1) What is the definition that the authors use for the concept of strategic ambidexterity?
2) What do the authors have to say about organizational capabilities and exploitive strategies?
3) What do the authors have to say about organizational capabilities and exploratory strategies?
4) What do the authors have to say about organizational capabilities and strategic ambidexterity strategies?
5) What do the authors have to say about organizational capacity to change and strategic ambidexterity?
Please read article below by William Q. Judge, "Organizational capacity for change and strategic ambidexterity Flying the plane while rewiring it"
Please help. Thank you very much.
Today's strategic leaders face a daunting challenge.Onone hand, they face theimmediate
pressures of delivering value to increasingly sophisticated and globally diverse
customers while accelerating the return on these efforts for financial stakeholders.On the
other hand, strategic leaders must identify and prepare for disruptive technologies and
emerging market opportunities over the long-term. Put simply, overall organizational
effectiveness requires firms to be efficiently responsive to current markets while
effectively preparing for new markets on the horizon (Naman and Slevin, 1993).
Unfortunately, discussion around these two strategic orientations often focuses on
whether firms ought to pursue the strategic goals of market exploitation or market exploration in a given context. Many assume they are mutually exclusive. This is
perhaps due to the fact that exploitation and exploration strategies are typically
associated with dramatically different organizational structures, cultures and
systems (Kyriakopoulos and Moorman, 2004). Similarly, firms that pursue both
exploitation and exploration are often seen as lacking good external
organization-environment or internal organizational fit (Lawrence and Lorsch,
1967). Despite the longstanding argument that the key functions of business involves
satisfying existing customers while seeking innovative new products and markets, a
key question confronting many organizations today is how an organization can excel
at both, simultaneously. Reconciling strategic tensions
Recently, Aulakh and Sarkar (2005, p. 4) advanced the notion of "strategic
ambidexterity" (SA) which they define as "a firm's ability to combine exploration and
exploitation strategies across product, market, and resource domains". In their
empirical study of international expansion strategies of South American
manufacturing firms, these authors found that certain combinations of exploration
and exploitation strategies were associated with superior firm performance. To our
knowledge, this is the first conceptual and empirical solution to the dilemma posed by
the exploitation and exploration imperatives.
While this development is encouraging, several important questions remain. First,
no known studies have explored potential antecedents of strategic ambidexterity so
little is known about how it might be created. Also, virtually nothing is known about
what kind of contextual factors influence strategic ambidexterity. Finally, the SA
concept is being formally and informally explored in the organizational theory,
strategic management, and marketing literatures with no cross fertilization of ideas.
Clearly, some integration of these literatures is needed to avoid redundancy and
promote cross fertilization of ideas. Consequently, this research seeks to fill this void in
the literature by:
-. elaborating on the concept of SA;
. identifying a potential antecedent and moderators of SA; and
. integrating disparate literatures into a coherent whole. Following Aulakh and Sarkar (2005), we conceptualize SA as the ability to
simultaneously explore and effectively pursue new market opportunities while
efficiently exploiting existing markets. The concept of SA builds on an extensive and
growing marketing literature, which is increasingly interested in understanding the
balance between exploitive and exploratory strategies (Berthon et al., 2004; Bhuian
et al., 2005). In addition, it builds on literature within organizational theory and
strategic management (Gibson and Birkinshaw, 2004; March, 1991; Miller, 1992).
Together, these literatures offer a comprehensive perspective of SA.
Organizational capabilities and strategic orientation
One of the oldest dictums of strategic management is that organizational strategy and
structure should be aligned (Andrews, 1971). However, the strategic landscape now appears to require the pursuit of multiple strategic orientations so that there is a
"loose-tight" fit between strategy and structure (Arogyaswamy and Byles, 1987). While
organizational structure is clearly important, we think that the more current
organizational capabilities research is more likely to reconcile these divergent strategic
Organizational capabilities and exploitive strategies
The notion that customers should occupy a central place in corporate strategy dates
back to Drucker's (1954) discussion on obtaining and retaining customers as the central
purpose of business. The marketing discipline examines these ideas and their many
facets through the core concept of "market orientation" (e.g., Narver and Slater, 1990).
