Faculty of Economics and Business Master in Business Studies
Master’s Thesis
Integrating Innovative Ambidexterity and Business Model Innovation
Looking into the role of Strategic Flexibility and Ambidexterity Oriented Decision-making
Author: L.M.C. (Lisette) Zijm, 10475729
University of Amsterdam, Amsterdam Business School
Executive Progamme in Management Studies - MSc Strategy Track
Supervisor: Dr. Dipl. -Wirt.-Ing. Sebastian Kortmann
University of Amsterdam, Amsterdam Business School
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Statement of Originality
This document is written by Student Lisette Zijm who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Preface
Still my eager for learning and achieve an academical level, that was my main motivation when starting this Executive Master in Business Studies at the University of Amsterdam. Three year later I’m graduating with this thesis and with that ending my time as a (part-time) master’s student.
The last three years have been very remarkable. My pre-master was challenging but very interesting and has changed my life; achieving the maths-courses felt as an incredible achievement. The master year brought me the academical knowledge and feeling I was looking for. Although it has been tough and was lots of hard work, I would never regret starting this incredible opportunity. The thesis however was something else, it has cost me some tears, but the end product is there, and it makes me feel proud.
I would like to thank my thesis supervisor Sebastian Kortmann for guiding me through the thesis process. Furthermore I would like to thank my thesis coach and helpful friends for their useful advice. I would also like to thank to my co-workers and managers at Rabobank Amsterdam, I would not have made it without their flexibility and support. Furthermore I would like to thank my fellow students at UvA, for all the fun and hard work we shared together. Without them it would not have been such a great experience.
Finally I would like to thank my dear friends and family for their moral support and understanding, in particular my parents, sister and boyfriend. I would not have made it without them.
Enjoy reading!
Lisette Zijm 31 August 2015
4 Table of Contents
Abstract ... 6
1. Introduction ... 7
2. Literature Review ... 10
2.1 Long Term Firm Survival... 10
2.2. The Paradox of Ambidexterity ... 11
2.3 Innovative Ambidexterity... 12
2.4 Antecedents of Ambidexterity ... 12
2.5 Dynamic Capabilities ... 14
2.6 Management Involvement ... 15
2.7 Integrating Innovation ... 16
2.8 Business Model Innovation ... 17
2.9 Research gap ... 19
3. Theoretical Framework ... 20
3.1 Strategic Flexibility and Innovative Ambidexterity ... 20
3.2 Ambidexterity Oriented Decisions and Innovative Ambidexterity ... 22
3.3 Business Model Innovation and Innovative Ambidexterity ... 23
3.4 Mediation effect of Business Model Innovation for Strategic Flexibility ... 24
3.5 Mediation effect of Business Model Innovation for Ambidexterity Oriented Decisions ... 25
3.6 Conceptual model ... 27 4. Methodology ... 28 4.1 Research Design ... 28 4.2 Data collection ... 29 4.3 Research sample ... 29 4.4 Measures... 30 Independent variables ... 30 Dependent variables ... 31 Mediation variable... 32 Control variables ... 32 Representativeness ... 33 4.4 Statistical Procedures ... 33 Normality check ... 33 Statistical procedure ... 34 5. Results ... 35 5.1 Data Analysis ... 35
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5.2 Descriptive Statistics ... 35
5.3 Reliability Analysis ... 36
5.4 Correlation ... 36
6. Discussion ... 42
6.1 Discussion of the findings ... 42
6.2 Theoretical implications ... 46 6.3 Managerial implications ... 46 6.4 Limitations ... 47 6.5 Further research ... 48 7. Conclusions ... 49 References ... 50
Appendix 1: Cover Letter Survey and Survey Questions ... 55
Appendix 3: Descriptive Statistics of the variables ... 61
Appendix 4. Reliability Analysis ... 63
Appendix 5. Mediation Analysis ... 64
6 Abstract
Long term firm survival has been a main point of interest within organizational strategy theory. Modern literature highlights the crucial importance of innovation in long term firm survival and introduces innovative ambidexterity as a solution for obtaining sustainable competitive advantage. Possible antecedents are proposed to be found in dynamic capabilities, in particular strategic flexibility and ambidexterity oriented decision, as these enhance the involvement of top management and the right strategic decision making. However this strategic behaviour and strategic decisions do not directly translate into innovation outcomes, a mediating role of business model innovation is expected. Research amongst 121 firms in the Netherlands has confirmed that business model innovation partly influences the impact of strategic flexibility and ambidexterity oriented decisions on innovative ambidexterity. This research extends our knowledge on ambidexterity theory and connects with the theory on business model innovation. The findings show that there is a significant, positive however modest mediating effect of business model innovation on the effect of strategic flexibility on innovative ambidexterity. For ambidexterity oriented decisions this effect was very limited and non-significant. This research suggests that in order to obtain long term survival, firms need to incorporate business model innovation in their organizational strategies in order to transform strategic flexibility into innovation outcomes. It gives arguments for future research on incorporating ambidexterity theory with the theory on business model innovation in order to extend our understanding on the achievement of sustainable competitive advantage.
Keywords: Sustainable Competitive Advantage - Innovative Ambidexterity - Business Model Innovation - Strategic Flexibility - Ambidexterity Oriented Decision-making
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1. Introduction
“It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able to adapt to and to adjust best to the
changing environment in which it finds itself” Charles Darwin, British naturalist (1809-1882)
For firms to survive in the long run, prior literature indicates the importance of sustainable competitive advantage (Teece, 2007). It has been broadly shared that sustainable competitive advantage can be obtained by having organizational ambidexterity, e.g. being ambidextrous (O’Reilly & Tushman, 2004; Birkinshaw & Gibson, 2004; Raisch & Birkinshaw 2008). In order to obtain ambidexterity, firms should focus on optimal exploitation on one hand, but on the other hand simultaneously focus on exploration activities. This need for simultaneous exploitation and exploration is defined as (organizational) ambidexterity (O’Reilly & Tushman, 2004; Birkinshaw & Gibson, 2004; Raisch & Birkinshaw 2008).
As explained, organizational ambidexterity builds on two constructs; exploitation and exploration (O’Reilly & Tushman, 2004; Birkinshaw & Gibson, 2004; Raisch & Birkinshaw 2008). Exploitation refers to optimal efficiency, whilst exploration refers to the innovation part and adapting to future needs. These innovation activities can be divided into exploitative innovation and explorative innovation, which together are referred to as innovative ambidexterity (Jansen et al. 2009). Exploitative innovations are the incremental innovations made on existing products and processes; exploratory innovations are radical and aimed at new product/service development (Jansen et al. 2009).
Prior literature on innovative ambidexterity indicates the involvement of top management and the right strategic decision making is needed for optimal implementation of this construct (Kortmann et al., 2014; Jansen et al., 2009; Gibson & Birkinshaw, 2008). The literature highlights certain antecedents in particular in regards to the dynamic capabilities that needs to be in place: strategic flexibility (S. Kortmann, 2014), ambidextrous operational capabilities (Kortmann et al. 2014, Patel et al., 2012; Rothaermel and Alexandre, 2009) and ambidextrous oriented decisions (Kortmann, 2014) which enable innovative ambidexterity.
