Ambidexterity as a dynamic capability: Resolving the innovator's dilemma

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Abstract

How do organizations survive in the face of change? Underlying this question is a rich debate about whether organizations can adapt—and if so how. One perspective, organizational ecology, presents evidence suggesting that most organizations are largely inert and ultimately fail. A second perspective argues that some firms do learn and adapt to shifting environmental contexts. Recently, this latter view has coalesced around two themes. The first, based on research in strategy suggests that dynamic capabilities, the ability of a firm to reconfigure assets and existing capabilities, explains long-term competitive advantage. The second, based on organizational design, argues that ambidexterity, the ability of a firm to simultaneously explore and exploit, enables a firm to adapt over time. In this paper, we review and integrate these comparatively new research streams and identify a set of propositions that suggest how ambidexterity acts as a dynamic capability. We suggest that efficiency and innovation need not be strategic tradeoffs and highlight the substantive role of senior teams in building dynamic capabilities.

Section snippets

Dynamic capabilities, organizational ambidexterity and competitive advantage

As some firms, albeit not the majority, do survive in the face of change, the question is how they manage to adapt—and why are some firms able to accomplish this while others cannot? Central to the adaptive process are the notions of a firm's ability to exploit existing assets and positions in a profit producing way and simultaneously to explore new technologies and markets; to configure and reconfigure organizational resources to capture existing as well as new opportunities (Helfat &

Exploration, exploitation, and organizational ambidexterity: dynamic capabilities in practice

Based largely on March's (1991) seminal paper on exploration and exploitation, there has been a growing interest in research on if, when, and how organizations adapt to change. For example, Christensen (1997) described how disruptive technologies undermine an established firm's competitive position by offering a cheaper and often less sophisticated alternative that is good enough for most customers. In spite of the deadly consequences of disruptive technology for successful incumbents,

Ambidexterity in action

Conceptually, dynamic capabilities are a useful way to understand inter-firm performance differentials (Ethiraj et al., 2005), but what specifically would these capabilities look like and how would they operate to help a firm sense, seize, and reconfigure organizational assets? Eisenhardt and Martin (2000) note that unless made specific, dynamic capabilities remain vague (e.g., “routines to learn routines”) and add little other than terminology to our understanding of organizational adaptation.

Future directions

The fundamental logic underlying evolutionary adaptation is variation–selection–retention. Organizational ecologists have used this to explain mortality rates among populations of organizations (Hannan & Carroll, 1992) and to argue against organizational adaptation. Yet this same variation–selection–retention logic underlies the idea of exploration–exploitation and organizational ambidexterity. As a dynamic capability, ambidexterity helps organizations sense and seize new opportunities and to

Conclusion

In his influential book, The Innovator's Dilemma, Christensen (1997) described the challenges facing organizations attempting to adapt to changes in technologies, markets, competition and regulatory environments. He builds a compelling case for the need for differential organizational alignments to pursue exploitation and exploration. Yet, in the end, he concludes that it is not possible to resolve the “innovator's dilemma” and argues that, confronted with a disruptive change, managers cannot

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