is defined as all those activities related to “refinement, choice, production, efficiency, selection, implementation and execution”. Exploration, in contrast is defined as all those activities related to “search, variation, risk-taking, experimentation, play, flexibility, discovery and innovation”. The papers’ central position claims that driven by trade-off
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choices in resources allocation a lack of balance between exploitation and exploration will result in either over-exploitation wherein a company will find itself trapped in a suboptimal equilibrium without new alternatives to offer to emerging market demands (the so-called “success trap”) or over-exploration which causes a company to suffer high costs of
experimentation without gaining many of its benefits (the so-called “failure trap”). Comprehensively summarized by Uotila, Maula and Zahra (2009), a certain balance is
required because “firms that overemphasize exploration, risk spending scarce resources with very little payback. Conversely, firms that overemphasize exploitation reduce learning of new skills and ultimately become captive of outdated processes, knowledge and resources,
herewith depressing their long-term performance”.
March (1991) key-contribution consisted of a comprehensive modelling study into the organizational learning demonstrating that an organizations’ collective body knowledge shows the strongest increase when absorption of new knowledge (“exploration”) and adaption to existing knowledge (“exploitation”) are balanced. Underlying the exploitation-exploration dilemma is the tendency of organizations to over-exploit over the lifecycle of the firm. This suggests a natural vulnerability of exploratory activities caused by the fact that exploration returns are systematically more risky, more remote in time and organizationally more distant from the dominant locus of action (March 1991, p73). Therefore,
self-reinforcing processes and systems tend to favour exploitation hereby increasing path dependency automatically leading to a suboptimal equilibrium. And, more dramatically, this intrinsic tendency would inevitably lead to self-destruction. (see figure 2, Lackner, Güttel, Garaus, Konlechner and Müller, 2011). However, detailed analysis (Bierly and Daly, 2007) confirms conventional wisdom that reality is fortunately less extreme.
There is an active debate on the fundamental nature of the exploitation and exploration dichotomy. In practice only a few dichotomies survive reality and the
exploitation-exploration construct is probably no exception where the distinction is likely more a matter of degree rather than kind (Lavie, 2010). Conceptualizing exploitation-exploration as a (orthogonal) continuum is therefore consistent with i) the tendency that organizations can cycle between exploration and exploitation and with ii) nature of the activity is relative from
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the perspective of the (sub)-organization as the exploration domain maybe part of standard capability of another organization or even another part of the same organization. The advantage of a pure dichotomy is that trade-offs can be easily classified and valued which is more difficult with a continuum operationalization. Furthermore, consolidating the output into a single variable allows to study the (curvilinear) relation of the exploitation-exploration trade-off as shown in figure 2 (Auh and Menguc, 2005, He and Wong, 2004).
Figure 2 – Ambidexterity as organizational balance between exploitation and exploration
Next to ambidexterity as desired position, figure 2 also shows temporal cycling as possible execution mode for implementing an ambidextrous organization (Lackner et al, 2011, Boumgarden, Nickerson and Zenger, 2012). See III B.2 for more details on this specific execution mode.
To avoid ambiguity as much as possible, the following operational definition for ambidextrous organizations is applied in this thesis (see below). Here, on purpose the organizational performance is not incorporated in the definition due to difficulties with uniform quantification of organizational success. Instead organizations’ intent, design and management is taken as a measure of ambidexterity.
Organizational life cycle
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Ambidextrous organisations are those organizations that have a strategic intent to perform both exploitation and exploration tasks simultaneously.
Actually, with this definition, the ambiguity is not really resolved but shifted to the
exploitation-exploration construct which needs further clarification. The outcome (see II.B) leads to the following operational definitions:
Exploitation = those activities that build on the organizations’ existing knowledge base and capabilities whereby development and variants are generated in the same or nearby domain.
Exploration = those activitiesthat investigate domains outside organizations’ existing knowledge base and capabilities whereby development and variants are generated from domains distant from existing domain
From this perspective, it’s essential to clearly define the level-of-analysis because tensions on one level can be resolved at the next organizational level (Raisch et al, 2008). A
corporation can achieve ambidexterity by creating business units with different foci or a business unit can create different departments. According to the strict definition of
ambidexterity the ideal ambidextrous organization performs both activities simultaneously both time-wise and organization-wise in such an integrated way that the collective body of knowledge of the organization increases.
From this perspective, creating monolithic business-units for each separated activity does not qualify as true ambidexterity unless sufficient integration is safeguarded to ensure shared learning across the organization. (see appendix F)
B. Construct Analysis
The exploitation-exploration dilemma is central to this thesis so a more detailed analysis is performed to ensure clarity especially in comparison with other key constructs in management literature and most fundamental differences. (see table 1)
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Table 1 – Management dilemma’s close to the exploitation – exploration construct
Dilemma Flexibility vs Efficiency Differentiation vs Integration Capability vs Rigidity Integration vs Responsiveness Management theory origin Operations management Organizational Sciences Innovation
management International Business
Key author(s) Thompson (1967),
Adler (1999)
Lawrence and Lorsch (1967)
Leonard-Barton (1992)
Hamel and Prahalad (1983) Difference(s) compared to exploitation – exploration construct a classical trade-off dilemma wherein choice is required between flexibility or efficiency (e.g. efficiency frontier) organizational level construct which does
not hold on departmental or
individual level (Gilbert, 2006)
not a true paradox; rigidity and capability not positioned as alternative strategies
specific for multi-national companies structure selection. Not applicable on departmental or individual level Summary
The exploitation-exploration construct dilemma was assessed by reviewing the founding paper (March, 1991) but as well by comparing it to other closely related constructs from the fields of Organizational Sciences, Operations management and International Business. The latter assessment is helpful as it provides a distinctive position relative to other dilemmas. Core characteristics and differences of the exploitation-exploration dilemma:
Exploitation and exploration are both activity modes of customer value generation which are fundamentally different in nature in terms of inherent nature of the associated task, time-horizon, associate risk and (technology) domain orientation.
