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.
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.
[1] This term of organizational ambidexterity was first used by Duncan,[1] however, it was March[2] that had been credited for developing and generating greater interest in this concept, especially in the late 20th and early 21st century.
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.
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.
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.
[7][8][9] "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" (Tushman and O'Reilly, 1996: page 24).
[17][18] Contextual ambidexterity is a balanced type that takes a mid-level position between exploitation and exploration, also known as parallel structures or hybrid strategies.
On the other hand, the balanced type (i.e. contextual ambidexterity) is consistent with the systems approach of fit across multiple dimensions,[21][22] but contradicts the opinion that organizational choice is discrete.
[3] In future studies, the different organizational ambidexterity configurations can be compared to find a better solution for dealing with the exploitation and exploration paradox.
The new element need not be entirely novel or unfamiliar to members of the unit, but it must involve some discernible change or challenge to the status quo (West & Farr, 1990).
[17] Similarly, another study of 34 high-tech organizations showed that their ability to simultaneously execute exploration and exploitation was associated with higher performance (Chandrasekaran et al. 2012).
Although they were not directly testing an ambidextrous orientation, results indicated a positive performance effect of simultaneously pursuing exploitative and exploratory innovation under high dynamic and competitive environments.
The effects of exploitative, explorative and balanced corporate alignment activities on performance were compared under varying environmental conditions (Raisch & Hotz, 2008).
Market orientation was defined as "the capability to generate, disseminate, and respond to intelligence pertaining to current and future customers" (Kohli & Jaworski, 1990).
This idea was supported by empirical evidence that small firms may benefit more from a one-sided orientation than from mixed strategies (Ebben & Johnson, 2005).
For example, spatial separation was suggested as an appropriate solution for environments characterized by long periods of stability, disrupted by rare events of discontinuous change.
[16] Research also found that firms operating in dynamic competitive environments rely on contextual ambidexterity rather than developing spatially separated units (Jansen, van den Bosch, & Volberda, 2005).
The functional definition of ambidexterity was originally used to describe organizations, but recently this concept was extended to multiple organizational levels, including individuals, teams, and leaders.
Noting that ambidextrous organizations require significant amounts of mobilization, coordination, and integration activities to maintain both exploitation and exploration, informal and social integration of the senior team as well as the cross-functional interfaces of the formal organization contribute to the success of organizational ambidexterity significantly (Jansen, Tempelaar, van den Bosch, & Volberda, 2009).
The concept of ambidexterity was first formally introduced into the leadership area by the Rosing, Frese and Bausch (2011) paper, holding the idea that leaders should be able to lead their team to match the complexity and the pace of innovation (Ancona, Goodman, Lawrence, & Tushman, 2001).
A possible solution for big companies is to adopt a venture capital model – funding exploratory expeditions but otherwise not interfering too much with their operations.
For example, in a study of biotechnology firms it is shown how an organization's management control system can be adjusted periodically to achieve this changing focus on exploitation and exploration.
[2][35] An empirical study of ambidexterity in organizations (He & Wong, 2004) further cautions that very low levels of both exploration and exploitation are not sufficient to contribute to superior firm performance.