8 However, top management’s strategic behaviour and decisions are unlikely to directly translate in concrete innovation outcomes. In this respect, prior research highlights the embeddedness of product and service innovation in business model innovation, as well as the importance of strategic decisions in business model innovation (Schneider & Spieth, 2013; Kortmann, 2014; Dess, 1987). Although the literature indicates the need for innovative ambidexterity and the need for embedding innovation and strategic decisions in business model innovation, there is however little research that looks into combining both constructs.
The research gap of this study investigates into the gap in our knowledge on the relation between antecedents strategic flexibility and ambidexterity oriented decisions and the desired outcome of innovative ambidexterity. It is expected that business model innovation plays a mediating role in bringing innovative behaviour and decisions into concrete innovation outcomes. The research question of this study looks into is:
Does business model innovation play a mediating role in the relationship between innovative ambidexterity and its antecedent’s strategic flexibility and ambidexterity oriented decisions?
This study will focus on the effect of strategic flexibility and ambidexterity oriented decisions on innovative ambidexterity in particular and will investigate if business model innovation plays a mediating role within those relationships. It combines the theory on business model innovation with the theory on innovative ambidexterity, which is not looked into before.
This study will contribute to theoretical knowledge as it integrates the theory of business model innovation with innovative ambidexterity theory by looking into the mediating effect of business model innovation. It extends our current knowledge within the organizational strategy literature on the topic of innovative ambidexterity and to the theory of business model innovation as it integrates both topics and will investigate in the mediating effect of business model innovation. The theory of business model innovation will be tested as a mediating effect between both strategic flexibility and ambidexterity oriented decisions on innovative ambidexterity. It will contribute to the knowledge on ambidexterity by integrating innovative ambidexterity with business model innovation. From a view point of managerial relevance it will be useful for top and middle management as it helps to understand the role of business model innovation in obtaining innovative ambidexterity. It will add to our understanding of the ability of management to resolve and manage the tension between exploration vs exploitation strategies.
9 This paper gives an overview of the existing literature on ambidexterity and the gaps within the literature. It covers the concepts of innovative ambidexterity, strategic flexibility and ambidexterity oriented decisions in regards to business model innovation and the relationships between those constructs. The identified or proposed relationships have been developed into hypotheses. The proposed relationships between the constructs and subsequent hypotheses have been tested by using a quantitative study. Based on the study the results are presented and conclusions are drawn. This paper will conclude with a discussion of the results and proposed future research objectives.
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2. Literature Review
The following section gives an overview of the existing literature on the topic of this research study. It will first look into the background of organizational ambidexterity and its antecedents. Additionally the role of management and dynamic capabilities will be illustrated. Furthermore the concept of business model innovation will be introduced and the relevance of integrating business model innovation with innovative ambidexterity will be illustrated.
2.1 Long Term Firm Survival
Long term survival is, in the end, the ultimate goal organizations are striving for. In order to achieve this goal firms face several challenges. Why some firms manage to survive and others fail is a question that is frequently looked into in the academic literature on organizational strategy, for instance O’Reilly III & Tushman (2007) question how some firms manage to adapt to change whilst others cannot.
Many researchers have looked into ways of achieving long term survival. Teece (2007) mentions that firms need to have sustainable competitive advantage in order to be able to survive in the changing environment. In line with this O’Reilly & Tushman (2008) mention that being able to manage emerging and mature strategies simultaneously is a key element for long-term success. More recently O’Reilly and Tushman (2011) state that organizations will successfully survive if they are able to exploit present businesses and explore new areas, which can be done by re-building existing resources and the development of new capabilities. This pursuit of simultaneously exploring and exploiting is referred to as ambidexterity within the academical literature (O’Reilly & Tushman, 2004; Birkinshaw & Gibson, 2004; Raisch & Birkinshaw 2008).
The linkage between long term firm survival and ambidexterity is frequently emphasized in academical literature on organizational strategy. For instance Raisch et al (2009) explain that ambidexterity is positively related to firm survival. Also Jansen et al (2005) underline the crucial role of organizational ambidexterity in obtaining long term firm survival. Likewise O’Reilly & Tushman (2013) have also indicated that organizational ambidexterity is required for long term firm survival.
As described before, long term firm survival is in the end the most optimal goal for organizations, in which ambidexterity plays a crucial role.
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2.2. The Paradox of Ambidexterity
As organizational ambidexterity can be seen as an important driver for long term firm survival, is has been of great interest for researchers within the organizational strategy literature for the last decades (Gibson and Birkinshaw, 2004; Raisch and Birkinshaw, 2008).
The construct of ambidexterity within organizational theory can be defined as the ability of an organization to simultaneously manage exploration- and exploitation strategies (O’Reilly III and Tushman, 2011). Prior literature provides a variety of definitions for ambidexterity and its underlying constructs of exploration and exploitation; however they all have a comparable viewpoint. Raisch and Birkinshaw (2008) refer to ambidexterity as “an organization’s ability to be aligned and efficient in its management of today’s business demands while simultaneously being adaptive to changes in the environment” (p. 375). Others define ambidexterity as operational efficiency vs strategic flexibility (Kortmann et al, 2014) or alignment and adaptability (O’Reilly & Tushman, 2004), all the same they emphasize the need executing both strategies simultaneously.
As managing both exploration and exploitation is a contradiction, many relate to this issue as the paradox of ambidexterity (Eisenhardt, 2010). In earlier research on organizational theory, Thomson (1967) already defined this trade-off between efficiency and flexibility as a paradox of administration. Likewise, O’Reilly III & Tushman (2008) refer to early research of March (1991) who already explained that ambidexterity is a fundamental tension which is at the heart of an organizational long term survival, also indicated the struggle of managing these contradicting strategies simultaneously.
In more recent literature the ability to manage two contradictory strategies simultaneously is also stressed. Eisenhardt (2010) and Kortman (2014) mention that firms need to be strategically flexible to adapt to their changing environment, but also need to optimize their business processes in order to obtain operational efficiency. In the same light, Kaplan & Norton (2008) emphasize that organizations have always found it difficult to balance demanding operational concerns with long-term strategic priorities. Also O’Reilly and Tushman (2008) state that the basic problem an organization faces is ensuring the firms’ current viability by engaging in adequate exploitation, whilst at the same time ensure the firms future viability by devoting sufficient energy to exploration. Adler et al (1999) argue that with efficiency comes bureaucracy and bureaucracy holds back flexibility, which results in firms facing a trade-off between efficiency and flexibility.
12 As discussed above, researchers agree that managing both exploitation and exploration is a paradox and asks for the ability to manage two contradictory strategies.
2.3 Innovative Ambidexterity
Jansen et al. (2009) apply the distinction of exploitation and exploration to the concept of innovation, introducing the topic of innovative ambidexterity as “the ability to simultaneously pursue exploratory and exploitative innovation”. This view builds on prior literature that distinguishes exploratory and exploitative innovations (Benner and Tushman, 2003; He and Wong, 2004).
