Abstract
The purpose of this study is to examine the impacts of ambidexterity of exploration/exploitation on long-term performance and the moderating effects of slack resources. The methodology adopted is panel data analysis of a sample dataset of 125 high technology firms in China. The finding of this study shows that a moderating role of organizational slack between ambidexterity and long-term performance is strongly supported. The research and practical implications of this paper are: (1) Exploration and exploitation can be mutually enhancing instead of being fundamentally contradictory; (2) Slack resources moderate the relationship between ambidexterity and performance. The originality and value of the paper is that it is one of the earliest studies that empirically examine the moderating effects of slack resources on ambidexterity-performance relationship.
Highlights
Exploration and exploitation are two basic forms of organizational learning and innovation strategy when competing for scarce resources within firms (e.g. March 1991; Tushman, O’Reilly 1996; He, Wong 2004; O’Reilly, Tushman 2013)
Some empirical studies found that the balance between exploratory strategy and exploitative strategy is positively related to firm performance (e.g. Geerts et al 2010; He, Wong 2004; Lubatkin et al 2006)
Ghemawat and Ricart Costa (1993) found that managers’ attempts to balance exploratory activities and exploitative activities resulted in extensive economic costs causing damage to firm performance
Summary
Exploration and exploitation are two basic forms of organizational learning and innovation strategy when competing for scarce resources within firms (e.g. March 1991; Tushman, O’Reilly 1996; He, Wong 2004; O’Reilly, Tushman 2013). Exploitation emphasizes the need for efficiency, Journal of Business Economics and Management, 2016, 17(5): 734–748 customer-responsiveness and reliable processes; while exploration anticipates changing requirements and innovation (Benner, Tushman 2003; He, Wong 2004). Studies such as March (1991) argued that exploration and exploitation should be viewed as two ends of a single continuum, which implies conflicting resources and organizational demands on the firm. The mechanism of how ambidexterity of exploration/exploitation affects firm performance seems much more complex and may be determined by a range of internal and external factors (Andriopoulos, Lewis 2009; Junni et al 2013; Raisch et al 2009)
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