Hybrid Ambidexterity: How the Environment Shapes Incumbents’ Use of Structural and Contextual Approaches

Abstract

According to the literature on ambidexterity, organizations can use structural or contextual approaches to simultaneously explore novel opportunities and exploit existing ones. So far, however, we know very little about what induces organizations to focus on structural versus contextual ambidexterity, or how they combine the two approaches to maximize organizational learning. To shed more light on these questions, we investigate how the environment shapes a firm’s use of structural and contextual ambidexterity. Drawing on a comparative, longitudinal case study of the four largest electric utility companies in Germany, we show that firms focused on structural ambidexterity whenever they perceived emerging opportunities in the environment as requiring organizational culture and capabilities fundamentally different from their own. Contextual ambidexterity, on the other hand, became particularly important when opportunities in the environment were both numerous and uncertain, requiring the organization to leverage the distributed attention and expertise of its frontline employees. We show that environments characterized by opportunities that are numerous/uncertain and require novel culture and capabilities lead organizations to invest in initiatives that combine elements of both structural and contextual ambidexterity—an approach we label hybrid ambidexterity. Our theory framework synthesizes and complements existing work that has started to investigate the antecedents of structural versus contextual ambidexterity. We challenge the prevailing understanding of contextual and structural ambidexterity as dichotomous categories and reconceptualize them as two ends of a continuum. In addition, we provide initial evidence that firms’ ambidexterity approaches are influenced by managers’ perceptions of capabilities and opportunities.