To What Extent do Strategic Intent and Organizational Architecture Contribute Towards Managerial Ambidexterity in Lower Management?
Author: L.M.M. van Bijlevelt Student Number: 12694282 Date: 31st of March 2021 Final version: 1.0
EBEC: EC 20210312020346
Master: Executive Programme Management Studies – Strategy Track Institution: University of Amsterdam / Amsterdam Business School Supervisor: Philip Eskenazi
Statement of Originality
This document is written by Student L.M.M. van Bijlevelt 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.
This study focuses on measuring to what extent the level of strategic intent is related to managerial ambidexterity, as well as discovering whether there is moderation of the relationship between strategic intent and managerial ambidexterity. Through monitoring these various processes, certain variables related to organizational architecture are included: coordination mechanisms, integration mechanisms, and organizational learning. In order to provide an accurate and realistic answer to the research question, different theories are described in the paper and quantitative research consisting of peer-reviewed surveys is conducted as a case study at Engie Netherlands. Engie is a global energy supplier and provided a sample consisting of 351 managers in lower management. As predicted, through measurements in the correlation and regression analysis proof is supplied that strategic intent has a positive significant relationship to managerial ambidexterity. Furthermore, it is proved that knowledge inflows do moderate the relationship between strategic intent and ambidexterity. Other effects of the stated hypotheses vary and are not fully proved to be significant. This research contributed to the current knowledge about managerial ambidexterity and has provided more clarity and urgency for firms to formulate a strong strategic intent and invest in intra-organization communication interfaces to connect managers both horizontally as vertically, to further broaden their knowledge. Future research can be done in the field of organization learning and managerial ambidexterity. It is specifically interesting to acquire further knowledge about the moderating effect of integration mechanisms such as transmission channels, motivational disposition and absorptive capacity between organizational knowledge and managerial ambidexterity.
Key words: managerial ambidexterity; strategic intent; decision-making authority; formalization of a manager’s tasks; cross-functional interfaces; and knowledge inflows.
Table of contents
Abstract ... 3
1 Introduction ... 5
2 Theory and Hypotheses ... 7
2. 1 Strategy ... 7
2.2 Ambidexterity ... 8
2.3 Structural and Contextual Ambidexterity ... 9
2.4 Managerial Ambidexterity ... 10
2.5 Strategic intent ... 11
2.6 Organizational Architecture ... 12
2.6.1 Coordination Mechanisms ... 13
2.6.2 Informal Integration Mechanisms ... 15
2.6.3 Knowledge exchange ... 16
2.7 Conceptual model ... 20
2.8 Control variables ... 20
3 Research Design and Methods ... 22
3.1 Data collection and Sample... 22
3.2 Respondents ... 22
3.3 Measurement and Validation of Constructs ... 23
3.3.1 Dependent variable: Managerial Ambidexterity ... 24
3.3.2 Independent variable: Strategic Intent ... 24
3.3.3 Moderating variable: Coordination Mechanisms ... 24
3.3.4 Moderating variable: Integration Mechanisms ... 25
3.3.5 Moderating variable: Knowledge Exchange ... 27
3.3.6 Control variables ... 27
4 Results ... 29
4.1 Normality of distribution ... 29
4.2 Correlation analysis... 29
4.3 Hierarchical Regression analysis ... 32
5 Discussion ... 34
5.1 Major findings ... 34
5.2 Theoretical implications ... 34
5.3 Contributions to the field ... 36
5.4 Future Research Suggestions ... 36
5.5 Conclusions ... 37
6 References ... 38
7 Appendices ... 43
I Measures and items ... 43
II Distributed survey ... 46
In the current organizational landscape, various different approaches are being considered on what it means to manage your business well. Porter (1991) acknowledged that one of the reasons that firms gain a favourable position in the market is through managerial choices about strategy. The firm can obtain above normal returns when expectations of return potential are accurate and above costs of acquiring (Barney, 1986). While being uncertain about the future, managers are required to make choices about strategy. Certain managerial choices, among a firm’s initial conditions, are reflected as a reason why firms might achieve favourable positions (Porter, 1991). As several schools of thought hold strategic theories of combining elements to gain and maintain competitive advantages, the resource-based approach focuses on costly-to-copy resources as the driver of performance (Barney, 1986). Barney (1986) considers the resource-based approach of strategic management fundamental for firms to gain sustainable competitive advantages. Eisenhardt, Furr and Bingham (2010) further specified the involvement of human resources as part of the resource-based approach as micro foundations. They pursued to clarify the micro foundations as in how leaders balance strategic activities within organizations to achieve high performance. Smith and Tushman (2005) acknowledged that balancing these strategic activities involve a combination of exploitative and explorative activities and recommend firms to employ both activities simultaneously to ensure long term success. Besides, it is essential for organizations to invest in both exploration and exploitation since it is a primary factor in firms’ survival and prosperity (March, 1991; Lavie et al., 2010). Likewise, managers are often required to engage in paradoxical thinking to manage both exploitation and exploration strategies. The trade-off between exploitation and exploration is rather complex since they often produce divergent organizational outcomes. The practice of managing various organizational tactics simultaneously, is defined as ambidexterity (Tushman & O’Reilly, 1996). Even though various experts agree on the positive effects of ambidexterity, the field is still lacking in expert knowledge with regard to managerial ambidexterity (O'Reilly & Tushman, 2011).
Turner, Swart and Maylor (2013) explored the mechanisms for managing ambidexterity. In general, they conclude that studies neither explain how micro-mechanisms enable ambidexterity, nor how ambidexterity leads to organizational benefit. However, it remains unclear how managers can orchestrate exploitation and exploration activities. In research related to the same topic, O'Reilly and Tushman (2011) applied further research in addressing the gap in how ambidexterity is managed and implemented within organizations. They acknowledged that the ability of firms to be ambidextrous lies within the theory of dynamic capabilities. Dynamic capabilities are explained through a firm’s ability to sense changes in the environment, seizing needs – whether that constitutes money, assets or human resources – and opportunities and reconfigure or transform towards continuous renewal. They proposed that ambidexterity is more likely to be successful when a compelling strategic intent is communicated through the teams. Furthermore, they acknowledge that without a strategic intent there is no justification for managers to focus on exploration instead of exploitation. Mom, van den Bosch and Volberda (2009) have concluded as well that knowledge about ambidexterity at the individual level of analysis is scarce.
