Jack of all trades: cross-functional CEOs and organizational ambidexterity

Abstract

Relying on the insights from cognitive scientists we propose that analogical reasoning enables CEOs to draw on direct or vicarious experience from settings with similar but different features when they try to reduce the trade-off that occurs when firms grow exploration and exploitation activities. Based on a partly hand-collected dataset from the upstream oil industry we are able to show that CEOs with cross-functional expertise facilitate ambidexterity. We theorize that cross-functional expertise helps them to better differentiate and integrate competing demands, which is central to achieving ambidexterity. Further we are able to show that that this ability of cross-functional CEOs is subject to managerial discretion. More specifically we concentrate on a firm’s technological capabilities in a technology focused industry, thereby extending previous insights from an upper echelon perspective that the ability of managers to shape outcomes is limited if a firm does not have sufficient resources.