Kortmann (2014) refers to innovative ambidexterity as “the ability of firms to simultaneously develop discontinuous and incremental innovation (p.1). Also Jansen et al. (2006), Benner and Tushman (2003) and He and Wong (2004) make the division between exploitative innovations and exploratory innovations. They explain exploitative innovations are incremental and designed to meet the needs of existing customers or markets and extend existing capabilities and knowledge. Exploratory innovations on the other hand are radical and are designed to meet the needs of emerging customers and new markets and require new skills and knowledge.
Both Kortman (2014) and He and Wong (2004) have emphasized the relevance in recent literature of combing exploratory and exploitative innovations for sustainable superior performance. They define innovative ambidexterity as the pursuit of discontinuous as well as incremental innovation, in which the first aims for entering new product-market domains and the second at improving existing product-market positions, underlining the need for both kinds of innovations.
Kortmann (2014) mentions that the success of innovative ambidexterity is dependent on several factors, which can be found within the antecedents of ambidexterity.
2.4 Antecedents of Ambidexterity
As described by Raisch and Birkinshaw (2008), prior literature has indicated three underlying approaches in enabling ambidexterity: structural, contextual and leadership-based: “structural solutions that allow two activities to be carried out in different organizational units, contextual solutions that allow two activities to be pursued within the same unit, and leadership-based
13 solutions that make the top management team responsible for reconciling and responding to the tensions between the two activities” (Raisch and Birkinshaw 2008, p.389).
First, structural ambidexterity can be explained as putting in place separate structures or business units for alignment (exploitation) or adaption (exploration), called “dual structures” (Duncan, 1976) or “structural separation” (Gibson & Birkinshaw, 2004). Secondly, contextual ambidexterity can be defined as the behavioural capacity that entails the simultaneous demonstration of alignment and adaptability across an entire business unit (Gibson & Birkinshaw, 2004). The last researchers mention that contextual ambidexterity will emerge when a supportive organizational context is developed. Finally, leadership-based ambidexterity refers to the importance of involvement of management. Raisch and Birkinshaw (2008) mention the importance in prior studies of leadership based antecedents of ambidexterity and emphasize leadership-based ambidexterity to be a supporting factor in implementing structural or contextual ambidexterity.
Besides the previously mentioned three underlying approaches to ambidexterity, several authors have written about the constructs that need to be in place in order to obtain ambidexterity. Jansen et al. (2005) have examined how organizational ambidexterity is affected by environmental and organizational antecedents. Gibson & Birkinshaw (2014) identified that key sources of ambidexterity can be found in a decentralized structure, a common culture and vision, supportive leaders and flexible managers. Additionally O’Reilly and Tushman (2011) propose five conditions which need to be present in order for ambidexterity to be successful, including a compelling strategic intent, common vision and values, a senior team that explicitly owns the units strategy, separate but aligned organizational architectures and finally the ability of senior leadership to tolerate and resolve the tensions arising from separate alignments. Teece (2007) mentions in order to achieve sustainable competitive advantage, firms need to be able to sense and seize opportunities and to have the ability to reconfigure assets and skills.
Summarizing, the majority of prior studies highlight the importance of involvement of management in becoming ambidextrous. By many researches, this ability is referred to as dynamic capabilities (Teece, 2007) or more specifically ambidextrous operational capabilities (Kortmann, 2014).
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2.5 Dynamic Capabilities
The pursuit of firms to be ambidextrous has been referred to as a dynamic capability. O’Reilly and Tushman (2011) confirm this by stating “the ability of a firm to be ambidextrous is at the core of dynamic capabilities” (p. 6). They see ambidexterity as a dynamic capability as an answer on how managers deal with both exploring and exploiting. In their earlier research (O’Reilly & Tushman 2008) they have explained that ambidexterity as a dynamic capability helps organizations to sense and seize new opportunities and helps to “mitigate the effects of path dependence” (p200). Teece (2007) also mentions that dynamic capabilities are needed in order to have (sustainable) competitive advantage and has defined dynamic capabilities as ”the capacity to sense and shape opportunities and threats, to seize opportunities and to maintain competitiveness though enhancing, combining, protecting and when necessary, reconfiguring the business enterprises intangible and tangible assets” (p. 1319). Also Simset et al (2009) have pointed out the underlying nature of ambidexterity as a dynamic capability.
A specific stream within the dynamic capabilities is the theory on ambidextrous capabilities (Kortmann, 2014; Kortmann et al., 2014; Eisenhardt et al., 2010). As stated by Eisenhardt et al. (2010) in order for firms to be ambidextrous, firms need to have ambidextrous capabilities, which Kortmann et al. (2014) define as ambidextrous operational capabilities. They mention that being ambidextrous asks for ambidextrous operational capabilities and define these capabilities as “the ability of a firm to balance different value creating activities in a trade-off situation” (p. 476) and highlight several managerial examples, illustrating the importance of ambidextrous operational capabilities when combining strategic flexibility and operational efficiency.
To sum up, ambidexterity operational capabilities are identified to be important antecedents for innovative ambidexterity (Kortmann et al., 2014; Patel et al., 2012; Rothaermel and Alexandre, 2009). This research study will look into two ambidextrous operational capabilities in particular, namely strategic flexibility and ambidextrous oriented decisions.
Based on the study of Kortmann et al. (2014) strategic flexibility is considered as an important antecedent for innovative ambidexterity. In line with this Eisenhardt et al (2010) classify strategic flexibility as an important dynamic capability that helps effective organizations to create and combine resources in new ways. Also Helfat and Peteraf (2009)
15 and Teece et al. (1997) highlight the importance of strategic flexibility in organizational strategy when facing change.
The other ambidextrous operational capability that is considered to be an important antecedent of innovative ambidexterity and which is looked into in this study is ambidexterity oriented decision. Kortmann (2014) identifies ambidexterity oriented decisions as the ability of top management teams to manage the contradictory strategic directions of adaptability and alignment.
As pointed out above, important antecedents of innovative ambidexterity are identified to be within ambidextrous operational capabilities namely strategic flexibility (Kortmann, 2014), and ambidexterity oriented decisions (Kortmann et al., 2014). Both are considered a dynamic capability, which asks for the right leadership skills and decisions (Teece, 2007).
2.6 Management Involvement
According to Teece (2007) in order to sustain dynamic capacities, top management leadership skills are needed. Eisenhardt et al. (2010) indicate the need for dynamic capabilities within the organization’s management whilst stating: “high performance in dynamic environment relies on leaders resolving the fundamental tension between flexibility and efficiency for their organizations” (p. 1264).