They examined possible coordination mechanisms that enable managers’ ambidexterity. The locus of action varies from formalized hierarchical structures or voluntary connectedness through organizational members. They suggest to apply further research about the causality between coordinating mechanisms and managerial ambidexterity.
This paper aims to prove that strategic intent and organizational architecture are of great importance in achieving managerial ambidexterity by answering the following research question: “To what extent do strategic intent and organizational architecture contribute towards managerial ambidexterity in lower management?” This research is structured as followed: theory that elaborates on the concepts of ambidexterity, the influence of strategic intent as well as the moderating effect of organizational architecture. Consequently, the hypotheses and theoretical framework are discussed. Second, the method section provides insights into the process of data collection and methods used to conduct research. Lastly, through examining the results section, a discussion follows in which limitations and future research suggestions are presented.
2 Theory and Hypotheses
The following section contains insights regarding the existing literature on managerial ambidexterity and the indicators regarding certain aspects in the strategy and organizational architecture. As this paper argues, strategic intent is a relevant predictor in the relationship with managerial ambidexterity.
Furthermore, it is expected that certain aspects in the organizational architecture will moderate the relationship between strategic intent and managerial ambidexterity. This section is dedicated to the supporting arguments and hypotheses.
2. 1 Strategy
Mintzberg and Waters (1985) argue that many strategies have been conceived of what leaders of an organization are planning to do in future. Whereby Porter’s (1996) definition of a strategy lies in defining and communicating the company’s unique position in which activities interact and emphasize the strategic position. According to Prahalad and Hamel (1989), the traditional view of strategy is to focus on the level of fit between existing resources and current opportunities. However, it causes them to not move beyond their scope when firms are mainly fixated on today’s problems. Corresponding, a dynamic view of strategy is marked as “take advantages of your current market position while concurrently creating new opportunities or exploiting the innovations of others.” (Markides, 1999) In short, these definitions together position strategy as a firm’s future direction emphasizing certain elements required to ensure a strategic position in the market. Over time the definition of strategy is evolved from a static point of view towards a dynamic representation of a firm’s future direction.
The introduction briefly reflects on the current literature about ambidexterity and gaps in managerial literature. As mentioned earlier, ambidexterity employs exploitation and exploration simultaneously (Smith & Tushman, 2005) and is required as a primary factor in the firm’s survival and prosperity (March, 1991; Lavie et al., 2010). According to March (1991) exploitation involves the refinement of existing skills and technology while explorative activities are involved with the search for new ideas, markets, or relations. Exploration is likely to have longer time horizons and to evolve in less certain outcomes than exploitation. Smith, Binns and Tushmann (2010) view unitary strategies as either exploitative or explorative in nature. While managing multiple, rather complex strategies it is required to execute exploitation and exploration simultaneously in order to ensure long-term success. These multiple strategies are paradoxal in nature, contradictory to one another but yet related. These contradictions are related to the perspective of exploiting short term and exploring long term strategies.
Tushman and O’Reilly (1996) argue that due to discontinuous or revolutionary change in the environment managers are required to realign and simultaneously shift in strategy, structure, people and culture. This change can be incremental when competing in mature markets or radical due the development of new products and services for new markets. Conversely, firms can even proactively shape the external environment due to incremental strategic renewal. Agarwal and Helfat (2009) refer to IBM’s major transformation from computing hardware to computing business services as a concrete example in incremental strategic renewal. IBM’s history in their leading position was due to both strategic transformations and incremental strategic renewal.Both changes require different approaches in organizational and management skills in speed, costs, flexibility and efficiency. Focusing on either incremental or radical innovation guarantees short-term success but long-term failure.
2.3 Structural and Contextual Ambidexterity
Lawrence and Lorsch (1967) stated that high performance is associated with firms engaging in both high integration and high differentiation. Differentiation applied in the organizational design stimulates local task environments to cope with environmental uncertainty and heterogeneity while integration stimulates coordination between subsystems. While both mechanisms seem antagonistic to one another, data suggest that these components deliberately engaged in the organizational design make it more efficiently to cope with dynamic environments. Birkinshaw and Gibson (2004) further examined the link between firms’ ambidexterity and performance. They therefore distinguished ambidexterity in two different contexts, structural ambidexterity and contextual ambidexterity. Structural ambidexterity is elaborated in separated organizational structures that is based on either alignment (exploitation) or adaptability (exploration) activities. On the other hand, contextual ambidexterity is featured as individuals applying both the alignment-oriented and adaptability-oriented activities. Individuals can apply contextual ambidexterity complementary to structural ambidexterity. Andriopoulos and Lewis (2009) acknowledged that contextual ambidexterity is strongly connected to behavioural and social sciences in means of integrating exploitation and exploration. In order to measure managerial ambidexterity, Good and Michel (2013) stated that structural ambidexterity is causing a certain bias in testing managerial ambidexterity since separated structures may emphasize more on exploration or exploitation activities. Their experiment is conducted explicitly in a contextual setting that allowed managers to act ambidextrously. As the behavioural variables divergent thinking, focused attention and cognitive flexibility are part of the formative construct for ambidexterity, their findings suggest that individuals may have measurable abilities to better predict performance within dynamic tasks.
According to a firm’s external environment, Mom, Fourné and Jansen (2015) have found a positive relationship between ambidexterity and performance when uncertainty is high. They suggest that managerial ambidexterity best fits within a work context containing uncertainty and/ or interdependence.
2.4 Managerial Ambidexterity
As previous paragraphs acknowledged ambidexterity as a firm’s trade-off between exploitation and exploration activities. The application in ambidexterity led firms to structure their organization in order to cope with dynamic environments.
