O’Reilly & Tushman (2013) – Organizational Ambidexterity: Past, Present and
Future
Definition
Ambidexterity = the ability to simultaneously pursue both incremental and discontinuous
innovation… from hosting multiple contradictory structures, processes, and culture within
the same firm
The past: origins of the construct
Early Finding: different organizational forms are associate with different strategies and
environmental conditions
o Stable environments = mechanistic management system (hierarchy, well-defined
roles and job descriptions)
o Turbulent environments = organic system (lack of formally defined tasks, less
formalization and specialization)
Organizational adaptation literature: firms need to change these structure alignments in the
face of environmental / technological change
This trade-off = “a paradox of administration” (Thompson 1967)
Adaptive challenge facing firms was the balance of having both:
o Exploitation (efficiency, control, certainty)
o Exploration (search, discovery, autonomy, innovation)
In achieving this balance there is a bias in favour of exploitation as it results in short-term
success
Scholars suggest that firms need both exploitation and exploration for long-term success.
Having both simultaneously leads to higher firm performance
Studies were conducted on:
Whether there is a relation to performance and survival
Whether ambidexterity is accomplished through structurally separate units or other means
Under what conditions ambidexterity is most useful
How it is achieved
Exploration of the theoretical underpinnings of ambidexterity in:
Theories on absorptive capacity
Theories on dynamic capabilities
Theories on organizational learning
Problem
The large interest has blurred some of the initial clarity regarding the concept of
ambidexterity
, The Present: What does the evidence show?
Ambidexterity and Firm Performance
Clear pattern: ambidexterity positively affects firm performance (sales growth, innovation,
performance ratings, market valuation, firm survival, firm growth)
3 conclusions:
o Ambidexterity is positively related to firm performance
o These effects are contingent on the environment. Most valuable when:
Uncertainty and competitiveness is high
Sufficient resources available
Firms are large rather than small (meaning they have resources)
o Under- or Overuse of ambidexterity comes at a cost
Firms with greater tech. capabilities benefit more from it
Ambidexterity differs between manufacturing and service firms
There is an inverted U-shaped relationship between ambidexterity and financial performance
Unit of analysis: Studies focused on individual level, firm level, unit level and project level
Methods: usually large samples with longitudinal data
How is Ambidexterity achieved?
Original view by Duncan: firms need to shift their structures over time to align them with the
firm’s strategy – meaning, organizations achieve ambidexterity in a sequential way
Other argue: in times of radical change, sequential ambidexterity is inefficient
They propose: simultaneous ambidexterity – establishing autonomous subunit for
exploration and exploitation which are structurally separate but with targeted integration for
the use of resources and capabilities
Gibson & Birkinshaw introduce contextual ambidexterity: permitting individuals to decide
between exploration and exploitation by building a set of enabling processes and systems as
well as a supportive organization context (consisting of discipline, stretch, trust and support)
Sequential ambidexterity
Future
Definition
Ambidexterity = the ability to simultaneously pursue both incremental and discontinuous
innovation… from hosting multiple contradictory structures, processes, and culture within
the same firm
The past: origins of the construct
Early Finding: different organizational forms are associate with different strategies and
environmental conditions
o Stable environments = mechanistic management system (hierarchy, well-defined
roles and job descriptions)
o Turbulent environments = organic system (lack of formally defined tasks, less
formalization and specialization)
Organizational adaptation literature: firms need to change these structure alignments in the
face of environmental / technological change
This trade-off = “a paradox of administration” (Thompson 1967)
Adaptive challenge facing firms was the balance of having both:
o Exploitation (efficiency, control, certainty)
o Exploration (search, discovery, autonomy, innovation)
In achieving this balance there is a bias in favour of exploitation as it results in short-term
success
Scholars suggest that firms need both exploitation and exploration for long-term success.
Having both simultaneously leads to higher firm performance
Studies were conducted on:
Whether there is a relation to performance and survival
Whether ambidexterity is accomplished through structurally separate units or other means
Under what conditions ambidexterity is most useful
How it is achieved
Exploration of the theoretical underpinnings of ambidexterity in:
Theories on absorptive capacity
Theories on dynamic capabilities
Theories on organizational learning
Problem
The large interest has blurred some of the initial clarity regarding the concept of
ambidexterity
, The Present: What does the evidence show?
Ambidexterity and Firm Performance
Clear pattern: ambidexterity positively affects firm performance (sales growth, innovation,
performance ratings, market valuation, firm survival, firm growth)
3 conclusions:
o Ambidexterity is positively related to firm performance
o These effects are contingent on the environment. Most valuable when:
Uncertainty and competitiveness is high
Sufficient resources available
Firms are large rather than small (meaning they have resources)
o Under- or Overuse of ambidexterity comes at a cost
Firms with greater tech. capabilities benefit more from it
Ambidexterity differs between manufacturing and service firms
There is an inverted U-shaped relationship between ambidexterity and financial performance
Unit of analysis: Studies focused on individual level, firm level, unit level and project level
Methods: usually large samples with longitudinal data
How is Ambidexterity achieved?
Original view by Duncan: firms need to shift their structures over time to align them with the
firm’s strategy – meaning, organizations achieve ambidexterity in a sequential way
Other argue: in times of radical change, sequential ambidexterity is inefficient
They propose: simultaneous ambidexterity – establishing autonomous subunit for
exploration and exploitation which are structurally separate but with targeted integration for
the use of resources and capabilities
Gibson & Birkinshaw introduce contextual ambidexterity: permitting individuals to decide
between exploration and exploitation by building a set of enabling processes and systems as
well as a supportive organization context (consisting of discipline, stretch, trust and support)
Sequential ambidexterity