Exploitation-exploration is a multi-level construct which can be positioned on individual, departmental, business or corporation level. This is fundamentally different compared to for example integration-responsiveness or
differentiation-integration which are basically organizational dilemma’s Innovation, i.e. the ability to introduce something new (Jansen, van den Bosch
and Volberda, 2006) is a different concept and can take place in both activity modes although exploration is usually more related to radical innovation whereas exploitation is more related to incremental innovation.
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Both exploitation and exploration activities are required for any organization to increase its collective body of knowledge and to be able to continuously generate, develop, implement and sustain new business opportunities. To understand the current academic perspective on ambidextrous organizations and to recommend a new organizational design for RM, a literature review is executed with specific focus on (positive) ambidexterity drivers (antecedents, moderators, linkages, etc.). The review is expected to deliver the essential building blocks for an ambidextrous organization.
C. Organizational Ambidexterity Research Model
To separate the different elements (e.g. factors, moderators, linkages) related to organizational ambidexterity, a model was developed by Raisch et al. (2008) to categorize literature research. In essence, this model (see figure 3) represents a more expanded version of a more basic input-throughput-output model (Simsek, Heavey, Veiga and Souder, 2009) and allows for incorporation of moderators on multiple relationships.
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Straightforward relations to an input-throughput-output model can be made whereby categories (1),(2) and (3) can be seen as respectively external and internal context input and (4) and (5) equal to respectively throughput and output categories. An established paradigm in organizational sciences, is that a company should strive for an optimal fit between the company and its environment while at the same time maintain a fit between chosen strategy and internal business systems. From this perspective, a specific focus on environmental factors (1) is introduced to the relation between various environmental factors and the degree of ambidexterity.
A significant amount of research has been dedicated to identify the organizational antecedents (2) that are prerequisite to achieve organizational ambidexterity where the dominant focus in early literature has been on organizational structures. Different structures studied can be related to two basis underlying concepts, namely spatial or sequential
separation. Relatively new studies focus on context or leadership antecedents. Other moderators (3) is a collection of internal factors that influence organizational ambidexterity directly or indirectly via moderation of the link with organizational antecedents or
performance outcomes.
At its core, the throughput part of the model, organizational ambidexterity (4) describes research findings into the mechanisms and effects of ambidexterity in organizations. The final category, performance outcomes, represent the output and focus on studies that investigate the effect that ambidexterity has on a firm’s performance in either revenue, market share of growth. In addition to direct causal relations between the different
categories the model also allows for incorporation of indirect, moderating factors influencing the causal relation of the 2 key-links, between organizational antecedents-ambidexterity (7) and ambidexterity-performance outcome (9). Especially, the incorporation of moderator effects makes the model powerful as it allows for identification of those moderating factors that can be critical to a specific context.
In short, the systematic literature review will i) apply the 2008-model to understand current academic perspective on organizational ambidexterity (Q1.1), ii) identify most important factors for building ambidexterity (Q1.2) and iii) apply the obtained insights as input for design of a new ambidextrous organization for RM.
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III. Literature Review
A systematic literature review generates a comprehensive overview of the current knowledge by applying a multi-stage review strategy (Turner et al., 2013). In this thesis, a concise approach is applied with i) development of clear research question, ii) synthesis of the results in a pre-selected framework, iii) comprehensive conclusions and iv) appraisal of the quality and limitations of the findings.
To answer the main research question, the target of the literature review is to deliver answer(s) on following sub-questions.
Q1.1 What is the current state-of-the-art academic view on organizational ambidexterity? Q1.2 Which factors have the most significant influence on organizational ambidexterity?
A. Method and Data Collection
A dual approach was taken to generate a database of relevant literature articles, i) literature references of several systematic review articles (Raisch et al., 2008, Tushman, Smith, Wood and O'Reilly, 2010 and Turner et al., 2013) spanning the period 2008-2013 were collected and ii) the University of Amsterdam CataloguePlus engine was used to search for articles with “ambidext*”, “exploitation’, “exploration” in the title published after 2013 to cover period after the review articles.
The initial literature selection consisted of 494 articles containing 122 duplicates, resulting in 372 articles. After an initial screening for relevance, 169 articles were selected and reviewed (see VII for full reference list) in the quantitative analysis. Finally, 63 articles emerged as highly relevant and were analysed in-depth for the qualitative analysis. In line with the subject-company RM, those articles specifically describing SME’s were prioritized over more generic articles. Results were structured according the selected framework (see figure 3) and the each categorical element was analysed qualitatively to answer literature review question Q1.1.