Andriopoulos and Lewis (2009) theorize that managing paradoxes involve a shared responsibility across organizational levels. Therefore, the ability of managers to engage in paradoxical thinking is vital in managing both exploitation and exploration strategies (Smith & Tushman, 2005). As ambidexterity is conducted and enabled within the dynamic capabilities of a firm (O'Reilly & Tushman, 2011), managers are subsequently required to act ambidextrously. The execution of complex strategies demands both cognitive and behavioural complexity from managers. For instance, managers are required to apply multiple leadership behaviours while solving contradictory tensions. (Smith et al., 2010). Kauppila and Tempelaar (2016) considered exploitative and explorative activities at an at individual level as a greater challenge compared to organizational ambidexterity. They demonstrate that both psychological factors and leadership are predictors for managerial ambidexterity. They conclude that employees exhibit higher levels of ambidexterity when both learning orientation and paradoxical leadership are high. Paradoxical leadership is defined through a strong managerial support and high-performance expectations. Mom et al., (2009) projected cognitive- and behavioural skills and motivations that explain managerial ambidexterity. One can clarify certain characteristics of managerial ambidexterity as: they host contradictions, are multitaskers, and both refine and renew their knowledge, skills, and expertise. Junni et al. (2013) could not significantly find the effects of individual and team level ambidexterity on firm performance. However, they measured positive results on both exploration and exploitation. Moreover, they found that organizational ambidexterity is more relevant in service and high-technology sectors.
They conclude that these sectors are positioned in uncertain environments and require an increased urgency to continuously explore and exploit opportunities.
2.5 Strategic intent
The previous paragraphs were subject to the evolvement in strategy and the reflection towards ambidexterity and cognitive and behavioural aspects of managers. The following section builds further on the consideration between strategic position and strategic intent. Hedley (1977) reflects on the common responses of firms in ‘tightening of the belt’ and pressures to generate profits in the short term.
It is highly recommended that firms consider long range strategies to optimize strategic opportunities.
A common assertion is that strategic planning typically prioritizes better financial performance over investment in innovative activities (Arend, Zhao, & Im, 2017). Strategic failure is due to the firms’
inability of choosing a distinctive strategic position and must therefore develop capabilities in the internal environment that recognizes changes in the environment. Other requirements contain diminishing cultural and structural inertia, building the appropriate competences to manage the coexistence of old and new strategic positions (Andriopoulos & Lewis, 2009). As strategic intent is considered as a sizable stretch in the current scope, firms are required to push their boundaries when new opportunities emerge in order to increase their chances to become a global leader. This forces them to be more inventive. Somehow firms seem to be more familiar with traditional strategic planning than they are with strategic intent (Johnson & Sohi, 2001). They argue that when firms search and assembles all possible resources regarding to their strategic ambitions, it is reflected as a strong strategic intent.
They consider a firm’s strategic aggressiveness to be a measurement for strategic intent. Their observed that when firms are strategically aggressive, they tend to interact more intensively with partners and managers from multiple levels. This can be explained as an attempt to access a broader resource base of complementary assets or by building inimitably strategic assets.
In this study I would like to measure if the level of strategic intent is related to managerial ambidexterity.
I therefore posit the following hypothesis stating a positive direct effect on individual ambidextrous behaviour:
Strategic intent is positively related to managerial ambidexterity
2.6 Organizational Architecture
“With increase in division of labor, organizations become more complex and innovative; the need for resources to support such innovations promotes interdependent relations with organizations, and the greater integration of the organizations in a community structure.” (Aiken & Hage, 1968)
Previous paragraphs provided insights about ambidexterity, specifically structural and contextual ambidexterity provide understanding about the divided sections in the organization and the activities to be performed. The following literature provides a basic understanding in how organizations are structured.
According to Mintzberg (1989) the organization is structured in six basic parts: (1) operating core, (2) strategic apex, (3) middle line, (4) technostructure, (5) support staff and (6) ideology. He argues that these basic parts and situational factors of a firm require certain coordinating mechanisms, organizational design, and configurations. Porter’s (1991) view about the separation of activities is explained through the Value Chain. He considered that the sources of competitive advantage are configurated around interrelated activities that perform economic activities. The economic activities are schematically divided in activities directly producing customers value or support activities that are integral to those primary activities.
Figure 1. Value chain and value system. Adapted from “Towards a Dynamic Theory of Strategy”, by M. E. Porter (1991).
Strategic Management Journal, Vol. 12, p103
2.6.1 Coordination Mechanisms
Mom et al. (2009) focused on decentralization and formalization as consistent components of a formal structure. They empirically validated the theoretical understanding about the direct and indirect variation of formal structural mechanisms and personal coordination mechanisms on managerial ambidexterity.
Their results indicate that the personal types of coordination mechanisms, as in cross-functional interfaces and connectedness have a relatively larger effect than mechanisms as manager’s decision- making authority and formalization of a manager’s tasks.
184.108.40.206. Decision-Making Authority
To investigate centralization at the manager’s level of analysis. I focus on a manager’s decision-making authority. Former studies indicate that managers’ decision-making authority is considered to positively affect the level of managerial ambidexterity. Therefore, they pursued to measure the effect of decision- making authority on managerial ambidexterity. Their results significantly proved that decision-making authority is positively related to managerial ambidexterity. They reason that said decision-making authority increases the sense of responsibility for managers in how they conduct and perform their tasks, as through this authority, managers feel more pressured to perform well. Moreover, managers seem to have a higher urge to seek for solutions outside the scope of the existing strategy and beliefs (Mom et al., 2009). Also, from their post hoc analysis they indicate that the effect of decision-making authority on ambidexterity is larger for operational level managers than for business unit level managers.
The relationship between strategic intent and ambidexterity is stronger when decision-making authority is high rather than low.
Aiken & Hage (1968) emphasize that rules and regulations are often used as an organizational mechanism to ensure the predictability of performance. The process of using these rules and regulations is called formalization, which Aiken and Hage (1968) subsequently divided into three subconstructs, one of which was added later to review the structural process. Firstly, they define job codification, which sees to defining job descriptions in a formal matter, whereas the second, rule observation, looks at the degree to which job occupants are supervised in confirming to the standard set in said formal descriptions. Lastly, they define job specificity, which looks at to what extent or degree the procedures of defining jobs are spelled out. By combining these three, the organizational mechanism of formalization is developed, defining the level of formal rules and regulations in the organization.
