04 Aug 2011Working Paper Summaries

A Dynamic Perspective on Ambidexterity: Structural Differentiation and Boundary Activities

by Sebastian Raisch and Michael L. Tushman

Firms renew themselves by exploring new business models even as they exploit existing ones. But to conduct "explore and exploit" simultaneously, organizations must reconcile associated internal tensions and conflicting demands. Sebastian Raisch and Michael L. Tushman explore the shifting nature of differentiation and integration in organizations attempting to explore and exploit. Key concepts include:

Whereas exploration is related to flexibility, decentralization, and loose cultures, exploitation is associated with efficiency, centralization, and tight cultures.
Organizational ambidexterity is a firm's ability to simultaneously exploit and explore with equal dexterity. The paper updates the organizational ambidexterity concept by considering the underexplored roles of time, paradox, and locus.
Based on a longitudinal data set of six business initiatives, the researchers find that organizations engage in a dynamic process of managing antagonistic boundary activities in order to explore and exploit. The locus of integration shifts from the corporate team to the business unit level when the new initiative gains economic and cognitive legitimacy.

Author Abstract

This paper explores the shifting nature of differentiation and integration in organizations attempting to explore and exploit. In a longitudinal study of six new business initiatives, we find that firms engage in a dynamic process of managing contradictory boundary activities. Boundaries between differentiated units are reinforced to enable exploitation and exploration, while corporate boundary spanners integrate these processes. The locus of integration shifts from the corporate team to lower organizational levels when the new business initiative reaches economic and cognitive legitimacy. We use these insights to revise the organizational ambidexterity concept, considering the underexplored roles of time, paradox, and locus.