To answer research question Q1.2, the same selection of 169 articles was used to perform a quantitative analysis to identify those factors that have the most significant influence on
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organizational ambidexterity. Research involved both the direct and indirect relationships, numbered (6)-(13) (see III C).
B. Qualitative Analysis
The selected 63 articles were analysed and categorized according the main topic in the framework categories (1) - (5). The synthesis of the analysis is described below per category with summary and conclusions in III B.6.
B.1 Environmental factors.The application of contingency theory in the area of
organizational sciences is long-established and states that organizations should continuously try to achieve an optimal fit between the organization and the environment for the highest performance (Drazin and Van de Ven, 1985). This strongly suggests that level of dynamism and competitiveness is related to an organization’s ambidexterity. Academic studies
investigated both direct as well as indirect relationships between environmental factors and (changes in) organizational ambidexterity. Direct effects are found by Clercq, Thongpapanl and Dimov (2014) (see link 1, Figure 3) showing that in case of high competitive pressure organizations respond with increasing internal alignment and shift balance toward increased exploration. However, Randall, Edelman and Galliers (2017) finds that for small software development firms demands from dominant customers result in shift of resources toward exploitation at the expense of running explorative projects hereby sacrificing ambidexterity. Although study context is different, Auh et al. (2005) present findings that can explain this somewhat contradictory result demonstrating that impact of increasing competitive pressure on an organization ambidexterity depends on the relative competitive position itself. The study shows that under increasing competitive pressure an organizations’ dominant learning mode is emphasized. For example, incumbent organizations (i.e. “defenders”) that are exploitation-oriented by nature will further increase exploitation activities. Results confirm that the incremental exploitation further reduces a firm’s overall efficiency and ambidexterity. As expected, reverse is true for entrant firms (“prospectors”) that will respond with even higher degree of exploratory activities hereby increasing short-term risk and operational inefficiencies.
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Indirectly, a moderating effect of environmental factors on the ambidexterity-performance (see link 7, Figure 3) is found by Jansen et al. (2006) wherein exploration activities deliver increased results in dynamic (i.e. high flux) environments in contrast with strong competitive environments which favour a more exploitation orientation. The authors suggest that over time, an ambidextrous approach might, instead of a differentiating factor, become a
necessity to survive periods of highly competitive rivalry. The latter seemed to be confirmed in an extensive US-study (Zahra, 1993) wherein an ambidextrous model was positively correlated with increased growth under conditions of high environmental dynamic. A few studies were found that investigated impact of environmental factors on organization antecedents (see link 5, Figure 3). Study of 1,500 SME’s (i.e. companies with less than 500 employees) showed that middle managers perception of increased environmental pressure can increase internal rivalry and struggles for funding, people and senior management attention (Clercq et al., 2014). As a consequence, managers will increasingly favour low-risk projects and limit unconditional knowledge sharing. Study shows that under these
conditions, effectiveness of a contextual ambidextrous organization is greatly reduced, although results confirm that contextual ambidexterity is a driver for high performance. Aligned with this observation is study by Jansen, Tempelaar, van den Bosch and Volberda (2009) which shows that degree of environmental dynamics has no significant influence on leadership preferred dominant choice between exploitation or exploration. An unexpected consequence of this finding is that for any successful ambidextrous organizational design ambidextrous-oriented leadership is essential. Finally, indirect influence of the environment on design of ambidextrous organizations is demonstrated by Damanpour and
Gopalakrishnan (1998) where a very useful distinction is made between environments stability (i.e. rate of environmental change) and predictability (i.e. regularity of
environmental change). Figure 4 shows the resulting four quadrants with different environments. Note that here innovation adoption is linked to presence of a successful ambidextrous organization as both exploration (“variant generation”) and exploitation (“variant implementation”) are required for innovation.
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Figure 4 – Different environment types with corresponding organizations (Damanpour et al., 1998)
B.2 Organizational antecedents.Next to studies into the nature of organizational
ambidexterity itself, the largest body of academic research has focussed on relevant antecedents, i.e. those internal firm specific factors that influence organizational ambidexterity. Three dominant themes emerge from literature representing key-antecedents for organizational ambidexterity, namely i) Leadership, ii) Structure and organizational design and iii) Organizational culture.