Furthermore, by increasing the level of formalization, one can reduce variances in organizations by adhering to these formal rules and regulations (Jansen et al. 2006). Jansen et al. (2006) states that
“formalization is aimed at reducing variance through incremental improvements in processes and outputs”, thereby enhancing exploitative innovations through improvement of current products, services and processes, as defining and standardising activities directly improves the routines through which these are implemented. The empirically tested findings of Jansen et al. (2006) therefore indicate a positive effect of formalization with regard to a manager’s ability to pursue exploitative innovation.
With regard to exploratory innovation, Jansen et al. (2006) stated that the process of formalization has a negative effect on this practice, although the predicted negative effects could not be supported by their empirical research. Mom et al. (2009) view formalization of managers tasks as the rules and codes that apply to a particular task, and the degree to which managers have to conform to the task description.
Former studies indicate that higher levels of formalization decrease the extent in which managers pursue to different opportunities and goals. Moreover, formalization decreases the ability to act outside the boundaries of their formalized tasks and to broaden their competences. This reduces their ability to act ambidextrously (Mom et al., 2009). However, their empirical findings did not provide support for the predicted negative relation with managerial ambidexterity. According to recent insights they conclude
that formalized rules and procedures may include processes for effecting change known as the concept of meta-routines. These meta-routines enable organizations to shape non-routine tasks in to more- routines tasks (Mom et al., 2009). Given these contractions we therefore predict that formalization has positive moderation effects between strategic intent and managerial ambidexterity. I therefore posit the following hypothesis:
The relationship between strategic intent and managerial ambidexterity is stronger when levels of formalization is high rather than low.
2.6.2 Informal Integration Mechanisms
While Mom et al. (2009) considered participation in cross-functional interfaces as one of the consistent components of personal coordination mechanisms, Jansen et al. (2009) chose the variables cross- functional interfaces as part of an informal integration mechanism. Both variables are derived from Gupta and Govindarajan (2000) and are drawn from corresponding theories about the means about integrating exploitation and exploration (Lawrence & Lorsch, 1967; Andriopoulos & Lewis, 2009), therefore the two have many similarities.
220.127.116.11. Participation in Cross-Functional Interfaces
Mom et al. (2009) have proven that participation in cross-functional interfaces by a manager is positively related to managerial ambidexterity. In relation to the other variables involved in this research, the tests of interaction effects have shown that a managers decision-making authority and participation in cross- functional interfaces are positive and significant. One of these positive effects their results show, is that the trust between managers of differentiated units is increased, which in turn provides various opportunities to increase and exchange knowledge between these managers. It provides managers with the opportunity to refine their already existing knowledge base by acquiring knowledge that is similar and complimentary to their own. This knowledge, for example, can be related to best practices or more formal forms knowledge, such as the use of specific technologies or specific market knowledge.
Furthermore, it challenges managers to renew and review their knowledge base by learning from peers with a different expertise, or sharing their own.
The relationship between strategic intent and managerial ambidexterity is stronger when participation in cross functional interfaces is high rather than low.
18.104.22.168. Cross-Functional Interfaces
Adding to the theory stated, Mom et al. (2009) and Jansen et al. (2005) also argue a positive effect of cross-functional interfaces as part of an informal integration mechanism on managerial ambidexterity.
They show that these cross-functional interfaces result in more lateral forms of communication between managers, which deepen flows across functional boundaries and lines of authority (Jansen et al., 2005).
By building a unit’s understanding about external knowledge, such as the knowledge of peers, overcoming differences and interpret issues, these interfaces promote nonroutine and reciprocal information processing. Furthermore, Cohen and Levinthal (1990) consider a firm or unit’s absorptive capacity critical for its innovative activities, this strongly relates to the knowledge exchange initiated by these cross-functional interfaces.
The relationship between strategic intent and managerial ambidexterity is stronger when the level in cross functional interfaces is rather high than low.
2.6.3 Knowledge exchange
Argote and Ingram (2000) describe the process of knowledge transfer as the way knowledge is affected by the experience of another. Knowledge transfer is demonstrated through changes in knowledge and performance. Furthermore, as Schulz (2001) was able to empirically show, collecting new knowledge intensifies vertical flows of knowledge, combining old knowledge affects horizontal flows, and codifying knowledge affects both kinds of knowledge transfer. This adds to the theory of Mom et al.
(2009), as they were able to show positive effects of managers sharing their own expertise, which takes place at a horizontal level. With regard to codification of knowledge in formal rules or policies the knowledge exchange is directly applicable, as this can be exchanged between different organizational participants and subunits. Levinthal and March (1993) argue that an optimal mix between exploitation and exploration in organization learning is hard to specify. They explain than when an organization engages exclusively in exploration it will never gain the returns of its knowledge. On the other hand, organizations engaging solely in exploitation suffer from obsolesce. On more closely examining organizational learning, they concluded that problems of myopia will occur in organizations and compromise the effectiveness of learning.
Cohen and Levinthal (1990) consider a firm’s absorptive capacity critical for its innovative activities.
Absorptive capacity is the ability to assimilate and exploit information originating from the external environment. Prior knowledge is essential in the assimilation and exploitation of information about ongoing activities. Firms may assign gatekeepers with a requisite background to distribute knowledge internally. Zahra and George (2002) build further upon the construct of absorptive capacity and make a distinction between potential and realized absorptive capacities. Potential absorptive capacity is explained as the acquisition and assimilation of knowledge, to be followed by realized absorptive capacity that transforms and exploits knowledge for purpose of value creation. Their reconceptualization of absorptive capabilities requires broader managerial roles in organizational routines and strategic processes. Mom, Van den Bosch and Volberda (2007) consider the concept of knowledge inflows as a recipient acquiring tacit and explicit knowledge from a donor. Their empirical research focuses on the direction from which managers acquire knowledge from other persons and/or units in the organization.