The research of Jansen et al. (2009) also points out the role of senior team attributes and leadership with regards to achieving organizational ambidexterity. This study clarifies how the conflicting demands of the contradictory strategies can be balanced by senior executives. In line with this view, O’Reilly and Tushman (2011) state that taking advantage of ambidexterity as dynamic capability is dependent on the ability of leaders of actually managing the tension between exploration and exploitation. Their view is largely consistent with Teece’s observations of leadership and the top management teams capabilities and involvement. Also Gibson and Birkenshaw (2004) emphasis the important role of senior management on arranging an effective organizational context that enhances the development of ambidexterity. Kortmann et al. (2014) emphasize, besides the crucial role of executive management, the vital role of involvement of operations and middle management, by stating “strategic managers have to fully recognize the role of operations managers, providing
16 capacity and organizational slack to operational managers to develop ambidextrous operational capability” (p. 484) .
The study of Jansen et al. (2009) reveals the first path towards “uncovering the specific features of senior teams and leadership behaviour in ambidextrous organizations” (p. 1000)”. However, still a lot remains unrevealed; Jansen et al. (2009) opt for future research avenues on the manager level of analysis. Also O’Reilly and Tushman (2013) indicate that leaders must be able to arrange the division of resources between existing and new businesses, and mention “how they actually do this is seldom addresses in the research on ambidexterity but is at the core of the leadership challenge” (p.332). They propose avenues for further research by asking the questioning how leaders can manage the inevitable conflicts that arise.
Although the importance of management involvement is broadly shared among researchers, prior literature does not indicate how this is successfully implemented within the organizations business model.
2.7 Integrating Innovation
As mentioned before many authors have agreed upon ambidextrous capabilities being important dynamic capabilities which enhance firms’ long term survival. However these authors agree that the exact ‘how’ remains undiscovered.
As explained, prior research gives us a variety of suggestions for antecedents and constructs which needs to be in place before an organization can be ambidextrous (O’Reilly & Tushman, 2013; Eisenhardt et al., 2010; Raisch and Birkinshaw, 2008). But more in-depth insight in how these leaders manage the struggle of both exploration and exploitation is needed. As stated by O’Reilly & Tushman (2013), studies do not provide insights in how leaders actually manage the boundaries between exploration and exploitation. Cao, Simsek & Zhang (2010) and O’Reilly & Tushman (2011) mention that further research is needed in order to clarify how senior team members resolve these strategic challenges.
O’Reilly and Tushman (2011) aim for the importance of correct integration of ambidexterity within the processes of the organization. They mention that successful ambidextrous designs require processes that integrate exploratory and exploitative units in a way that enhances value. This is line with their earlier research (O’Reilly and Tushman,
17 2007) which highlights ambidexterity only becomes a dynamic capability if the firm’s exploitation and exploration activities are strategically integrated. According to Raisch and Birkinshaw (2008), strategic integration requires “a common set of values, a shared vision, and an overarching governance process” (p. 389) also emphasizing the need for integration of managerial decisions on organizational processes.
As stated above prior research highlights that integrating innovation on existing products and services, as well as integrating innovation on strategic decisions on future products and services, should be embedded within the organization (Kortmann 2014, Schneider & Spieth, 2013). This emphasizes the embeddedness of product and service innovation in the organizational business models as well as the importance of integrating strategic decisions in business model innovation.
Summarizing, a link can be made towards the theory on business model innovation as it can be seen as an integration mechanism for the implementation of innovation strategies. In this respect this study looks into the concept of business model innovation as a means of successful achievement of innovative ambidexterity.
2.8 Business Model Innovation
Within the academic theory on organizational strategy there are several theories incorporating the strategic challenges in obtaining long term survival by means of innovation, in particular business model innovation. Schneider & Spieth (2013) have done extensive research on business models and emphasize their importance by stating “business models have emerged as an important means to commercialize innovations” (p. 1) based on Chesbrough and Rosenbloom (2002), Chesbrough (2010) and Teece (2010). In recent literature an increase in attention to the topic of business model innovation is noticed (O'Connor and Yamin, 2011; Morris et al, 2005; Zott et al., 2011). Researchers see the topic as a holistic approach to look into a firm’s activities.
A main concern within the concept of business model innovation is the lack of a well-defined and an overall accepted definition for this construct. Furthermore the relatively low amount of literature on business model innovation as opposed to other organizational strategy theories, makes this concept valuable to investigate.
As mentioned before, there are several different definitions for business models and business model innovation. As Teece (2010) mentions, the early definitions focus on ‘how a
18 firm will make money” (Stewart and Zhao, 2000, p.209, Teece, 2010) and “how enterprises work” (Margretta, 2002, p.87, Teece, 2010). Teece (2010) himself refers to business model innovation as “the design or architecture of the value creation, delivery and capture mechanism”(p. 172). Amit and Zott (2010) have a holistic view on business model innovation and refer to it as the capacity of the firm’s business model that integrates all current elements of the firm, including its environment, customers and partners. Likewise Santos et al (2009), refer to business model innovation as a reconfiguration of the existing business model’s activities in order to compete in new products, services or markets.
Although the lack of a consistent definition, the relevance of business model innovation theory within organizational strategy has been agreed upon. There is however little research that looks into combining business model innovation and innovative ambidexterity. Schneider & Spieth (2013) mention business models are subject to change and the influence of innovation due to continuous changing environment, which gives a bridge between business model innovation and innovative ambidexterity. Additionally Smith et al. (2010) indicate the important role of management on strategic decisions and organizational processes in enabling successful business model innovation by stating “to manage paradoxical strategies effectively, leaders must be capable of communicating an overarching vision, building and maintaining organizational designs that are internally inconsistent, of managing ongoing conflict and of engaging in long term, integrative thinking”(p. 4-5), This view of Smith et al. (2010) links the theory on business model innovation to having ambidextrous capabilities and highlights the importance of integration of strategic decision-making. As explained before, prior literature on ambidexterity has asked for integration of innovation within the organization (O’Reilly and Tushman, 2011; Schneider & Spieth, 2013; Kortman, 2014 and Raisch and Birkinshaw, 2008), which has overarching link with the business model innovation due to its capability to orchestrate the numerous organizational parts together (Ostenwalder et al, 2010).
As explained, prior research on business model innovation highlights embedding product and service innovation in business model innovation (Amit & Zott, 2010; Schneider & Spieth, 2013, Smith et al. 2010) as well as the integration of strategic decisions within the organization (O’Reilly and Tushman, 2011; Kortman, 2014 and Raisch and Birkinshaw, 2008) and links to innovative ambidexterity theory. This view indicates the importance of
19 transforming strategic decisions and behaviour into innovation outcomes, and opts for business model innovation as a means for the correct integration.
2.9 Research gap
To sum up, the importance of innovative ambidexterity is well documented in the literature. The involvement of top management and the right type of decision-making has been of great interest. Based on the literature the most important antecedents for innovative ambidexterity are highlighted, e.g. ambidextrous operational capabilities (Kortmann et al., 2014; Patel et al., 2012; Rothaermel and Alexandre, 2009), strategic flexibility (Kortmann et al., 2014) and ambidexterity oriented decisions (Kortmann, 2014).
However, strategic decisions are unlikely to directly translate in concrete innovation outcomes. In this respect, prior research highlights the embeddedness of product- and service innovation in business model innovation as well as the importance of strategic decisions in business model innovation (Schneider & Spieth, 2013; Smith et al., 2010). Based on prior literature an integration of the concepts of innovative ambidexterity and business model innovation is proposed.
