Organizing for Ambidexterity: Studies on the Pursuit of Exploration and Exploitaiton through Differentiation, Integration, Contextual and Individual Attributes
01 / 2006 - 03 / 2010
To survive in an ever changing environment, an organization has to engage in strategic renewal activities (Baden-Fuller & Volberda 1997; Burgelman 1983), and therefore has to be able to deal with a certain tension between contradictory processes. This tension stems from a mismatch between stress and inertia (Huff et al. 1992), resulting from the strategic actions a firm undertakes to alter its path dependence (Volberda et al. 2001), and the exploitation of existing core competencies while at the same time engaging in exploratory activities to ensure development of new competencies and strategies (Floyd & Lane 2000; Levinthal and March 1993; March, 1991). Nevertheless, previous research suggests the possibility of overcoming the either/or of these contradicting forces and structures to develop behavior that resolves the tension (March 1991; Poole and Van de Ven 1989; Rivkin and Siggelkow 2003; Smith and Tushman 2005). This suggests that a coordinating social structure can be developed and managed, guiding both the exploitative and exploratory processes underlying strategic renewal (Floyd and Lane 2000; O Reilly and Tushman 2004; Sheremata 2000). However, much more remains to be understood how organizations do strategically renew by coordinating the development of the exploitation of existing competencies and the development of new competencies simultaneously. To this end, we focus here on vertical and lateral coordination mechanisms. The role of management in vertical coordination is crucial (Galbraith 1973; Ghoshal et al. 1994; Tsai 2002). While the influence of top-managers on strategic and organizational change has been widely emphasized in the strategic literature (Barr et al. 1992; Burgelman 1983; Lyles and Schwenk 1992; Rajagopalan and Spreitzer 1996; Rosenbloom 2000), other investigations stress that besides the influence of top management on this process, organizational coordination mechanisms are important as well (Floyd and Wooldridge 2000; Volberda et al. 2001). In this study, we intend to contribute to this debate by addressing the research question to what extent and how lateral coordination mechanisms complement vertical coordination mechanisms in strategic renewal processes. Furthermore, coordination is not a construct that is easily assessed in isolation. It is a complementary of organizational structure (Whittington 1988). Whatever the direction and nature of coordination, it concerns itself with the crossing of boundaries raised by the organizational structure (Kellogg et al. 2006; Kahn 1996). Put as a biological metaphor (Ghoshal and Bartlett 1989), structure is the anatomy and coordination the physiology. In terms of combining exploitation and exploration, the inherent structure is one that is separated, the business units require distinct structure, guiding distinct processes (Benner and Tushman 2003), yet they must be interrelated as well (Tushman and O Reilly 1996). In this light, organizational structure can both bolster or hinder coordination (Puranam et al. 2006). In a similar vein, we will examine the role of informal network structure, or, more specifically: structural attributes of informal networks. Mohrman et al. (2003) state that an informal network has the potential to guide action To this end, we will investigate the influence of network composition on the relationship between coordination and strategic renewal. Figure 1 illustrates the relationships as described above. More than any other management level, top management teams have the potential to influence firm outcomes (Hambrick and Mason 1984) and play a decisive role in establishing a supportive context and reconciling the implicit tension when simultaneously pursuing exploitation and exploration in strategic renewal. At the top management level, the process of combining exploitation of existing competencies with the exploration of new ones within an organization poses considerable challenges (Denison et al. 1995). Although structural differentiation can help overcome resource and routine rigidity (Gilbert 2005), top management teams face tradeoffs in their decision-making. In order to reconcilliate both the exploitation of existing competencies and the development of new ones, top management teams need to allow for variety and local adaptation, yet facilitate collective action and strategic coherence (O Reilly and Tushman 2004). In this sense, they are expected to resolve contradictions through joint information processing and tight integration (Floyd and Lane 2000, Michel and Hambrick 1992). In this study, we examine coordinating mechanisms developed by top management teams that might help achieving strategic renewal.However, lateral coordination between and within business units (Tsai 2002) are also important in strategic renewal. Indeed, many authors have emphasized the importance of coordination mechanisms between business units when developing exploratory and exploitative innovation simultaneously in different organizational units (e.g. Benner and Tushman 2003; Tushman and O Reilly 1996). Units that engage in exploratory innovation pursue new knowledge and develop new competencies resulting in new products and services for emerging customers or markets. Units pursuing exploitative innovation build upon existing knowledge and competencies and extend existing products and services for existing customers (Benner and Tushman 2003: 243).