They consider that one of the primary roles of managers is to gather and disseminate information through multiple channels in the organization. In their study they limit intra-organizational knowledge inflows to top-down, bottom-up and horizontal directions.
22.214.171.124. Top-down knowledge inflows
According to Mom et al. (2007), top-down knowledge inflows to managers originate from persons or units at higher hierarchical levels. Based on former studies they acknowledge that top-down knowledge inflows are likely to increase, refine or improve the manager’s existing knowledge. Therefore, they hypothesize that top-down knowledge inflows of a manager are positively related to the extent of managers engaging in exploitation activities. Nevertheless, they do not rule out that decisions taken by senior management according to organizational structure, such as decision making, formalization and cross-functional interfaces can trigger managers’ exploration activities. Moreover, as they examined exploitation and exploration as separate dimensions, they support that exploitation and exploration are not mutually exclusive (He & Wong, 2004; Gibson & Birkinshaw, 2004). Eventually, their empirical findings indicate that top-down knowledge inflows of a manager are significant and positively related to the extent in which managers engage in exploitation. I therefore posit the following hypothesis:
The relationship between strategic intent and managerial ambidexterity is stronger when managers’
top-down knowledge inflows are high rather than low.
126.96.36.199 Horizontal knowledge inflows
Mom et al. (2007) consider that horizontal knowledge inflows are associated with knowledge originating from managers from comparable hierarchical levels throughout the organization. Former studies have shown that horizontal knowledge inflows enhance innovation and the creation of new knowledge at the recipient level. When considering that these knowledge inflows are unrelated to the manager’s existing knowledge base, they assume that it will rather broaden than deepen the existing knowledge base of the manager. Therefore, they hypothesized that horizontal knowledge inflows are positively related to managers’ exploration activities. Eventually, their empirical findings indicate that horizontal knowledge inflows are significant and positive related to the extent in which managers engage in exploration.
Moreover, they found that horizontal knowledge inflows do not significant relate to managers’
exploitation activities. However, their findings indicate that a combination of both top-down and horizontal knowledge will increase the extent in which a manager may engage in both exploration and exploitation. I therefore posit the following hypothesis:
The relationship between strategic intent and managerial ambidexterity is stronger when managers’
horizontal knowledge inflows are rather high than low.
188.8.131.52 Bottom-up knowledge inflows
Bottom-up knowledge inflows are associated with knowledge originating from persons and units at lower hierarchical levels than the manager (Mom et al., 2007). Former studies argue that bottom-up inflows represent data about current performances of the organization. Data is preferably reported in a standardized and formalized matter and motivates the manager to engage in exploitation activities. On the other hand, bottom-up knowledge inflows may be a major source of knowledge about trends in the external environment and can enhance exploration activities. It will therefore provide input to redefine strategic decisions. Mom et al. (2007) conclude from their empirical research that bottom-up knowledge inflows significantly relate to this manager’s exploration activities. Moreover, their findings indicate that a combination of both top-down and bottom-up knowledge will increase the extent in which a manager may engage in both exploration and exploitation. I therefore posit the following hypothesis:
The relationship between strategic intent and managerial ambidexterity is stronger when managers’
bottom-up knowledge inflows are high rather than low.
2.7 Conceptual model
Figure 2. Conceptual framework
2.8 Control variables
It is shown in other research that certain control variables affect the level of managerial ambidexterity.
We therefore include these variables in our sample. Mom et al. (2009) have found that age is negatively related to ambidexterity. Based on previous research, tenure is one of the most significant predictors of managerial behaviour (Mom et al., 2015). Their findings indicate that firms should select managers with long organizational tenure and a relatively low functional tenure. They suggest that HRM strategies must nurture internal mobility through career planning and management development approaches.
Manager’s exposure in different functions may foster ambidextrous behaviour for higher performance in uncertain and interdependent work contexts. Papadakis et al. (1998) assumed that increasing levels of education may increase cognitive abilities and may positively relate to managerial ambidexterity.
As explained previously, Mintzberg (1989) argues that the organization is structured in six basic parts:
(1) operating core, (2) strategic apex, (3) middle line, (4) technostructure, (5) support staff and (6) ideology. He argues that these basic parts and situational factors of a firm require certain coordinating mechanisms, organizational design, and configurations. As these six different parts have various degrees
of importance, the present paper focuses on what are generally considered as the three most important ones with regard to the sample as researched: technostructure, operational core and support staff.
According to Mintzberg (1989), the technostructure is responsible for designing systems to support the operational core. The activities of the support staff are mainly focused in processes outside the operational core and involve reporting and control. The operational core is the control mechanism that ensures correct delivery, service and customer relations. These basic parts require different mechanisms in coordinating. We therefore assume that the degree of formalization, communication, reporting and diversification require different coordinating mechanisms to reflect different outputs in exploitation and exploration. If these different mechanisms and work standards do affect the level of managerial ambidexterity, it is therefore essential to seek if the part of the organization predicts the behaviour and the coordinating mechanisms moderate managerial ambidexterity. To that regard, technostructure, operational core and support staff are used as the control group mechanisms.
3 Research Design and Methods
After discussing the various different theories behind the concept of managerial ambidexterity, the following paragraphs aim to provide insights with regard to the research design of this study. They do so by reflecting on the data collection method, as well as the sample group in this study. Lastly, the study enlarges on the measurements of the dependent variable, independent variable, moderators and control variables.
3.1 Data collection and Sample
The empirical research on the present study has been conducted at Engie, a global energy supplier whose services and solutions are aimed to provide sustainable energy and to reduce energy consumption. Engie has divided its businesses over particular markets including different strategic groups. Its strategy is to aim for long term success while engaging in environmentally sustainable solutions (Engie, 2021). Their strategy is formulated as follows: “Making zero-carbon transition possible for corporates and local authorities.” Porter (1989) emphasizes that differences in goals from strategic groups towards a parent company may occur and subsequently lead to differences in strategy. Since Engie employs different strategies, their exploitative activities are in general related to operational excellence and customer intimacy while explorative activities are related to challenges towards environmental sustainability in renewable energy and solutions in reducing energy consumption. These explorative objectives are established within new or current markets involving new technologies and data intelligence. Therefore, one can assume that employees are required to engage in both activities and therefore provide an excellent sample that meets the criteria for this research.