i) Leadership
There is no shortage of literature references emphasizing the importance of
top-management team (TMT) involvement to sustain organizational ambidexterity. Tushman, Smith and Binns (2011) suggests that especially the TMT has a pivotal role in managing the integration of the inevitable tensions an ambidextrous organization generates. According to Smith, Binns and Tushman (2010) the TMT is especially required for implementing an over-arching vision, an appropriate performance management system and a culture of
collaboration and learning. In a highly relevant study (Lubatkin, Simsek, Ling and Veiga, 2006) investigated senior management influence on ambidexterity in almost 800 US SME’s. SME’s were selected because due to fewer hierarchical levels and senior managers are expected to fulfil multiple roles, both strategic and operational where management of exploitation-exploration tensions becomes critical. Study shows high correlations between
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ambidexterity and behavioural integration of the TMT indicating that when collaboration and unconditional exchange of information is present, sufficient trust and reciprocity is created to allow tension diffusion and fostering of an ambidextrous organization. Lin and McDonough (2011) confirms a high correlation between senior-management’s ability to manage internal inconsistencies of exploitation and exploration and innovation
performance, operationalized as lagging measure on past 3 years new product performance. However, causal link is suggested to be indirect via TMT’s influence on organizational culture (i.e. values and norms) and context of knowledge-sharing systems and processes. Next to studies above, focussing on senior-management level Mom, van den Bosch and Volberda (2007) studied the leadership influence on middle-management level. The study finds confirmation for relation between information flows and ambidexterity. Top-down (i.e. control-based) information flows are related to exploitation activities while bottom-up and horizontal information flows (i.e. knowledge based) show higher correlation to exploratory activities with managers showing ability to make different combinations depending on the mental models of the individual manager. This would suggest that next to a project-based structure, for example expert communities or platforms would provide further support exploration activities. The leadership (style) has a direct influence on design of the selected performance management system hereby directly influencing an organizations’
ambidexterity. Possibly confirming conventional wisdom, a study (Brion, Mothe and Sabatier, 2010) showed that sufficient degree of exploration is most protected by a long-term organizational focus and vision. Output-control instead of behaviour- or
process-control and high degree of formalization was reported to result in high levels of exploitation. The notion of a supportive organization context reflects organization-context literature where especially the organizational effectiveness framework (Ghoshal and Bartlett, 1994) suggest that contextual ambidexterity “cannot be achieved primarily through charismatic leadership, not through a formal organization not even through a strong culture. Rather, it’s achieved by building a carefully selected set of systems and processes that collectively define a context that allows meta-capabilities of alignment and adaptability to simultaneously flourish…” (Birkinshaw et al., 2004). Again, critical is a combination of behaviour- and process-control based performance management and a supportive social context which enable organizational ambidexterity.
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ii) Structure and organizational design
Early thoughts on organizational design were strongly linked to the industrial manufacturing era attempting to solve the efficiency-flexibility dilemma (see II B.). Organizations that strive for efficiency should a adopt a mechanistic-design (e.g. highly standardized with little room for individual creativity) where in contrast those organizations that aim to excel in
innovation should adopt an organic-design (e.g. highly informal with high degree of individual freedom) (Burns and Stalker, 1961). The essential tension between these two organizational designs can also be found in studies on design for ambidextrous organizations although this dilemma is fundamentally different (see II B.). Since 2004, literature is building on three different concepts for ambidextrous organizations (Tushman, 2013) which involves either separating exploitation and exploration in space, i.e. structural ambidexterity (concept #1) or in time, i.e. sequential ambidexterity (concept #2) Or, thirdly by designing a context (concept #3) wherein a ambidextrous balance is managed on business-unit level but “actually manifests itself in the specific actions of individuals throughout the organization employees” (Gibson et al., 2004, p211), so-called contextual ambidexterity.
To achieve structural ambidexterity, exploitation and exploration need to be structurally separated in different work units with different systems, processes, HRM practices and ultimately a different culture. However, to ensure organizational learning and alignment recent insight is that these separate units should be “held together by a common strategic intent, an overarching set of values and targeted linked mechanisms to leverage shares assets.” (O'Reilly, 2013). From this perspective, the ability to achieve ambidexterity then becomes, in essence, a leadership capability. In contrast, contextual ambidexterity can be built by combination of hard elements (e.g. discipline and stretch) with soft elements (support and trust) in their organizational context, enabling individuals to balance their activities (Adler, Goldoftas and Levine, 1999), representing a bottom-up organizational design. Literature also reports the top-down variant leadership ambidexterity wherein top management maintains ambidexterity by continuous balancing both activities within a business unit (Lin et al., 2011). More detailed investigations in structural elements of contextual ambidextrous organizations show a delicate interplay of a number of key-elements, namely performance management by objectives for both exploitation and
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exploration, use of project-based structure to ensure sufficient exploration and establishing learning-oriented values (Güttel and Konlechner, 2009).
Instead of separating ambidexterity in space, it can also be separated in time, generating sequential ambidexterity whereby a company cycles through periods of increased
exploitation followed by periods of increased exploration (Güttel et al., 2011, Boumgarden et al., 2012). While interesting conceptually, the ex post studies fail to demonstrate strategic intent (see II.A) or the practical mechanisms that would provide the required timing to benefit from the significant re-structuring costs (O’Reilly et al., 2013). In another study (Menguc and Auh, 2010) show that both exploratory-driven radical innovations and exploitative incremental innovations need formal structures but at different stages of development. This aligns with findings that a project-based parallel structure can possibly serve as the locus of ambidexterity (Güttel et al., 2009, Turner, Swart, Maylor and
Antonacopoulou, 2016), coming close to the earlier postulated loosely coupled systems as ideal hybrid structure between mechanistic and organic structures (Weick, 1987). Recent studies into spatial separated ambidexterity (O'Reilly and Tushman, 2007, Gilbert et al., 2006, Jansen et al., 2009) have realized that spatially separating exploitation and exploration can only solve the ambidexterity dilemma when sufficient inter-unit coordination and
integration can be achieved (cost) effectively. This leads to the conclusion that contextual ambidexterity represents the only true ambidextrous design. In other words, the mere presence of exploratory and exploitative activities in structurally differentiated
organizational units does not deliver any synergistic organizational learning (Jansen et al., 2009) unless organized. This conclusion is probably not incongruent with recent literature stream on organization of disruptive innovations (Christensen and Bower, 1997, Christensen, 2006) as these disruptions are by default disconnected from incumbent business scope and are more linked to the punctuated equilibrium perspective (Romanelli and Tushman 1994) driven by industry-independent worldwide technology or societal trends.