This study will look into combination of business model innovation and innovative ambidexterity, by deepening the following research subject: The effect of business model innovation on innovative ambidexterity and the role of strategic flexibility and ambidexterity oriented decisions. It gives the following research question for this study:
Does business model innovation play a mediating role in the relationship between innovative ambidexterity and its antecedents strategic flexibility and ambidexterity oriented decisions?
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3. Theoretical Framework
In order to investigate the research gap in the ambidexterity literature concerning the integration of business model innovation and innovative ambidexterity, this research will look into these relationships. This section will first look into the underlying theories of each construct and will additionally explain the relationship between these constructs, which will give the proposed hypotheses. Having elaborated on the main constructs of this study and their theoretical foundations, the main relationships which will be looked into in this study have been identified and established.
3.1 Strategic Flexibility and Innovative Ambidexterity
Building on the dynamic capabilities view (e.g. Teece et al., 1997 and Eisenhardt and Martin, 2000) as part of the resources based view (e.g. Hamel, 1991; Prahalad and Hamel, 1990 and Barney, 1991), this study looks into ambidextrous operational capabilities (Kortmann, 2014), in specific strategic flexibility (and ambidexterity oriented decisions), in regards to their role on innovative ambidexterity.
As explained before, strategic flexibility resembles the capability of organizations to reallocate resources and reconfigure processes in order to successfully deal with change (O’Reilly & Tushman, 2013). In this research study, the construct of strategic flexibility is based on the theory of Zhou & Whu (2010). They define strategic flexibility as “the ability of a firm to reallocate and reconfigure its organizational resources, processes, and strategies to deal with environmental changes” (p. 546) and have based their understanding on strategic flexibility on Sanchez’s (1995) theoretical work, which focuses on “the flexible allocation and coordination of resources in response to changing environments” (p.552). In line with this Eisenhardt and Martin (2000) have also defined strategic flexibility as a dynamic capability which enables an organization to address discontinuities in the environment. Zhou & Whu (2010) state that strategic flexibility has a facilitating role in achieving competitive advantage, as it enables the flexible use of resources and reconfigurations of processes. Kortmann et al. (2014) also build on this construct of strategic flexibility derived from Zhou & Whu (2010) and Sanchez (1995). They argue that strategically flexible firms are able to purse various strategic strategies (Kortmann et al., 2014) and mention “innovative ambidexterity is an important ambidextrous operational capability that is nurtured by strategic flexibility” (p. 447). This role of strategic flexibility on innovative ambidexterity will be looked into in this study.
21 The construct of innovative ambidexterity within this research is based on the theory of innovative ambidexterity as stated by Jansen et al (2009), who consider innovative ambidexterity enables organizations to pursue both incremental and radical innovation strategies. As explained, incremental innovations are defined as exploitative innovation; radical innovations are defined by exploratory innovation (Jansen et al, 2009). Additionally this study argues that innovative ambidexterity enables organizations to successfully pursue multiple inconsistent innovation streams (Jansen et al, 2009, Tushman et al, 2006). Building on the theory of Jansen et al (2009) and prior related literature as stated above, this study will look into the construct of innovative ambidexterity, by looking into both the exploratory as the exploitative innovations.
As explained this study will look into the relationship between strategic flexibility and innovative ambidexterity. Kortmann (2014) has already indicated a positive relationship between strategic flexibility on (innovative) ambidexterity, in which this study further investigates. This relationship builds op prior literature indicating flexible strategic decision making as an essential requirement for ambidextrous behaviour (Kortmann, 2014; Adler et al., 1999; Tushman and O’Reilly, 1997).
Based on this prior literature a positive significant relationship is expected between strategic flexibility on innovative ambidexterity. In regards to the research question of this study, the relationship between strategic flexibility and innovative ambidexterity is again tested, in which a positive effect is expected. A positive effect is also expected when holding on to the complementary view of Zhou & Whu (2010) on strategic flexibility, who see strategic flexibility as a facilitating role to achieve competitive advantage. Furthermore they emphasize the flexible allocation of resources between exploitative and explorative strategies, which can be linked to the appropriation or resources for innovation, on bases of which a positive relation can be expected between strategic flexibility and innovative ambidexterity. This is also expected when looking at the research of Jansen et al (2009), who also claim innovative ambidexterity to be dependent on dynamic capabilities like strategic flexibility.
Building on this prior knowledge the following hypothesis is developed in order to look into this relationship:
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3.2 Ambidexterity Oriented Decisions and Innovative Ambidexterity
Besides strategic flexibility, also ambidexterity oriented decisions can be seen as important antecedent for innovative ambidexterity (Kortmann, 2014), on which this research study will further investigate.
Within this research study, the construct of ambidexterity oriented decisions builds on the work of Kortmann (2014), who’s view originates from the theory of Gibson and Birkinshaw (2004) and Im and Rai (2008) from their perspective on management and strategic decision making. Formerly the theory on ambidexterity oriented decisions builds on the upper echelon theory of senior management capabilities as described by Kortmann (2014) and on the dynamic capabilities view (Teece, 2007) and involves the influence of management in ambidextrous firm behaviour.
According to Kortmann (2014) ambidexterity oriented decisions “embrace the capability of top management teams to manage contradictory strategic directions, namely adaptability and alignment” (p. 1). In other words ambidexterity oriented decisions are the ability of management to balance adaptability and alignment-oriented decisions. Both Gibson and Birkinshaw (2004) and Kortmann (2014) emphasizes that organizations become ambidextrous when the top management team makes ambidextrous-oriented decisions, a relationship which is further investigated into in this research study.
When looking into the relationship of innovative ambidexterity and ambidexterity oriented decisions, this research will focus on explaining the direct and possible indirect effect of ambidexterity oriented decisions on the innovative behaviour of the firm. It will build on the viewpoint of Kortmann (2014) who states ambidextrous organizations to be a reflection of the ambidexterity oriented decisions made by the top management. As this viewpoint is a logical explanation for innovative ambidexterity is will be used as a means to find an answer our research question.
In this research the view of Kortmann (2014) and Gibson and Birkinshaw (2004) is supported, as a positive effect of ambidexterity oriented decisions on innovative ambidexterity is expected. This gives the following hypothesis:
Hypothesis 2: Ambidexterity Oriented Decisions have a positive relationship on Innovative Ambidexterity
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3.3 Business Model Innovation and Innovative Ambidexterity
The construct of business model innovation in this study is based on the theory on Amit & Zot (2010), who refer to business model innovation as a way to create and appropriate value and explain it involves designing a new or modified ‘activity system’ by combining existing resources. As mentioned by Schneider & Speith (2013) business model innovation builds on the resource based view by acknowledging the variation of resources as source of competitive advantage (Barney, 1991; Wemerfelt, 1984; Teece, 1984; Penrose, 1959 from Schneider & Spieth 2013).