In this paper, for the purposes of integrating discussion of SA from several literature
bases, we refer to market orientation as an "exploitive" strategy. An exploitive strategy
can be conceptualized as:
. a unifying frame of reference that emphasizes serving the customer through
understanding their needs and creating value for them (Slater and Narver, 1999);
. a set of organization-wide processes involving the generation, dissemination, and
responsiveness to market intelligence (Jaworski and Kohli, 1993); and
. an organizational capability that enables the firm to compete through
understanding market requirements and forging relationships with customers,
channel members, and suppliers (Day, 1994). Several studies have identified marketing-related capabilities as keys to competitive
advantage. Capabilities previously identified include: customer service, product
branding, new product development, relational assets (e.g. customers, networks,
supply-chain), and intellectual assets (e.g., Ray et al., 2004). A key idea throughout this
research is that firms with exploitive strategies seek a tight alignment with customers
and expect this alignment to lead to valuable and rare competitive advantages.
However, some marketing and strategy scholars argue that there are considerable
strategic risks to an exclusive focus on market exploitation. Evidence shows a firm's
over-emphasis on this strategic orientation can lead to an unhealthy, escalating
commitment, described by Hamel and Prahalad (1994) as the "tyranny of the served
market". Their argument is that firms can be rightfully preoccupied with exploiting
core capabilities to serve customers profitably. Yet, in the process, they can get so
focused on tightly aligning with served markets that its core capabilities become "core
rigidities", that limit visibility of the market's periphery, where major opportunities
and threats emerge (Leonard-Barton, 1992).
Similarly, some evidence shows the influence of current customers can adversely
shape the trajectory of competence renewal (Danneels, 2002), lead to myopic R&D
efforts (Frosch, 1996), or possibly cause firms to get stuck in a loop of developing
incremental new products to serve existing customer needs (Christensen and Bower,
1996). Overall, the literature suggests that an exploitive strategy often leads to superior
value delivery and performance in the short-term. However, recent evidence regarding
an over-emphasis on served markets suggests its viability for long-term performance is questionable. This research suggests that firms need capabilities to do more than just
exploit existing markets.
Organizational capabilities and exploratory strategies
An exploratory strategy takes a different approach to creating value whereby
managers devote their energy to innovation through experimentation, taking creative
risks, and being proactive in identifying and serving new markets (Covin and Slevin,
1989). Discussion of this strategic orientation usually focuses on issues such as
developing innovative products, discovering new technologies, and finding untapped
markets. Unlike an exploitation strategy, an exploratory strategy advocates
maintaining loose linkages with current customers and pursuing market
adaptability. The key idea is that by maintaining loose linkages, firms can remain
flexible and adapt to a dynamic environment, as well as seize opportunities or avoid
distant threats that lie on the market's periphery (Danneels, 2003).
Despite the apparent long-term benefits of an exploratory strategy, a significant
obstacle to innovation is that firms are often unable to effectively financially
appropriate the value they create. In these cases, firms fail to erect isolating
mechanisms, and the value created through innovation is claimed by customers and
competitors before any profit is realized (Ghemawat, 1991). Similarly, firms can get
caught in a cycle of cannibalizing their previous products with new product introductions. Also, having loose linkages with customers is inherently less efficient
than an exploitive strategy, and recent research suggests that financial markets reward
firms for shifting away from long-term value creation to short-term value
appropriation (Mizik and Jacobson, 2003).
Finally, firms that overemphasize the technology aspects of an exploratory strategy
to the exclusion of market feedback can fall into a "product orientation", whereby its
products and services fail to match up with the actual benefits sought in the
marketplace (Kotler and Armstrong, 1996). So, while an exploratory strategy seems
critical for firms hoping to survive long-term, strategic leaders enacting this strategy
may struggle to compete today given the inefficiencies of this approach and pressure
for short-term results from financial institutions. Organizational capabilities and strategic ambidexterity
Within the strategic management and organizational theory literatures, significant
attention has been given to managing the trade-offs of conflicting demands (March,
1991; March and Simon, 1958). For example, Gibson and Birkinshaw (2004) explored an
overarching tension between the goals of organizational alignment and organizational
adaptability, and theorized that successful organizations are ambidextrous to the
extent they can effectively reconcile the two. Others characterize this tension as a
balance between incremental and radical organizational change and reason that the
tension lies in the fact that a firm's productivity gains can inhibit its flexibility to
innovate (Benner and Tushman, 2003).