iii) Organizational culture
The long-lasting statement “Organizations don’t have a culture, it is a culture” (Weick, 1979) comes to mind when studying relation between organizational culture and innovation. The all-encompassing nature of the phenomenon makes it difficult to study the direct relation
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with organizational ambidexterity. However, in a recent study Büschgens, Bausch and Balkin (2013) performed a meta-analytical review in order to make the concept more tangible. The study follows the Competing Values Framework (Quinn and Rohrbaugh, 1983) to account for different organizational cultures and investigate relationship with innovation performance, applied as proxy for an ambidextrous balanced organization. Interestingly the study finds no significant difference in organizational culture between organizations that either pursue exploitation or exploration driven innovation. Rather, a significant difference is found between an innovation supportive culture and a culture that is focussed on stability and cohesion. Cultural values associated with an innovation supportive culture are flexibility and action-oriented. A more direct relation was identified in an article (Lin et al., 2011) between an innovation performance and a knowledge-sharing culture i.e. that fosters values of uncertainty tolerance, openness to challenge and trust and high degree of ambidexterity where especially exploratory activities were supported. Remarkably, a strong mediating effect of company culture was found on the link between leadership and organizational ambidexterity suggesting that ambidexterity management works via or in conjunction with the company culture to build organizational ambidexterity. In a case-study of Kaiser
Permanente, a US healthcare provider Adler and Heckscher, 2013) suggested the need for a collaborative culture to achieve high levels of ambidexterity. Such a culture can be best linked to the “adhocracy” (Mintzberg, 1979) organization describing an organic form with “little formalization” or to the earlier mentioned “developmental” design in the Competing Values Framework (Quinn et al., 1983). Some empirical evidence is available showing that the collaborative culture represents a synergistic mix of a mechanistic organization with a strong performance management context with focus on discipline and stretch in
combination with an organic organization emphasizing a social context creating support and trust. Some studies have attempted to actually measure an organizations’ innovation culture (Hogan and Coote, 2014, Brooke Dobni, 2008) applying among others the Schein model (Schein, 1992). Unfortunately, the studies fail to clearly operationalize the definition and scope of the innovation thing that is studied. The results indicate that the employee survey can be used to identify the propensity of the organizational culture to experiment with new value offers and accept failure. Different elements (e.g. market orientation, organizational learning, employee empowerment, etc.) are found to be most critical for an innovation culture which is seen as a moderator on an organizations’ exploration and exploitation
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balance. The internal company survey will incorporate these scales to analyse innovation culture of RM, see IV.
Other often mentioned factors such as company age, size, industry or market share have been studied but with mixed results. Although, these context factors are probably relevant, degree of influence and interaction with other factors likely reduces importance of these factors.
Finally, some other interesting organizational antecedents are investigated in SME-studies and are worth mentioning, for example a twenty-year longitude-study in SME paint firms shows that the increasing use of process management systems (such as ISO9001) tip the innovation balance towards exploitation at the expense of exploration (Benner and Tushman, 2002). Postulated root cause is inherent focus on risk management and process efficiency in process management systems which unintentionally restricts variation-creating & distant search processes. Study suggest to maintain balanced ambidexterity by allocating specific domains for exploitation and exploration activities. Another study (Chang, Hughes and Hotho, 2011), expanding on the work of Cao, Gedajlovic and Zhang (2009), looked at a sample of 1,000 SME’s firms; key-finding suggest that to achieve balanced ambidexterity, SME’s need both stronger centralized decision making in contrast with larger firms and strong internal connectness both driven by resource scarcity and need for high
responsiveness. Finally, close to RM, Güttel et al. (2015) reports a case study of a global operating German SME. The findings suggest that ambidexterity is achieved through a mix of close leadership involvement, a firm-wide shared database which captures product design rules of historic and current products and close customer interaction in the early stages of product design.
B.3 Other moderators.Next to environmental factors which could be defined as
external context factors, other moderators are suggested which can be grouped under internal context factors. Most important of these, by default firm-specific factors, are market orientation and resource availability. One of the most cited studies on market orientation is the new product development study by Atuahene-Gima (2005) on a sample of 500 Chinese companies in the Guangdong province. Most important conclusion was that customer
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(see link 8, Figure 3). Possibly obvious in hindsight but a high degree of interaction or insights in customers’ requirements strongly reduce failure risk of new product development. A second-order effect is observed whereby the positive effect of market orientation on exploration is positively moderated by inter-functional coordination which is not found for exploitation activities. In other words, a firm’s use of market information to allocate resources to exploitation is not necessarily supported with inter-functional coordination. Important to note that the study shows that the market orientation should result in
manager’s perceive market opportunity in order to reduce perceived benefit of investment in exploration. Conversely, when environment is perceived as a threat, market orientation results in stronger bias for exploitation to avoid high failure costs of exploration which is in line with findings of Kyriakopoulos and Moorman (2004) in a study of the Dutch packaging industry. An important addition on the market orientation was confirmed in multiple studies (Li, Lin and Chu, 2008, Alpkan, Şanal and Ayden, 2012) whereby reactive customer
orientation is positively related to exploitative, incremental innovation and proactive customer orientation linked to exploratory, radical innovation.