This study will look into the concept of business model innovation as a means to integrate strategic decisions into innovation outcomes. In this concern, Amit and Zott (2001) have emphasized the value creating mechanism of business model innovation, by stating: “the business model depicts the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities” (p.511). Also Schneider & Spieth (2013) highlight the added value of business model innovation in this view, by stating “business model innovation requires a firm to timely and effectively identify and anticipate relevant developments in its constantly changing environment” (p. 21).
As stated in prior literature the theory on business model innovation does not held one clear definition, though the majority of the researches agree that it is an important mean to orchestrate the several fragments of the organization into the right strategic direction(s) in order to achieve superior performance.
As explained, the concept of business model innovation is a holistic way to look at the organizational processes in order to implement the integration of strategic decisions on innovation, which will be further looked into within this study. It will look into the relationship between business model innovation and innovative ambidexterity. There is little research that combines the terminology of business model innovation with innovative ambidexterity; however, when looking into the antecedents for innovative ambidexterity, the importance of correct implementation has been frequently mentioned (Amit & Zott, 2010).
As stated before, business model innovation can be seen as an effective means for strategy formulation and implementation. Based on the view of Jansen et al. (2009), it is expected that innovative ambidexterity will be positively influenced by business model innovation. Based on prior research (Amit & Zott, 2010; Jansen et al. 2009) on the effect of
24 business model innovation on creating an organizational model that enhances innovation, it is expected that this relationship is positive.
Building on prior research as discussed above the following hypothesis testing the relationship between business model innovation and innovative ambidexterity is proposed: Hypothesis 3: Business Model Innovation has a positive relationship on Innovative Ambidexterity
3.4 Mediation effect of Business Model Innovation for Strategic Flexibility
Building on the theory of Zhou & Whu (2010) on strategic flexibility and the theory of Amit and Zott (2011) on business model innovation, a link between those theories can be found as they both deal with the implementation of reconfiguration of resources and processes in order to deal with change. Building on this linkage within the theory on strategic flexibility and business model innovation, it can be assumed that there is a relationship between those constructs. Although the parallels between strategic flexibility and business model innovation seems to be valid, as the first looks into the capability of responding to and organizing change and the second in arranging the right organisational model to incorporate this change, little has been written on the relationship between those constructs.
Based on the linkage that is found within the theories of business model innovation and strategic flexibility, a positive relationship between these constructs is expected. In order to test the assumption that there is indeed a (positive) link between strategic flexibility and innovative ambidexterity, the following hypotheses will be tested:
Hypothesis 4a: Strategic Flexibility has a positive effect on Business Model Innovation
As previously mentioned, prior research (Kortmann, 2014; Kortmann et al. 2014) has already indicated a positive relationship between strategic flexibility and innovative ambidexterity. Furthermore based on the previous hypotheses within this research it is assumed that there is a positive relationship between business model innovation and innovative ambidexterity, as well as between strategic flexibility and business model innovation. However it has not been tested whether business model innovation has a mediating effect within those relationships.
Zhou & Whu have, besides from providing ground for a direct effect of strategic flexibility on innovative ambidexterity, given arguments for looking into mediating effect that
25 clarify this relationship, in order to find an indirect relationship. Building on this view and by combining the theory on business model innovation of Amit & Zott (2010) it gives arguments to integrate the theory of business model innovation within innovative ambidexterity theory. Given the role of business model innovation as a means to orchestrate the several parts of the organization, it is expected that this construct will mediate the effect of strategic flexibility on innovative ambidexterity. The proposed hypothesis for this relationship is:
Hypothesis 4b: Business Model Innovation has a mediating effect on Innovative Ambidexterity for Strategic Flexibility
3.5 Mediation effect of Business Model Innovation for Ambidexterity Oriented Decisions
As explained before, a positive relation between ambidexterity oriented decisions and innovative ambidexterity is expected. When looking into this relationship, a mediating effect of business model innovation will be proposed, which will be explained further on in this section. However to investigate in this indirect relationship of ambidexterity oriented decisions on innovative ambidexterity via business model innovation, this study will first look into combining ambidexterity oriented decisions with business model innovation.
Prior literature does not explicitly mention a relationship between ambidexterity oriented decisions and business model innovation. However, we assume that in order for a firm to perform effective business model innovation, the need of correct decision making is evident. This view is consistent with the view of Jansen et al. (2009) who also emphasize the need for incorporating managerial decisions within organizational strategy. Also Gibson & Birkinshaw (2004) give reasons to expect that ambidexterity oriented decisions have a positive effect on business model innovation, as they explain that in order to have an innovative organizational context, the right leadership and decision making is needed.
Based on the viewpoints above, this study assumes a relationship between ambidexterity oriented decisions on innovative ambidexterity, which gives the following hypothesis:
Hypothesis 5a: Ambidexterity Oriented Decisions have a positive effect on Business Model Innovation
26 Ambidexterity oriented decisions are expected to have a positive effect on innovative ambidexterity when looking into prior literature (Jansen et al., 2009 & Gibson & Birkinshaw 2004, Kortmann et al., 2014). However, a (partial) mediating effect is expected as Kortmann’s study (2014) suggests that there is a positive relationship between ambidexterity oriented decisions on innovative ambidexterity and indicates the presence of mediating effects within this relation.
As mentioned before, the mediating effect between ambidexterity oriented decisions and innovative ambidexterity is expected to be found within business model innovation as strong resemblances can be found with the theory of business model innovation as referred to by Amit & Zott (2010). This expectation is in line with the view of Kortmann (2014), who state that the influence of ambidexterity oriented decisions is dependent on their implementation. Based on the outcome of the literature, it is expected that business model innovation has a mediating effect between the ambidexterity oriented decisions and innovative ambidexterity, as business model innovation arranges the needed and configuration of the organizational elements involved.
As this study holds on to the theory of Kortmann (2014) and Amit & Zott (2010), the mediating effect of business model innovation on the relationship of ambidexterity oriented decisions on innovative ambidexterity is expected. Based on this expectation, the following hypothesis can be drawn:
Hypothesis 5b: Business Model Innovation has a mediation effect/relationship on Innovative Ambidexterity for Ambidexterity Oriented Decisions
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3.6 Conceptual model
The proposed relationships give the following conceptual model as presented in figure 1:
Figure 1: conceptual model
Strategic Flexibility (SF) Innovative Ambidexterity (IA) Ambidexterity Oriented decisions (AOD) Business Model Innovation (BMI) H4b H5a H1 H2 H3 H5b H5b H4a H4b
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4. Methodology
The aim of this study is to find empirical evidence for the proposed relationships and the expected mediating effect of business model innovation on the relationship between independent variables strategic flexibility and ambidexterity oriented decisions and dependent variable innovative ambidexterity. This section gives an overview of the methodology that has been used in order to conduct this research.
4.1 Research Design
This research study holds on to an positivism research philosophy, by following a deductive research approach, in which data is collected in order to evaluate the hypotheses and relate to an existing theory (Saunders et al, 2012). The methodological choice for this study is quantitative mono method. The research strategy is a survey research strategy, with a cross-sectional time horizon. The technique for data collection and analysis is described below. The nature of the research is an explanatory study, as it tries to explain the relationship between the different variables (Saunders et al, 2012).
