The Routinization of Paradox Management: Managing Recurrent Tensions in Dual Business Models

Abstract

The objective of our study is to uncover the micro-processes of managing repeated episodes of tensions occurrence between product and service business model. By contrasting 10 national subsidiaries, we find that whereas the unsuccessful subsidiaries pursue a bargaining process to tension management that preserves the dualism between the two business models, the successful subsidiaries upgrade from an initial synergistic process to a subsequent routinized process of tension management, which allows them to move towards a duality. Rather than bargaining for compromises between diverging interests, the successful subsidiaries engaged in promoting common overarching goals, resolving the conflict of interest, and promoting the identification of synergies. As trust in the success of the synergistic process grows, organizational members begin to learn how to resolve conflicts without their leader’s active mediation. They jointly generate and implement routines for the proactive identification of latent tensions, which enables them to identify further synergies, reinforce the mutual trust, and increasingly maintain duality between the dual business models. Our main contribution to the business model literature is a process perspective of managing dual business model tensions, which (a) shifts the literature's focus from the prior solution perspective to a process perspective; (b) replaces the one-off solutions by longer-term evolutionary processes including the emergence of routines to address recurrent tensions; and (c) shifts the focus from formal structural (and reactive) solutions to managerial (and proactive) actions required to address business model tensions. This routinization of paradox management can lead to less salient tensions and long periods of duality.