As the empirical research focuses on Engie, the research survey is also conducted at Engie, specifically the Netherlands branch. The sample population contains of 844 managers, whom have a position in
lower management. Engie Netherlands has 6200 employees. Mintzberg (1989) argues that the middle line contains managers who have a direct relationship to the operating core and strategic apex. Lower management at Engie is simply divided into overseeing the operating core, technostructure and support staff and we therefore assume, in accordance with the literature, that they are participating in the middle line of the organisation. In our sample we have included operational level managers and comparable officers who have a direct relationship to the operating core and strategic apex. In this paper we assume that the lower management is to a certain degree is responsible for the operational core, technostructure or support staff.
The common language within the sample is Dutch. Therefore, the peer-reviewed surveys are translated into Dutch to avoid misinterpretations by the respondents. To avoid inaccuracies, translation of the adopted scales was reviewed professionally by a former English lecturer with a Master’s degree in English Language and Literature.
The respondents were carefully selected according to their position in lower management and were invited by email to fill in an online survey distributed via Qualtrics (see appendix A). The respondents were asked to respond a one-month time frame. In total 844 respondents received the link of the survey and eventually 479 respondents completed the survey. Due to a pair-wise deletion of cases with missing values the final sample varies from 403 to 357 respondents. In relation to a list-wise deletion the final sample is measured to amount for 351 respondents.
3.3 Measurement and Validation of Constructs
This section reflects upon the measurement and validation of the variables. We have adopted existing scales that were validated in previous research. In order to ensure well tested results these scales were tested the normality of distribution and reliability of the data. The scales can be found in Appendix B.
3.3.1 Dependent variable: Managerial Ambidexterity
For this research, managerial ambidexterity has been used as the dependent variable. The measure for managerial ambidexterity was adapted from Mom et al., (2009). They constructed a scale to measure manager’s ambidexterity by combining measures of exploration and exploitation based on prior research. The scale is equally divided in seven exploitation and seven exploration items. The level of any manager’s ambidexterity is computed through multiplicative interaction between the exploitation and exploration items. Respondents were asked to base their answers on a seven-point Likert scale ranging from 1 = strongly disagree to 7 = strongly agree. The Cronbach’s alpha for this scale is α = 0.75.
The Cronbach alpha measures the internal consistency of the items per variable. A Cronbach alpha above .7 indicates a high level of consistency of the items.
3.3.2 Independent variable: Strategic Intent
This study contains one independent variable that observes the degree of strategic intent. The scale is adopted from Johnson and Sohi (2001). They constructed a scale to measure strategic intent. Based on prior research they consider a firm’s strategic aggressiveness as a measurement for the level of strategic intent. Respondents were asked to base their answers on a seven-point Likert scale ranging from 1 = strongly disagree to 7 = strongly agree. The Cronbach’s alpha for this scale is α = 0.83.
3.3.3 Moderating variable: Coordination Mechanisms
The moderating variable is testing the effect of strategic intent on individual ambidextrous behaviour when formal structural mechanisms apply. In order to test the level of strategic intent, one has to focus on two different control mechanisms: a manger’s decision-making authority and their formalization.
184.108.40.206 Manager’s decision-making authority
Mom et al. (2009) constructed a scale to measure a manager’s decision-making authority. The scale is based on prior research from Dewar et al. (1980) and contains four items measuring how and which tasks the manager performs and his or her ability to solve problems and to set goals. Respondents were asked to base their answers on a seven-point Likert scale ranging from 1 = strongly disagree to 7 = strongly agree. The Cronbach’s alpha for this scale is α = 0.91
Mom et al., (2009) constructed a scale to measure formalization of a manager’s tasks. The scale is based on prior research from Desphande and Zaltman (1982) and contains four items that measuring the extent in which a manager’s tasks are defined by rules, procedures or regulations. Respondents were asked to base their answers on a seven-point Likert scale ranging from 1 = strongly disagree to 7 = strongly agree.
The Cronbach’s alpha for this scale is α = 0.69
3.3.4 Moderating variable: Integration Mechanisms
The moderating variables tests the effect of strategic intent on managerial ambidexterity when integration mechanisms apply. Similar to the previous variable, two different mechanisms have been measured: the participation in cross-functional interfaces by a manager and the cross-functional mechanisms themselves. As these two mechanisms may appear similar, the difference between the two will be explained as well.
220.127.116.11 Participation in cross-functional interfaces by a manager
The following scale that measures participation in cross functional interfaces by a manager is adopted from Mom et al., (2009). The scale is based on prior research from Gupta and Govindarajan (2000) and Nadler and Tushman (1987) and assesses the extent to which a manager participates in cross-unit and
cross hierarchical integrative mechanisms. The scale contains three items varying from the most complex mechanism (permanent teams) to the least complex mechanism (liaison personnel). Moreover, these items are subject to a weighted average from 3 (permanent teams) to 1 (liaison personnel).
Respondents were asked to base their answers on a seven-point Likert scale ranging from 1 = strongly disagree to 7 = strongly agree. In the scale of ‘participation of cross-functional interfaces’, the Cronbach alpha appeared to be negative. The presence of counter indicative items could have been the cause for a negative value. It was therefore necessary to further research in the questions of the scale. Question 1 and 2 are based positively towards temporary project teams or cross-interfaces. Question 3 is the opposite of temporary teams resulting in permanent team settings. We have therefore decided to recode question 3 in opposite ratings. As a result, the Cronbach’s alpha for this scale turned positive in α = 0,42. However, the Cronbach alpha for ‘participation of cross-functional interfaces’ does not meet the criteria. We therefore decided to remove the data obtained in the scale. Nevertheless, the variable cross- functional interfaces is similar to participation in cross functional interfaces by a manager since Mom et al. (2009) and Jansen et al. (2005) both based their items on prior research from Gupta and Govindarajan (2000).
