Exploration and exploitation within supply networks

Abstract

PurposeThe purpose of this paper is to introduce and define the concept of purchasing ambidexterity in terms of two dimensions: balance dimension and combined dimension. The study proceeds to empirically examine the multiple performance effects generated for the buying firm and its key suppliers.Design/methodology/approachAmbidexterity theory informs the authors’ conceptual model. To test the hypotheses, the authors collected survey data from 95 purchasing functions of medium and large European firms and applied various estimation techniques.FindingsThis research indicates that ambidexterity substantially varies across purchasing functions. Further, it discovers that a purchasing function’s ability to advance the combined magnitude of exploratory and exploitative activities represents an essential determinant of supplier efficiency, supplier product innovation, and buyer financial performance. Notably, this research also discovers that balancing the magnitudes of exploratory and exploitative activities on a relative basis produces negative effects on the innovativeness of the supply network.Originality/valueAlthough ambidexterity theory has been applied to supply chain management, limited attention has been dedicated to purchasing ambidexterity. This gap led us to study how purchasing impacts the competitiveness of the buying firm and of its supply network by balancing and combining exploratory and exploitative activities. This research is the first to advance the notion of purchasing ambidexterity, unpack its underlying dimensions, and examine its multiple performance implications. Such a conceptual and empirical development presents new perspectives on how purchasing can help the buying firm and its supply network to strengthen their competitiveness.