From a trade-off perspective a moderating effect of resource availability can be suggested for both relationship between organizational antecedents-organizational ambidexterity (see link 6, Figure 3) as well as the organizational ambidexterity-performance relationship (see link 8, Figure 3). Ebben and Johnson (2005) empirically show that small firms pursuing an ambidextrous strategy underperform in comparison with SME’s that follow a one-sided strategy. However, the study is done from the efficiency-flexibility perspective wherein disadvantages of flexibility is defined as operational inefficiency. For design of an ambidextrous organization this is less relevant (see II.B Construct analysis). In a more
relevant study (Cao et al., 2009) on resource-constraints and company size it was found that SME’s that actively allocate resources between exploitation and exploration outperform firm’s that attempt to maximize both exploitation and exploration. Hodgkinson, Ravishankar and Aitken-Fischer (2014) offers a possible mechanism showing that especially middle managers when confronted with resources scarcity take short- and mid-term oriented decisions based on individual mental models to balance exploitation and exploration activities. This findings suggests that in vast majority of the organizations, decision on an organizations’ ambidexterity are actually taken by middle management. An obvious solution
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to resource scarcity is to build-in slack resources and studies indeed indicate a curvilinear relation between slack resources and exploration outcomes wherein both low and high levels of slack resources are prohibitive for ambidexterity (Nohria and Gulati, 1996, Rothaermel and Alexandre, 2009).
B.4 Organizational ambidexterity. The throughput part of the model (see figure 3)
describes the engine of organizational ambidexterity itself, in other words the mechanisms of organizational ambidexterity. This area is dominated by studies into organizational design and learning of ambidextrous organizations. Only recently, a number of papers is published on leadership in ambidextrous organization. Strange, as especially with a strategic topic as ambidexterity leadership is expected to be highly relevant. SME are usually seen as
organizations where leadership is less institutionalized thereby providing a rich environment to understand the link between leadership and ambidexterity. Cao, Simsek and Zhang (2010) reports in a study in 122 Chinese SME-companies that the CEO has a significant influence on ambidexterity by “fostering a culture of inquiry and investigation”. In addition, ambidexterity is further enhanced by allowing ambiguous communication, delegation of power and
functional diversity in the senior leadership team. With respect to structural ambidexterity, Burgers, Jansen, Van den Bosch and Volberda (2009) found, in a study on 4,000 Dutch manufacturing firms that isolated corporate venture units showed best performance when operating under a shared vision from the top-management team but without
cross-functional coordination or other limiting integration mechanisms. This finding is confirmed in a broader study (Hill and Birkinshaw, 2008) with the additional insight that long-term
survival of corporate venture units can be related to the degree the unit engaged in exploitation. On the contrary, in a study looking specifically into contextual ambidexterity, Carmeli and Halevi (2009) found a positive relation between an integrated top-management team and degree of contextual ambidexterity in an organization. The answer to these
apparent contrasting findings can be found in a study by Fang, Lee and Schilling (2010) describing a mathematical simulation on learning dynamics of organization. The central thesis is that full integration severely limits an organization to adapt (i.e. via variant generation) but whereby full isolation limits organizational learning and implementation. The optimal configuration is found with semi-isolated groups where a limited number of
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links to other teams and/or a governing body facilitates efficient dissemination of new knowledge. Reverse effects are reported in a number of studies (Tripsas and Gavetti, 2000, Gilbert, 2005) which link managerial inertia to loss of ambidexterity and show that
installation of so-called heavyweight project teams (i.e. teams which report directly into senior management teams) are required to remove inertia (Christensen and Overdorf, 2000). Organizational learning is another element strongly linked to leadership. This is a vast academic field but with respect to ambidextrous organizations, it is evident that learning can greatly stimulate ambidexterity (Ahuja and Lampert, 2001, Cegarra-Navarro and Dewhurst, 2007) where Ahuja et al. (2001) points to the so-called familiarity trap wherein only
learnings familiar or close to existing knowledge receive high priority (i.e. exploitation). Similar to Holmqvist (2004) a strong focus on experimental learning is suggested in order to maintain exploration or so-called double-loop learning which can also be applied on
individual or organizational level. According Argyris (1991), single-loop learning generates variants by using a feedback loop but using the same mental model, i.e. exploitation. In contrast, in double-loop learning, the mental model itself is also examined leading to new and different insights resembling exploratory learning. Relatively little studies are available that report on specific performance management systems for ambidextrous organizations but both Tiwana (2010) as Andriopoulos (2009) find that by providing context and setting both formal and informal controls ambidexterity can be achieved on individual and project team level.
