Organizational ambidexterity refers to an organization's ability to be efficient in its management of today's business and also adaptable for coping with tomorrow's changing demand. Just as being ambidextrous means being able to use both the left and right hand equally, organizational ambidexterity requires the organizations to use both exploration and exploitation techniques to be successful.
Origin and development
Organizational ambidexterity was defined as an organization's ability to be aligned and efficient in its management of today's business demands as well as being adaptive to changes in the environment at the same time.Duncan, R. (1976). The ambidextrous organization: Designing dual structures for innovation. Killman, R. H., L. R. Pondy, and D. Sleven (eds.) The Management of Organization. New York: North Holland. 167-188. This term of organizational ambidexterity was first used by Duncan, however, it was MarchMarch, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2, 71-87. that had been credited for developing and generating greater interest in this concept, especially in the late 20th and early 21st century. Ambidexterity in an organization is achieved by balancing exploration and exploitation, which allows the organization to be creative and adaptable, while also continuing to rely on more traditional, proven methods of business. Exploration includes things such as search, variation, risk taking, experimentation, flexibility, discovery or innovation, whereas exploitation includes such things as refinement, choice, production, efficiency, selection, implementation, and execution. Companies that focus only on exploration face the risk of wasting resources on ideas that may not prove useful or never be developed. On the other hand, companies that focus only on exploitation may accept status quo performance and products and fail to reach optimal levels of success.
Organizational ambidexterity is defined broadly, and several other terms are also highly related or similar to the construct of ambidextrous organization, including organizational learning, technological innovation, organizational adaptation, strategic management, and organizational design. Things such as reconciling exploitation and exploration, the simultaneity of induced and autonomous strategy processes, synchronizing incremental and discontinuous innovation, and balancing search and stability also tend to refer to the same underlying construct as ambidextrous organization.Raisch, S., & Birkinshaw, J. (2008). Organizational ambidexterity: Antecedents, outcomes, and moderators. Journal of Management, 34, 375-409.
There are studies on how structural and behavioral mechanisms affect organizational ambidexterity and studies on how ambidextrous organizational designs affect organizational ambidexterity. Whereas earlier studies on structural and behavioral mechanisms regarded the trade-offs between exploration and exploitation to be insurmountable, more recent research has paid attention to a range of organizational solutions to engender the existence of ambidexterity. One recent hot research topic in this area focused on the leadership characteristics that enable organizations to manage the contradictions that they face and achieve ambidexterity,Beckman, C. M. (2006). The influence of founding team company affiliations on firm behavior. Academy of Management Journal, 49, 741-758.Lubatkin, M. H., Simsek, Z., Ling, Y., & Veiga, J. F. (2006). Ambidexterity and performance in small- to medium-sized firms: The pivotal role of top management team behavioral integration. Journal of Management, 32, 646-672.Smith, W. K., & Tushman, M. L. (2005). Managing strategic contradictions: A top management model for managing innovation streams. Organization Science, 16, 522-536. which is the origin of the concept ‘ambidextrous leadership’. Several antecedents, outcomes of organizational ambidexterity as well as related moderators have also been identified in the studies on structural and behavioral mechanisms.
Ambidextrous organizational designs and organizational ambidexterity
The studies on "ambidextrous organizations" take the organization as the unit of analysis and ambidextrous organizing is conceptualized as the simultaneous pursuit and combination of incremental and discontinuous innovation. "Ambidextrous organizations" are needed if the failure to balance exploitation and exploration is to be overcome: "the ability to pursue simultaneously both incremental and discontinuous innovation results from hosting multiple contradictory structures, processes, and cultures".
It has been empirically found that competence exploitation is negatively related to radical innovation performance whereas the effect for competence exploration is positive; competence exploration will be more valuable to the firm when it is matched with lower levels of competence exploitation, and vice versa. It has been theorized that the "ambidextrous organization" does not solve the tension between alignment and adaptability but allows for coping with the tension between different types of alignment in order to produce incremental and discontinuous innovation. "Ambidextrous organizations" do not alternate between exploration and exploitation, but they do both simultaneously.
There's work that empirically investigates the processes of ambidextrous organizing by analyzing the implementation of the "ambidextrous organizations" concept in order to study whether there is evidence on how companies applying the concepts (suggested by "ambidextrous organizations" proponents) actually manage the processes of exploitation and exploration.
