Literature Review Organizational Ambidexterity

Organizational ambidexterity refers to the firms ability to simultaneously carry

out the practices of exploration and exploitation. Thus, there is a trade-off
associated between improving the efficiency to exploit resources effectively and
searching for new opportunities to prevent being obsolete in future. In the past
there has been many research papers, empirical studies conducted in the area of
Organizational Ambidexterity. We now going to look into those insights gained
from different research conducted.
The research of organizational ambidexterity shares with different areas viz.,
tech. innovation, adaptation, strategic management, organizational behaviour
and organizational design. Thus, many terms used by different studies like
exploration and exploitation, discontinuous and incremental innovation, seeking
balance between stability and search all refers to the same underlying issue.
Many of these studies view organizational ambidexterity as something inherent
for organizational success.
It was Duncan who coined the term Organizational Ambidexterity in his paper on
The ambidextrous organization: Designing dual structures for innovation
published in 1976. However, the real interest in this area aroused after Marchs
article titled Exploration and Exploitation in Organization learning which was
published in 1991 many years after Duncan first came with the term. March
proposed that there are two different sets of activities performed by a firm which
are exploration and exploitation. And, therefore, firm should divide its resources
to effectively carry out these 2 sets of activities. There is a trade-off involved
since resources for any firm are limited and thus it should wisely choose as to
what proportion of resources to put into each of these activities. While
exploitation refers to activities like improving efficiency, optimization, refining
the processes, exploration refers to searching for new discovery, experimenting,
researching. Due to opposing nature of these sets of activities, it calls for
differences in organizational structure, and strategies.
The reason that Marchs article picked great interest was due to it disrupting the
notion gathered from earlier research that it is impossible to simultaneously
focus on exploitation and exploration. Before 1991, the research conducted by
many scholars (e.g. Miller & Friesen, 1986; Hannan & Freeman, 1977) proposed
organizational strategies in terms of contrasting behaviour that firm should focus
on either exploitation of its resources or exploration. While March argued that
organizations need to have focus on both exploration and exploitation. Just
focusing on only exploitation will result in firm losing out to competitors during
changes in environment. While too much focus on exploration will lead to firm
getting trapped in vicious cycle of research and non-productive changes.
March argued that successful firms are indeed ambidextrous which resulted in
shift from conventional notion of firms success towards more contemporary
notion. Katila, R., & Ahuja in their paper something old, something new: A
longitudinal study of search behaviour and new product introduction proposed
the importance of balancing the two opposing activities in a firm viz., exploration
and exploitation, for being successful. Many other researchers like Tushman & O
Reilly, Smith & Shalley etc. contributed to realizing the importance of achieving a
balance between those two activities.
Whether Ambidexterity is associated with firms performance in positive or
negative manner?

Research performed by Venkatraman et al., 2006; Zhiang. Yang & Demirkan.,

2007 showed that organizational ambidexterity result in increased performance
of organization in terms of sales growth. Similar research conducted by
Gedajlovic & Zhang in 2009, Masini, Zollo & Wassenhove in 2004 and Schulze,
Heinemann & Abedin in 2008 showed that ambidexterity increases the subjective
rating of performance in the organization. Uotila et al. showed that firms
valuation as measured by Tobins Q has a positive effect due to ambidexterity. As
with organizational behaviour under varying level of market uncertainty, the
ambidexterity also shown to have a greeter positive effect on firms performance
during uncertain market conditions as suggested by empirical studies conducted
by Tarba et al. While some of the studies relied on secondary research through
the anecdotal evidences and case studies, many of the papers published used
large samples to reliably capture the effect of ambidexterity. The research
conducted by Goosen, Bazzazian, and Phelps used data of 500 companies for 10year period and concluded that technologically efficient firms are more positively
associated with the effect of ambidexterity. Similar study by Caspin-Wagner et al.
used data of 605 technology companies and came up with an inverted U-shaped
relationship between financial performance of the firm and ambidexterity.
How to Achieve Ambidexterity?
While Duncan in his original paper suggested that in order to establish the
alignment between efficiency and innovation firms need to sequentially change
their structures over time. Tushman and OReilly proposed that in a period of
uncertainty, changing world (VUCA) the sequential ambidexterity might not work
and a firm need to work on its exploitation and exploration simultaneously. This
can be achieved by creating autonomous subunits for carrying out exploitation
and exploration. These subunits should be separated by people having different
skillsets, by different culture, processes but they should be able to integrate with
the overall strategy of the firm. Another study conducted by Gibson and
Birkinshaw in 2004 argued that people should be given the choice to choose and
make judgement about which activity to devote their time to. Contextual
Ambidexterity as it is called allows individuals to make their best judgement
towards exploitation and exploration activities.
Thus, primarily 3 ways in which we can attain Ambidexterity as per the research
conducted in the past:

Sequential Ambidexterity
Simultaneous Ambidexterity
Contextual Ambidexterity

Sequential Ambidexterity
In response to change in environment, firms realign their organizational
structure. If we look at the history of organizational structures, we see that firms
like DuPont, Corning, and GE modified their organizational structures in a
sequential manner to adapt to the change in different environmental variables.
Kauppila, 2010; Rosenbloom, 2000 studied different firms to identify the
response of environment changes towards firms approach to achieve
ambidexterity. Temporal shifting is another way to achieve ambidexterity in
which firms oscillate between alternating period of exploration and exploitation.
Nickerson and Zenger, 2002 refers to this term as Vacillation. The period of
transition or sequential change between firms can be small as well as large.
Lovas and Ghosal, 2000 studied the Danish firm Oticon for over 100 years and
gathered points on how firms strategy evolved. Geerts et al. in 2010 published a

paper where they found that although sequential and simultaneous

ambidexterity has positive effect but service firms gather more from sequential
ambidexterity. Research conducted by Goosen, et al., 2012 and many others
established a pattern where it is found that firms which are smaller and exist in
slower environment benefits more from sequential ambidexterity because they
are void of resources to pursue simultaneous ambidexterity.
Simultaneous Ambidexterity
In this form of ambidexterity, firms are known to pursue both exploration and
exploitation simultaneously. Thus in this way, the key is to seek new
opportunities through simultaneous exploitation and exploration. Studies indicate
that to effectively manage ambidexterity through this route, there are certain
components that is required in a firm. These are:

Autonomous units for carrying exploitation and exploration activities

Integration between these units
Vision to back the need for exploitation and exploration
Effective Leadership capable to handle multiple conflicts arising from
simultaneously pursuing both activities

In a study of 325 firms in biotech sector, conducted by Rotharemel and Deeds in

2004, they showed that alliances is another way by which firm can pursue both
exploration and exploitation. Similar study conducted by Kauppila showed both
inter-organizational as well as intra-organizational approaches to ambidexterity
are important and they can be termed as complements instead of substitutes.
Contextual Ambidexterity
Both sequential and simultaneous ambidexterity seek towards minimizing the
tension between exploitation and exploration efforts through structural means.
Gibson and Birkinshaw in 2004 argued that this tension could be resolved at the
individual level. Thus contextual ambidexterity is the capacity of an individual to
manage demands for both alignment and adaptability. It argues that the best
judgement can be drawn from an individuals capacity to carry out exploitation
and exploration simultaneously. Contextual ambidexterity is different from the
first 2 forms of ambidexterity discussed in a way that here the focus is on
individual rather than the whole units. Another way it is different is that here the
ambidexterity is achieved when individuals agree about the alignment and
adaptability of their units. Adler, Goldoftas and Levines, 1999 studied Toyota
manufacturing system. In Toyota, the employees performs both day-to-day tasks
like engine tuning, assembly line activities (exploitation) but also they
continuously rotate their jobs to become more efficient(exploration). This is
termed meta-routines. The larger management system and culture supports
workers to pursue exploration and exploitation.
The Organizational Ambidexterity Framework
The organizational ambidexterity framework consists of 3 elements which are:
Exploration vs
Organizational Level
Context
Ambidexterity level
Exploitative
Structural
Core trade-off
Business- Unit Level
Cultural
Enabling Mechanism
Alignment vs
Special Separation
Adaptability
Team Level
(Specialized units for
paradoxical activities)

Search
vs
Stability
Project
Level
Enabling
Ambidexterity
Core Trade-off
Temporal
Separation
Mechanism
Level
Flexibility vs
Individual Level
(Dynamic cycles of
Efficiency
paradoxical activities)

Thus based on the categorization of different elements, we can categorize types

of organizational ambidexterity. This could further be used to support
comprehensive understanding of research in this area.
Putting together different combinations of elements in the above boxes, one can
come up with different forms of ambidexterity but we need to keep in mind that
not all combinations are combinable. There is element of dynamisms involved
with all three kind of ambidexterity discussed in the previous section i.e.
Sequential, Simultaneous and Contextual. However the last 2 one is different
from the sequential in the sense that it relies on simultaneous pursue of
contradicting set of activities but nonetheless it can be agreed that all qualifies
as dynamic capabilities due to time-variant sequence of exploration and
exploitation. Dynamic capability refers to firms capability to reconfigure itself in
response to change in external environment. Thus ambidexterity can only
become dynamic when managers are able to manage and configure-reconfigure
the allocation of resources over time in an effective manner. Thus Sebastian
Kortmann explains the framework for assessing whether a firm possess both
ambidexterity and dynamic capability or not based on simultaneity of
paradoxical activities and dynamic cycles of paradoxical activities. Thus if a firm
is not able to manage simultaneous paradoxical activities then it does not have
the ambidexterity capability as proposed by Rothaermal et al. Also, if firm does
not have the capability to manage dynamic cycles of paradoxical activities then
it does not possess dynamic capability. Thus it can be put into a framework of
organizational ambidexterity and dynamic capability.

Dynamic Cycles of Paradoxical Activities

Yes

No
Organizational Ambidexterity

Yes

Organizational Ambidexterity &

Dynamic Capability

No

Neither Organizational
Ambidexterity nor Dynamic
Capability

Dynamic Capability