In a relatively old, but often quoted study Adler et al (1999) describes the impressive turn-around of the ex-GM NUMMI-plant after acquisition by Toyota. Together with increasing employee integration four mechanisms are described which enable contextual
ambidexterity, allowing to minimize trade-off effects. Interestingly, these mechanisms are predominantly active on individual and departmental Described mechanisms are i)
metaroutines – implemented routines that systematically funnel routine improvements and ensure implementation, ii) enriching includes setting exploratory (i.e. improvements) next to the main task targets, iii) switching, where employees switch between different tasks
potentially including tasks from a parallel organization and finally, iv) partioning with fully separating tasks which is reported to allow for deepening of skills and specialization beyond switching and enriching mechanisms. Outside the applied definition in this thesis,
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Boumgarden et al (2012) report a study on periodically switching between exploration and exploitation which is called sequential ambidexterity. The study describes two case studies of US-firms that have cycled between exploitation and exploration over time with multi-year periods between both activities. It’s however questionable if in these cases there was an actual intent (see II.A) to balance exploitation and exploration over time. In any case, the study shows no clear advantage of sequential ambidexterity although time-span or sample type (i.e. large US-firms) could be of influence. In an interesting study on ambidexterity in the telecom industry, Grover, Purvis and Segars (2007) actually show an organizational structure which allows both radical and incremental innovation projects to take different pre-defined paths through the organization but with combined management and oversight. A number of studies (Lin et al., 2007, Kauppila, 2010, Zhiang, Lin and Demirkan, 2014) offer another perspective which is in particular of interest to resource-constraint SME’s. In these studies, exploration is executed simultaneously with exploitation but largely with external partners (i.e. suppliers, knowledge institutes, governments, customers, etc.) Herewith actually offering a perspective on organizational configurations to achieve contextual ambidexterity. In a similar study, McGrath (2001) studied impact of either goal autonomy (i.e. team autonomy to determine goals, roles and decision rules) or supervision autonomy (i.e. team autonomy to determine own plan, timing and resources) on effectiveness of exploratory learning. Both factors seem closely related to two different control mechanisms in Atuahene-Gima (2005) study into capability-rigidity dilemma (see II.B), namely output control or behaviour control. Findings are similar suggesting that when higher degree of exploration or degree-of-variance is targeted, management control should shift to goal autonomy or behaviour control with the contrary for increased exploitation.
B.5 Performance outcomes. Despite its intuitive appeal empirical evidence showing
that an ambidextrous organizational design is significantly related to long-term sustainable performance growth have remained scarce for a long time. This can be partly explained by the difficulty to operationalize the construct components, finding suitable proxies for exploitation and exploration and possibly most important, access to data to confirm long-term impact of especially explorative activities. However, this is probably not unusual for new constructs and recently a number of studies have been published on the relationship
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between organizational ambidexterity and performance outcomes in terms of growth, profitability or market share. Early output-oriented studies on ambidexterity report indirect evidence showing a positive effect of both exploitation and exploration on organizational learning (Katila and Ahuja, 2002). Additionally, a balanced ambidextrous approach on individual level was observed in the famous turn-around case study of the ex-GM NUMMI4
manufacturing plant after the Toyota acquisition (Adler et al., 1999). Next, there is a
significant stream of literature (Wernerfel and Montgomery, 1988, Van Looy and Debackere, 2005, Ebben et al. 2005, Thornhill, White and Raynor, 2007) that take multi-business
corporations as starting point wherein the degree of diversification is seen as a measure of exploration. Although related, this perspective is considered too distant from the original dilemma on simultaneously executing different modes of organizational learning within same organizational boundaries. Since, early 2000 a number of major studies have been published testing the ambidexterity hypothesis empirically with in general, positive relation between a balanced approach of exploitation and exploration and firm performance. Most highly referenced is a SME-specific study where positive impact of ambidexterity is observed (He and Wong 2004, Chang 2012). In line with Cao et al. (2009) a balanced approach instead of a combined approach is reported as most optimal for SME’s firms. Intriguingly, another study (Bierly, 2007) indicated no support for an interaction effect between exploitation and exploration which suggests that both have a more direct effect on performance. A meta-analysis of SME’s companies (Juuni, 2013) confirm these results but add that performance was mostly linked to sales growth and not to profitability, indicating the difficulty to combine costs and benefits of exploration in the same study. The latter was attempted to solve in a study covering a twelve-year period of over 1,000 US software firms (Venkatraman, 2007). Study confirms the positive relationship between ambidexterity and firms performance but find strong support for sequential ambidexterity for market dominant firms indicating that for SME’s combining both activities at the same time is cost-inefficient. In a specific study, looking at high-tech SME’s, a curvilinear relation was found with the balance becoming increasingly important with increasing degree of R&D intensity of the industry. Overall, literature reports a positive link between ambidexterity and performance albeit in sales growth or profitability. Specific factors for SME’s seem to concentrate on resource (i.e.
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financial, human and network capital) constraints but as well on systems and availability of organizational critical mass to manage the duality of exploitation and exploration.