Adler et al. (1999) explored the trade-offs between organizational efficiency and
effectiveness through an in-depth case study of the Toyota Production System within
the NUMMI automobile manufacturing facility in California. They discovered that the
keys to successfully balancing these two imperatives are extensive investments in training, the continuous enhancement of organizational trust, leadership and
management skill, and an innovative culture that contains accountability checks.
Mayrhofer (1997) argued that that best way to be both efficient and effective is by
maintaining a dynamic balance of organizational polarities - having structured and
unstructured activities; seeking diversity and coherence; and emphasizing the presence
of tight fits while allowing for organizational slack when necessary. We think that
Mayrhofer is pointing out something important that has been neglected in the
literature, and we build upon this insight in the following section. Organizational capacity for change and strategic ambidexterity
The central tenet behind the resource based view is that a firm's bundle of resources
can yield one or more capabilities to serve as the driving force behind competitive
advantage(s) and superior performance (Wernerfelt, 1984). Current resource-based
research reveals that some of the most valuable resources are dynamic capabilities.
Dynamic capabilities foster congruence between the firm's strategy and the changing
business environment and enable a firm to alter its capability base through the:
integration, adaptation, reconfiguration, gaining, and shedding of resources to
generate new value-creating strategies (Teece et al., 1997). More pertinent to this
discussion, dynamic capabilities have been linked to discussions of balancing strategic
exploitation and exploration (Benner and Tushman, 2003). For example, Brown and
Eisenhardt (1998) propose that dynamic capabilities can enable a firm to rhythmically
switch between exploratory and exploitive organizational strategies. However, we are
interested in discovering what organizational capability allows simultaneous pursuit
of both strategic orientations. Organizational capacity for change (OCC) - precursor to strategic ambidexterity?
OCC has been defined as "a dynamic organizational capability that allows the
enterprise to adapt old capabilities to new threats and opportunities as well as create
new capabilities" (Judge and Elenkov, 2005, p. 893). OCC is a new and relatively
comprehensive organizational construct emerging from the resource based perspective
that addresses many organizational issues confronting strategic leaders today.
OCC is related to several other organizational change constructs, but it is distinct in
its overall scope and implications. For example, it is similar to "readiness for change"
(Weeks et al., 2004) in that it proposes key dimensions for change preparation and
assists in diagnosing a change situation. However, it goes beyond an individual level of
analysis to describe an organizational unit's collective capacity for change. Also, the
OCC construct is comparable to "organizational adaptive capacity" (Staber and Sydow,
2002) and "capacity for change" (Meyer and Stensaker, 2006), however, OCC has been
operationalized and tested empirically.
OCC integrates eight key dimensions of organizational change key into four
(1) a leader and follower polarity;
(2) an innovation and accountability polarity;
(3) a unitary and distributed leadership polarity; and
(4) a thinking and action polarity.
Opposing poles along OCC dimensions represent corresponding concepts that serve as
the "other side of the coin". For example, an accountable culture complements one that
values innovation. That is, each dimension calls for a complementary dimension,
without which it can not be effective in supporting organizational learning and change
Given the nascent nature of OCC research, there is limited evidence about how these
dimensions interact and the resulting outcomes and interactions that occur when
various levels are achieved. However, based on their use in the literature, it is theorized
here that in reconciling internal organizational polarities that the polarity of
exploitation and exploration will be reconciled as well.
As discussed previously, strategic leaders in the 21st century are exhorted to
simultaneously exploit market opportunities while exploring new market
opportunities. This complex but undeniable challenge requires the ability to manage
polarities within the organization and across the organization-environment interface
(Johnson, 1992). The following discussion investigates how these polarities might be
managed and what some moderating influences might be.
Organizational capacity for change and strategic ambidexterity
As previously discussed, OCC is a dynamic organizational capability that may allow
firms to both explore and exploit market opportunities. While sensing the need to
change is undeniably the first step, recent authors have highlighted the dilemma that
simply knowing "what to do" can fall painfully short of actually following through and
experiencing success (Pfeffer and Sutton, 2000). Thus, actually implementing change
efforts to reconfigure and renew exploitive and exploratory strategies is likely the
biggest hurdle in a firm's pursuit of strategic ambidexterity. In fact, this stage is likely
where most change efforts fall short and firms end up as using the more common
"either/or" approach as opposed to the "genius of the and" approach (Collins and
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