18.104.22.168 Cross-functional interfaces
The following variable captures the extent of cross-functional boundary-spanning integration mechanisms. The scale is adopted from Jansen et al. (2009) and contains five items measuring the extent of integrative mechanisms enabling knowledge exchange between managers across exploratory and exploitative units. Jansen et al. (2009) based their scale on prior research from Hage and Aiken (1967) and Gupta and Govindarajan (2000). Respondents were asked to base their answers on a seven-point Likert scale ranging from 1 = strongly disagree to 7 = strongly agree. The Cronbach’s alpha for this scale is α = 0.78. We therefore conclude that the internal consistency of the scale cross-functional interfaces is considerably higher than participation in cross-functional interfaces by a manager.
3.3.5 Moderating variable: Knowledge Exchange
The moderating variable tests the effect of strategic intent on individual ambidextrous behaviour with the impact of knowledge inflows. Mom et al. (2007) acknowledge that in the process of knowledge inflows a recipient is acquiring knowledge from a donor. We therefore focus on the knowledge recipient as our focal unit of analysis.
22.214.171.124 Top-down, horizontal and bottom-up knowledge inflows
The following variables captures the extent of knowledge inflows from persons and units at higher hierarchical levels, similar hierarchical levels or lower hierarchical levels than the manager himself. The scale is adopted from Mom et al. (2007) and contains eight items in total that measure to what extent managers received or gathered knowledge, last year, from persons or units at higher hierarchical levels, similar levels or lower hierarchical levels. Mom et al. (2007) based their scale on prior research from Gupta and Govindarajan (2000) and Schulz (2001). Respondents were asked to base their answers on a seven-point Likert scale ranging from 1 = strongly disagree to 7 = strongly agree. The Cronbach’s alpha for top-down knowledge inflows is α = 0.79, horizontal knowledge inflows α = 0.88 and bottom-up knowledge inflows α = 0.72.
3.3.6 Control variables
The final sample included operational level managers and comparable managers represented in 12 business units, categorized into: Engie Services West (27,2%), Engie Services Zuid (24,3%), Engie Services West Industrie (13,1%), Engie Infra & Mobility (12%), Engie Services Noord B.V. (9,5%), Engie Refrigeration (4,6%), Engie Services Nederland (3%), Engie Electroproject (2,2%), Engie Ventures & Integrated Solutions (1,1%), Engie IFM (0,8%), Kalibra International (0,8%) and Engie Energy Solutions (0,5%). Likewise, we have controlled on certain demographical variables. As 75% of the respondents turned out to be male, we cannot draw any conclusions based on gender. Additionally, the average age is between 45 and 55 years. On average, they have received a higher professional
education. The organizational tenure is between 5 and 10 years and the average functional tenure is between 3 and 5 years. Controlling on the functional area, the average of the managers is operationalized in the middle line, with a direct relationship to the operating core and strategic apex.
By using and examining different control mechanisms, it appears possible to state that a correlation exists between the different variables of the research reflecting on the level of managerial ambidexterity.
By analysing both the correlations and the regressions between the two, the direct moderation effects of both will be shown and explained.
4.1 Normality of distribution
The distribution is normal when the skewness and kurtosis are close to zero. The distribution for all variables are symmetrical since the values are around zero. However, the kurtosis of the variable DecAuth (1.705) and BottUpKn (1.686) are substantial positive and therefore show many scores in the tails and is pointy. The cause of an underestimate of the variance is reduced with a large sample.
4.2 Correlation analysis
The correlation analysis is a measurement to indicate the relationship between variables (Field, 2018).
As shown above, it is possible to observe that significant correlations diverge from -0.3 and +0.6, which indicate small to large effects between the variables. The correlations do not indicate signs of multicollinearity. First, there is a significant positive direct effect between strategic intent and managerial ambidexterity, r =.31, p <0.01. The following variables indicate significant positive and negative correlations with both managerial ambidexterity and strategic intent. There is a significant negative effect between a manager’s decision-making authority and both managerial ambidexterity r = -.17, p < 0.01 and strategic intent, r = -.13, p < 0.05. Furthermore, while the predicted effect between formalization and managerial ambidexterity is not proven r = -.03, the relation between formalization and strategic intent shows significant correlation effects r = .21, p < 0.01. Moreover, there is a significant positive effect between cross-functional interfaces and both manager’s ambidexterity r = .23, p < 0.01 and strategic intent, r = .34, p < 0.01. Additionally, there is a significant positive effect between a
managers’ top-down knowledge inflows to both manager’s ambidexterity r = .35, p < 0.01 and strategic intent, r = .24, p < 0.01. Finally, there is a significant positive effect between a managers’ horizontal knowledge inflows to both managerial ambidexterity r = .29, p < 0.01 and strategic intent, r = .17, p <
0.01. The following control variables correlate significantly with both managerial ambidexterity and / or strategic intent: age, level of education, organizational tenure and position.
Table 1. Correlation analysis
4.3 Hierarchical Regression analysis
In order to test the direct effect and moderating effects on the dependent variable, a hierarchical multiple regression analysis was performed to research the direct effect of strategic intent predicting managerial ambidexterity. The results of the hierarchical regression are presented in Table 4. According to Mom et al. (2009), managerial ambidexterity is computed as a multiplicative interaction between managers’
explorative activities and managers’ exploitative activities. The models are significantly good in predicting the outcome and show improvement in model 2 and model 3 (F = 2.83, p <0.05), model 2 (F
= 9.16, p < 0.001) and model 3 (F = 8.23, p < 0.001). The control variable organization tenure positively affects managerial ambidexterity in model 1 (b = 0.42, p <0,05) and 5% variance in managerial ambidexterity is explained. The outcome of the regression analysis in model 2 supports hypothesis 1, in which is stated that strategic intent has a positive effect on managerial ambidexterity. It reveals a significance of p < 0.001 and a positive slope (b = 1.69). This means that when strategic intent increases by one-point, managerial ambidexterity increases by 1.69. Moreover, by entering strategic intent as a predictor for managerial ambidexterity the variance of the model has increased towards 16%. In model 3 the effect of the moderation is tested. The moderation between strategic intent and the variables top- down knowledge (b =.14, p < 0,01), horizontal knowledge (b = .10, p < 0.05) and bottom-up knowledge (b =.14, p > 0,01) inflows are positively related to individual ambidexterity. Consequently, by entering the moderation variables the variance of the model has increased towards 16%.