In order to answer the research question and to test the hypotheses, quantitative data is collected by means of a questionnaire, part of the survey research design strategy. The chosen research design and strategy is suitable with the research question and hypothesis as a survey is an appropriate method to measure attitudes, opinions, beliefs, behaviour, attributes (demographic characteristics), decisions, and preferences as it measures the perceptions of respondents and is one of the most common techniques in behavioural sciences (Sanders & Lewis, 2012). The ethics of the research design is established by taking in consideration the possible ethical issues while conducting the research. This research has been conducted within the standards of ethical behaviour (Saunders & Lewis, 2012).
The quality of the research design is established by ensuring the reliability and validity of the research (Saunders et al, 2012). The reliability is ensured by providing a detailed description of the research process including the data collection technique and analytical procedure. By ensuring the reliability, the threats to reliability as participant error, participant bias, researcher error and researcher bias are taken in to account in order to decrease the risk of these threats. The validity of the research design is established by ensuring the construct validity, internal validity and the external validity of the research design, whilst taking into account the threats to (internal) validity (Sanders et al. 2012).
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4.2 Data collection
The data for this study has been collected by distributing an electronic/online questionnaire by using multiple methods as email and social media. This survey has been built on the constructs of the conceptual model. The data collection has been combined with three other master students, who have intersecting constructs in their conceptual model. As all four focussed on a different combination of constructs, the individual aspects of the studies have been guaranteed. An advantage of the combination was the access to a larger public and a higher response rate. A downside is the total length of the survey, as it was with 15 till 20 minutes longer than average, which resulted in a higher dropout rate.
As explained, based on existing literate on the constructs of the conceptual model the survey questions have been chosen, which will be explained further on in this methodology section. As the questions that derived from the existing literature were in English and the respondents were Dutch, all questions have been translated to Dutch. In order to ensure the validity of the outcomes, these questions were contra-translated by a native English-speaker, to make sure the content of the questions still measures what they are supposed to measure (Sanders & Lewis, 2012, Field, 2009). Furthermore the question list has been checked on the right scales and logic of the questions. After ensuring the validity and reliability of the questions, the survey has been send out to the recipients by making use of Qualtrics. An example of the survey can be found in appendix 1 of this research paper.
The online questionnaire was distributed amongst a total of 750 recipients, during the period of 1st of April 2015 till 16nd of May 2015. A total of 240 respondents started the questionnaire, from which 121 respondents have completed the survey, which gives N=121 as response rate. A more detailed description of the target group and sample will be given in the next subchapter of this methodology section.
4.3 Research sample
The level of analysis of this study is from an organizational perspective in order to generalize the outcome to existing theory on organizational strategy. The sample is selected from the population by making use of convenience sampling which ensures easy accessibility and results in a high response rate. The cases were accessed by email and the use of social media and were approached from the network of the four researchers. This indicated the risk of bias. The data was collected by a survey amongst 239 Dutch employees of all levels (line staff –
30 executives) within Dutch companies. An overview of the descriptive statistics of the sample can be found in appendix 2 of this research paper.
4.4 Measures
In order to measure the constructs of the conceptual model, existing measures for these constructs has been derived from the literature. In the section below the origin of the several measures will be discussed.
Independent variables
Strategic Flexibility
The first independent variable that has been measured is strategic flexibility. The measure for this construct was derived from the study of Zhou and Whu, (2010), who use a 7 point Likert scale to indicate the amount of agree/disagreement on the proposed statements, indicating the firm’s strategy in response to changes in the environment:
Ambidexterity-oriented decisions
The second independent variable is ambidexterity-oriented decisions, which builds on the upper echelon theory of senior management capabilities and the influence of management in ambidextrous firm behaviour. The measure for ambidexterity oriented decisions comes from Gibson and Birkinshaw (2004) and Im and Rai (2008) from their theory on management and strategic decision making. A 7-point Likert scale was used to rate the statements below on applicability to evaluate the firm’s top management.
Strategic Flexibility (Zhou and Whu, 2010)
In responding to changes in the environment, your firm’s strategy emphasizes: (1 = strongly disagree; 7 = strongly agree)
1. The flexible allocation of marketing resources (including advertising, promotion and distribution resources) to market a diverse line of products.
2. The flexibility of product design (such as modular product design) to support a broad product variation. 3. The flexibility of product design (such as modular product design) to support a broad range of potential
product applications.
4. Redefining product strategies in terms of which products the firm intends to offer and which market segment it will target.
5. Reconfiguring chains of resources the firm can use in developing, manufacturing, and delivering its intended products to targeted markets.
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Dependent variables
Innovative Ambidexterity
De dependent variable of this study is innovative ambidexterity. The measures for innovative ambidexterity was derived from Jansen et al. (2009), who use a 5-point Likert scale, by looking into discontinues and radical innovations. For analytical purposes this scale was rebuild into a 7-point Likert scale to improve statistical analysis results.
Ambidexterity-oriented decisions (Gibson and Birkinshaw 2004 and Im and Rai 2008)
Please indicate to which extent the statement below are applicable for your top management team. Our top management team: (1 = strongly disagree; 7 = strongly agree)
1. advises departments to challenge outmoded traditions/practices/sacred cows. 2. gives departments enough flexibility to respond quickly to changes in their markets. 3. acts rapidly to changes in the market (e.g., through shifting business priorities). 4. supports the reconfiguration of department activities to respond to external changes. 5. advises departments to collaborate to support the overall objectives. .
6. causes departments to waste resources on unproductive activities. 7. supports the achievement of efficiency-related objectives. .
8. usually makes decisions that facilitate the efficient utilization of resources. 9. gives departments conflicting objectives that cause incongruent work.
Innovative Ambidexterity (Jansen et al. 2009)
Please fill in all questions from a business-unit perspective, if you are in a small or medium-sized enterprise, you may think of the firm as one business-unit. (1 = strongly disagree; 7 = strongly agree)
1. Our organization responds to demands that go beyond existing products and services. 2. We commercialize products and services that are completely new to our organization. 3. We frequently seek out new opportunities in new markets.
4. Our organization regularly uses new distribution channels.
5. We frequently make small adjustments to our existing products and services. 6. We continuously improve our production’s efficiency of products and services. 7. We continuously increase economies of scales in existing markets.
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Mediation variable
Business Model Innovation
The dependent variable of Business Model Innovation was measured by making use of the measure of Winkelman, 2014. Winkelman based his measure on Amit and Zott (2010) and used a 7-point Likert scale to indicate to which extent the statements below are applicable on several parts of the firm.