Structural and behavioral mechanisms that lead to organizational ambidexterity
Organizational ambidexterity can be considered primarily from two angles. One is architectural or structural ambidexterity, which uses dual organizational structures and strategies to differentiate efforts towards exploitation and exploration.Adler, P., Goldoftas, B., & Levine, D. (1999). Flexibility versus efficiency? A case study of model changeovers in the Toyota production system. Organization Science, 10, 43-68.McDonough, E. F., & Leifer, R. (1983). Using simultaneous structures to cope with uncertainty. Academy of Management Journal, 26, 727-735.Tushman, M. L., & O’Reilly, C. A. (1996). Ambidextrous organizations: Managing evolutionary and revolutionary change. California Management Review, 38, 8-30. Structural ambidexterity includes dual parts, with one part focusing on exploitation and the other focusing on exploration. It's also known as the spatial separation of the dual strategies concepts outlined above. The other approach is contextual ambidexterity, which uses behavioral and social means to integrate exploitation and exploration at the organizational unit level.Gibson, C. B., & Birkinshaw, J. (2004). The antecedents, consequences and mediating role of organizational ambidexterity. Academy of Management Journal, 47, 209-226.McCarthy, I.P., & Gordon, B.R. (2011). Achieving Contextual Ambidexterity in R&D Organizations: A Management Control System Approach. R&D Management, 41, 240-258. Contextual ambidexterity is a balanced type that takes a mid-level position between exploitation and exploration, also known as parallel structures or hybrid strategies.
Although both angles are related to the theme of organizational ambidexterity, they strongly differ in the way how they are configured. There has always been a debate of which of the two different approaches is right. The dual type allows both discrete orientations and fit across dimensions at the unit level but creates a misfit between organizational units. Some researchers argued that inconsistent structures may lead to low performance.Doty, H. D., Glick, W. H., & Huber, G. P. (1993). Fit, equifinality, and organizational effectiveness: A test of two configurational theories. Academy of Management Journal, 36, 1196–1250.Miller, D., & Friesen, P. H. (1986). Generic strategies and performance: An empirical examination with American data Part I: Testing Porter. Organization Studies, 7, 37-55. There are also some researchers trying to investigate the external and internal contingencies under which different configurations can be found. One factor would be the speed and type of technological change that organizations confront. On the other hand, the balanced type (i.e. contextual ambidexterity) is consistent with the systems approach of fit across multiple dimensions,Drazin, R., & Van de Ven, A. H. (1985). Alternative forms of fit in contingency theory. Administrative Science Quarterly, 30, 514-539. but contradicts the opinion that organizational choice is discrete.Meyer, A. D., Tsui, A. S., & Hinings, C. R. (1993). Configurational approaches to organizational analysis. Academy of Management Journal, 36, 1175–1195.Nickerson, J. A., & Zenger, T. R. (2002). Being efficiently fickle: A dynamic theory of organizational choice. Organization Science, 13, 547-566. In an environment where changes are slow, there will be sufficient time to react to the radical changes by constructing dual structures and strategies. However, in a high-competitive environment, balanced structures may be better prepared to deal with the constant need for alignment. In future studies, the different organizational ambidexterity configurations can be compared to find a better solution for dealing with the exploitation and exploration paradox.
Antecedents of organizational ambidexterity
Ambidexterity is often considered a capacity or skill and can therefore be facilitated by managers such as CEOs and top executives.Tang, S., Nadkarni, S., Wei, L., & Zhang, S. X. (2021). Balancing the yin and yang: TMT gender diversity, psychological safety, and firm ambidextrous strategic orientation in Chinese high-tech SMEs. Academy of Management Journal, 64(5), 1578-1604.Cantarello, S., Martini, A., & Nosella, A. (2012). A multi-level model for organizational ambidexterity in the search phase of the innovation process. Creativity and Innovation Management, 21, 28-48. From the structural ambidexterity's view, organizations can solve the paradox by temporarily cycling through periods of exploitation and periods of exploration.Brown, S. L., & Eisenhardt, K. (1998). Competing on the edge: Strategy as structured chaos. Cambridge, Massachusetts: Harvard Business School Press.Siggelkow, N., & Levinthal, D. A. (2003). Temporarily divide to conquer: Centralized, decentralized, and reintegrated organizational approaches to exploration and adaptation. Organization Science, 14, 650-669.Venkatraman, N., Lee, C. H., & Iyer, B. (2007). Strategic ambidexterity and sales growth: A longitudinal test in the software sector. Unpublished Manuscript. From the other point of view (contextual ambidexterity), firms ought to address exploitation and exploration simultaneously and internally to achieve the goal ambidexterity. Contextual ambidexterity is more difficult to achieve than structural ambidexterity because managing two inconsistent alignments within an organization simultaneously is far more complex than managing one consistent strategy after another.Gupta, A. K., Smith, K. G., & Shalley, C. E. (2006). The interplay between exploration and exploitation. Academy of Management Journal, 4, 693-706. Thus most studies on how to build ambidextrous organizations in literature focused on contextual ambidexterity rather than structural ambidexterity.