Table 2. Regression analysis
5.1 Major findings
Hypothesis 1 (strategic intent is positively related to managerial ambidexterity) is confirmed by the correlation and regression analysis. Furthermore, it is proved that knowledge inflows do moderate the relationship between strategic intent and ambidexterity. Other effects of the stated hypotheses vary and are not fully proved to be significant. It is hoped that the present study contributes to the current knowledge about managerial ambidexterity and has provided more clarity and urgency for firms to formulate a strong strategic intent and invest in intra-organization communication interfaces to connect managers both horizontally as vertically, to further broaden their knowledge. Although not all questions yielded the expected positive results, the majority of them did, proving the correlation in the bigger picture.
5.2 Theoretical implications
The results following the empirical research on the various hypotheses strongly correlate with what has already been shown in the theoretical review. With regard to hypothesis 1, as Andriopoulos & Lewis (2009) have shown, firms are required to push their boundaries when new opportunities arise in order to increase their chances to become a global leader. This requires a high level of inventiveness and therefore a high level of strategic intent, as firms must consciously think about what their next steps should be in order to come out on top. For that to be possible, a high level of managerial ambidexterity is required in order to deal with organizational changes and seizing opportunities. The results of this study further confirm the relation between strategic intent and managerial ambidexterity, as the scores to this regard has been positively significant as well.
Secondly, with regard to both hypotheses 2a and 2b, the empirical results fail to outline a relation to strategic intent and managerial ambidexterity when decision-making authority is high, as the results fail
to prove any significant outcome. The same relation has been hypothesized when the levels of formalization are low, although the results fail to outline any relation either. Supporting this research, the theoretical analysis also fails to indicate a clear relation. While high levels of formalization strongly decrease a manager’s ability to defer from the existing rules and regulations, the research has shown both positive and negative effects. When formalization levels are high, managers don’t get much opportunities to follow their own paths and structure, strongly limiting strategic possibilities to seize opportunities and quickly deal with organizational changes. However, the codification of job descriptions does provide a better start and a more well-defined way of working. When decision-making authority is high however, managers feel the responsibility to perform well and discover the boundaries in which their firm operates in order to become a global leader, leading them to take chances and improve their firms’ position. That being said, the empirical results failed to provide any results to support this theory.
With regard to cross-functional interfaces and their effect on the relation between strategic intent and managerial ambidexterity following hypotheses 3a and 3b, previous studies show that trust between managers, as well as their lateral communications, improve managerial ambidexterity (Jansen et al.
2005). Reasons for this are, for example, that managers are challenged to renew and review their own knowledge by participating in such cross-functional interfaces, as they are continuously challenged to improve their knowledge and skills through sharing it with managers with a different expertise.
Furthermore, it goes beyond the boundaries of functional lines, thereby directly increasing the levels of collaboration between different units, subunits and managers. The little amount of research done on this topic however therefore struggles to empirically prove how this moderates the levels of strategic intent, a point that this study also confirms. This proves that a gap in research with regard to these hypotheses arises and therefore should be explored further in future research. Especially given the correlation between knowledge sharing in a more formal way, which is explored in the next hypotheses, to the more informal way of knowledge sharing made possible by cross-functional interfaces, the results should have been more decidedly clear.
Lastly, with regard to hypotheses 4a, b and c, the literature states that all forms of knowledge inflows, whether they are top-down, horizontal or bottom-up, increase the relationship between strategic intent and managerial ambidexterity. As managers become more acquainted with a firms capabilities and resources, decisions can be made more decisively related to acquisition and assimilation of information.
Furthermore, given the broader amount of knowledge present in the organization (Mom et al., 2007) the strategic intent of the firm will be propagated throughout the firm, at different (managerial) levels. For a manager to be able to lead with strategic intent, different directions in knowledge flows can result in weighed strategic decisions. The research done by this study supports that, as all empirical results related to knowledge inflows have been decidedly positive.
As has been illustrated by all of the above, the empirical research of the study closely follows the theoretical analysis. The theoretical implications in this study therefore are twofold, as they on one hand confirm the already existing research, but also show gaps in this same research, as will be illustrated in the next paragraph.
5.3 Contributions to the field
From a managerial perspective, this study provides important implications. Next to daily managerial issues, firms should also be explicitly aware of the elements of their adopted strategy. If it implies a strong strategic intent, it may be reflected by an increase in managerial ambidexterity. Simply put, the more aggressive a firm’s strategy is, the more visible its positive results may be. Moreover, these results indicate that a strong level of strategic intent is moderated by the level of managers’ acquiring top-down, horizontal and bottom-up knowledge inflows. The firm can opt to do further research into the effectiveness of current and future channels in which knowledge inflows take place.
5.4 Future Research Suggestions
There is room for further research in the field of knowledge exchange and managerial ambidexterity.
such as transmission channels, motivational disposition and absorptive capacity between organizational knowledge and managerial ambidexterity. As mentioned in the introduction, there is still little research available on the subject. As managerial styles are rapidly changing, research tends to be soon outdated, pointing to the need for a continuous interest in the subject. Still, the topic of knowledge exchange has gained a lot of ground in the past few years, reflecting views vastly different from those as recent as the early 2010’s.
Managerial ambidexterity and strategic intent are irrevocably linked, as both the research and the theoretical background decidedly prove. For a manager to succeed in their given field, they need to be able to handle any and all given situations strategically and maneuver themselves in the modern corporate world. Through knowledge sharing and knowledge inflows, they are able to increase this ambidexterity and ascend their firm into the global playing field. As they broaden their knowledge, any manager can become a more capable manager. However, a serious lack in research with regard to this field persists, making it more difficult for innovative managers to grow or enter into new ways of working backed by theoretical views.
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