Control variables
On the organizational level the control variables that have been used are firm size, industry and employability (duration of employment). These variables have been derived from prior similar research (Kortmann, 2014; Jansen, 2009). Firm size is expected to have an influence on the preferred strategy of an organization. This larger the firm the more established it is assumed to be, the more process are assumed to be in place to facilitate innovative behaviour. Firm size has been measured by the amount of FTE’s, by using the following scales: 1; 2-5; 6-25; 26-50; 51-100;l 101-250; 251-500; 501-1000; 1001-2500; 2501-5000 and 5000+. Additionally the industry has been measured. As industries face different environments, different innovative strategies are assumed to be followed. It will therefore be used as a control variable. The industry has been measured by using the following choices: Energy; Materials; Industrials; Consumer Discretionary; Consumer Staples; Health Care; Financials; Information Technology; Telecommunication services; Utilities and other (CBS). A third control variable was on the individual level, by looking in to the employement level of the
Business Model Innovation (Amit and Zott, 2010)
Please answer the following statements as to what extend these are applicable in your firm’s /SBU’s situation for the past five years (1 = strongly disagree; 7 = strongly agree)
1. Our target segment has significantly changed in the last 5 years.
2. Our product or service offering has significantly changed in the last 5 years to satisfy the needs of our target segment.
3. Our value chain has significantly changed in the last 5 years. 4. Our cost structure has significantly changed in the last 5 years. 5. Our revenue model has significantly changed in the last 5 years.
33 respondent, which is assumed to tell us information about the innovative behaviour. The level of employment has been measured by making a distinction between: Entrepreneur; Employee Line management Middle management Top management (CEO/board) and Otherwise (Jansen, 2009).
Representativeness
The following demographic control variables have been used in order to guarantee the representativeness of the data and contain variables on the individual level: e.g. gender, age, educational level and employee-level. These variables are based on variables used in similar research. The scales for were: Male / Female. Age has been divided into several scales: <18; 19 – 24; 25- 34; 35-44; 45-54; 55-64 and 65>. In order to measure the educational level the following choices were offered: Less than high school; high school / GED; MBO; University of applied science (HBO), Bachelor Degree, Masters Degree and Doctoral Degree (Kortmann, 2014; Jansen, 2009).
4.4 Statistical Procedures
Normality check
After receiving the data by using Qualtrics, the data has been imported into SPSS. In order to check the reliability of the data, a reliability analysis was run on the data, including checks on normality and counter-indicative questions. Two questions of ambidexterity oriented decisions (question 6 and 9) were counter-indicative and have therefore bene transformed.
The data has been checked on statistical assumptions by testing for normal distribution. First of all based on the size of the sample (N=121), it can be assumed that the sample is normally distributed (Field, 2009). In order to confirm this assumption the skewness and kurtosis has been measured. The skewness analyses were run to test for asymmetry of the distribution and kurtosis to test the sharpness of the peak of the distribution. Both are tested in order to confirm the normal distribution of the data, which are assumed by outcomes close to 0. Values from .5 and -.5 are assumed to have moderate positive vs negative skewness and kurtosis, so outcome should preferably within these values, which was the case as is presented in the results section of this report.
34 In order to test the reliability of the data on each construct, the Cronbach alpha was tested, indicated by α, which are presented in the results session of this paper. The outcome of this value should preferably be α>.7 in order to assume the measurement of the data to be reliable.
Statistical procedure
To test if there were significant relations between the constructs a correlation analysis has been run on the data. To distinguish the nature of the relations, a regression analysis has been done. Furthermore to test the moderation effect of business model innovation on the effect of strategic flexibility and ambidexterity oriented decisions on innovative ambidexterity, a moderation analysis has been done by making use of Process technology of Hayes (2012). The mediating analysis is based on PROCESS from Hayes (2012), using a simple mediation model. The mediation test is done with a 95% confidence interval, giving significance by p<0.05. As there are two independent variables in the conceptual model, the mediation analysis has been run for both variables.The formula that is used is: Indirect effect of X on Y through Mj = a1jb1j, Total indirect effect of X on Y through all M = Σj (a1jb1j), Direct effect of X
on Y = c'1;, which gives the following two formulas in order to test the proposed relationships
of the conceptual model of this study:
𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐼𝑎𝑎𝐼𝑎𝐼𝑎𝐼𝐼𝑎𝐼𝐼𝑎 = 𝑎0 + 𝑎 ∗ 𝑆𝐼𝑎𝐼𝐼𝐼𝑆𝐼𝑆 𝐹𝐹𝐼𝑎𝐼𝑎𝐼𝐹𝐼𝐼𝑎 + 𝑎2 ∗ 𝐵𝐵𝐵𝐼𝐼𝐼𝐵𝐵 𝑀𝐼𝑎𝐼𝐹 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 + 𝐼𝑒
𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐼𝑎𝑎𝐼𝑎𝐼𝑎𝐼𝐼𝑎𝐼𝐼𝑎 = 𝑎0 + 𝑎 ∗ 𝐴𝑎𝑎𝐼𝑎𝐼𝑎𝐼𝐼𝑎𝐼𝐼𝑎 𝑂𝑎𝐼𝐼𝐼𝐼𝐼𝑎 𝐷𝐼𝑆𝐼𝐵𝐼𝐼𝐼𝐵 + 𝑎2 ∗ 𝐵𝐵𝐵𝐼𝐼𝐼𝐵𝐵 𝑀𝐼𝑎𝐼𝐹 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 + 𝐼𝑒
A detailed description on the outcome of the data analysis will be given in the results section of this study. Based on these results the conclusions have been drawn and limitations and avenues for further research have been indicated.
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5. Results
In order to test the hypothesis that have been proposed in this study, several statistical tests were executed run by means of a correlation, regression and mediation analysis. An overview of the results is presented in this chapter.
5.1 Data Analysis
The response rate differs per variable and consists of a range of 121 till 151 active responses, as not all people who started the survey have completely finished it. As the total respondents consist of 241 respondents there is a large dropout rate, this is however characteristic in the use online questionnaires and does not have a negative effect on the quality of the data set.
The first check for reliability on the data was a check on non-reliable responses considering extraordinary responses and duration, e.g. if time of duration was below average. Based on the checks as mentioned above the amount of respondents was corrected for mistakes, which gives a response rate (after corrections) of N=121
The questions of the questionnaire have furthermore been tested on counter-indicative items. Two questions of the variable ambidexterity oriented decisions have been decoded into AOD_6b and AOD_9b, by means of correcting their counter –indicative nature.
5.2 Descriptive Statistics
By running a frequency check & by testing the descriptive statistics, the normal distribution or normality of the data was tested. In the tables below the descriptive statistics of the variables is presented per variable.
Table 1: Descriptive Statistics
Variables N Min Max M SD Skew. Kurt.
1. Strategic Flexibility 121 2 7 4,34 0,94069 -0,002 0,463 2. Ambidexterity Oriented Decisions 137 3 5,78 4,483 0,78422 0,077 -0,034 3. Business Model Innovation 151 1,5 7 4,428 1,20854 -0,35 -0,374 4. Innovative Ambidexterity 137 2,13 6,88 4,855 0,90469 -0,468 0,391
As the skewness & kurtosis is close to 0 it can be assumed that the data is normally distributed with no extreme outliers which would have a misleading effect on the data. A detailed overview of the descriptive statistics for each individual construct and underlying components is presented in appendix 2 of this report.