B.6 Summary and conclusions.The qualitative literature analysis aimed to answer the
question Q1.1 “What is the current academic state-of-the art view on organizational ambidexterity?”. It is safe to state that current literature shows a clear consensus that the exploitation-exploration lens is well suited to study organizational ambidexterity. Unique features of this management paradox is that exploitation and exploration are both
innovative, value-adding, activities but which are fundamentally different in terms of risk, benefit return horizon and distance to locus of organizational operation. In terms of innovation, exploitation is more associated with incremental innovation while exploration can be linked to radical innovation. A prerequisite to achieve ambidexterity is that learnings generated by either activities are integrated in order to increase the collective body of knowledge. Ambidexterity can manifest itself in three fundamental different organizational forms, namely i) structural, ii) sequential and iii) contextual. The latter form approaches an ambidextrous organization most closely as herein both exploration and exploitation
activities are performed in the same organization at the same time. The need for a balance between exploitation exploration activities can be casually linked to positive firm
performance whereby for resource-constrained SME’s focus needs to be on a trade-off while larger firms can strive to maximize both activities. The competitive environment has a strong influence on a firms’ ambidexterity and thus ambidextrous organizations continuously need to maximize the fit between the external environment and the internal
exploitation-exploration balance. The pressure toward exploitation-exploration will increase with increasing
competitive or technology intensity. Depending on the business model, market or customer orientation can be used to drive ambidexterity whereby input from established, dominant customers is needed to avoid over-exploration and feedback from new customers,
businesses or technical opportunities to avoid over-exploitation. Ambidextrous organizations need an almost schizophrenic structure wherein organizational units work freely and
independently but simultaneously with strong managerial control and integration of generated learnings. Theoretically, such an organization can be built by implementing a network with loosely-connected units and by careful design of a limited number of
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managerial control and knowledge links. Interestingly, no research reports a must-have of physical proximity or shared spaces for ambidextrous organizations, possibly because in practice workplace arrangements naturally follows organizational design. A strong project based organization as parallel structure resembles the mentioned parallel network
organization wherein both exploration and exploitation activities are managed
simultaneously. To meet this challenge requires specific managerial capability, strategic alignment between both activities and last but certainly not least an overarching vision governing both exploitation as well as exploration. Leadership is expected to implement a delicate balance between performance management (e.g. management-by-objectives) combined with strong social support enabling firm-wide trust and learning organization is essential to cultivate contextual ambidexterity.
C. Quantitative Analysis
To find an answer on literature review question Q1.2, “Which factors have the most significant influence on organizational ambidexterity”, a quantitative literature analysis was performed next to the qualitative analysis.
Similar to the quantitative literature analyse by van de Voorde (2012) albeit less granular the selected studies are scored on predefined study elements and consolidated, resembling a meta-analytical literature review. The selected 169 articles were screened and 102 empircal studies selected excluding review articles, case studies and conceptual papers. While case studies can deliver significant insights these are generally descriptive by nature and findings cannot easily be consolidated quantitatively. The output was categorized according the relationships (numbered (6)-(13)) identifed by the ambidexterity research framework (figure 3). Direct relationships, numbered (6)-(9), were analyzed for the strenght of the relation (i.e. either positive or negative!), between the two categories. In addition, indirect relationships (10)-(13), were analysed for the degree of moderation, i.e. influence on the direct ((6)-(9)) relationships. As, in the vast majority each study tested multiple hypotheses, a total of 166 findings was identified, see table 2 below.
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Table 2 Output of quantitative analysis on ambidexterity literature
Overall, the output of the quantitative analysis shows clear signs of maturation of the ambidexterity construct with a significant amount of empirically supported facts on the inner workings of an ambidextrous organization. In addition, 71 out of the 102 selected articles are published since 2009 responding to the call (Raisch, 2008) for more detailed investigations in the exact mediating and moderating factors influencing the ambidextrous organization.
C.1 Direct effect on organizational ambidexterity. Interestingly, since work from Auh et
al (2005) no significant studies have been published on the relation between the external environment and organizational ambidexterity. Dynamics in the environment (e.g.
competitiveness, product life cycles, number of players) has a significant influence on the degree of organizational ambidexterity where a number of studies confirm that increase in external pressure increases organizational ambidexterity as incumbent firms attempt to respond to increased pressure from the market. The lack of new studies or interest could indicate that ambidexterity is viewed as dynamic capability which is pre-dominantly an internal resource-based perspective (Barney, 1995). Since contextual ambidexterity was introduced (Gibson, 2004), a high number of studies indeed confirm that internal
organizational context has a significant influence on organizational ambidexterity, ranging from workplace organization, design of systems and processes and shared beliefs. Closely
Category high medium low high medium low high medium low high medium low
Environmental factors industry type 1 1 environmental dynamics 3 1 1 1 3 Organizational Antecedents context 10 1 centralization 1 culture 5 1 structure 20 3 6 leadership 13 2 3 Other Moderators market orientation 2 3 2 resource slack 4 5 2 process management 2 3 4 1 3 1 knowledge management 6 2 1 size 4 1 2 2 2 2 performance management 5 2 10 Organizational Ambidexterity 12 5 1 Organizational Ambidexterity - Performance Outcomes relationship (11)
Strength of moderating relationship
relationship (7) relationship (8) relationship (9) relationship (12) relationship (13) Organizational Ambidexterity relationship (6) Performance Outcomes Strength of direct relationship
Organizational Antecedents - Organizational Ambidexterity
