Author Identifier

Agung Fahrudi

https://orcid.org/0000-0002-1212-0689

Date of Award

2018

Document Type

Thesis

Publisher

Edith Cowan University

Degree Name

Doctor of Philosophy

School

School of Business and Law

First Supervisor

Dr Denise Gengatharen

Second Supervisor

Dr Yuliani Suseno

Abstract

Organizational ambidexterity is about developing necessary organizational capabilities to compete in new and changing markets that enable organizations to survive in the face of dynamic external environments. It is about finding a balance between exploring new knowledge and exploiting existing knowledge or capabilities. The research on ambidexterity has offered different mechanisms for pursuing ambidexterity, and has highlighted the pivotal role of organizations’ senior teams and leadership behaviors in balancing the conflicting demands of exploration and exploitation. Research has also shown that no universal best practices should be sought to resolve the dilemma but instead leaders need to understand the situational context to enable them to develop the capability to effectively adjust the internal context of their organizations to the demands of the dynamic external environment or context. However, exactly how these leaders actually manage the interfaces of exploration and exploitation and the inevitable conflicts that arise from these two conflicting activities in practice is less clear. This study tries to address this gap by using an organizational learning lens to investigate what leaders actually do to achieve ambidexterity.

Research has shown that in terms of responding to the effects of the external context or environment, leaders need to pursue both cost-leadership (exploitation) and differentiation (exploration) strategies simultaneously to enable their organizations to compete competitively; they need to avoid “a stuck in the middle strategy” where they fail to successfully pursue either strategy. The aims of this thesis are thus twofold. The first aim is to examine the impact of external environments or contexts (i.e., competition, customer demands, development of technology, strategic partners, and government) on exploratory and exploitative innovation that organizations pursue. The second aim of this thesis, using Crossan et al.’s (1999) 4I framework, is to investigate how leaders facilitate organizational learning ambidexterity for the innovation they are pursuing. Leaders need to provide internal contextual support (i.e. strategy, structure, organizational culture, and resources) to facilitate learning in each of 4I phases in order to pursue innovation. Exploration of new knowledge (idea generation) is often associated with the intuition and interpretation phases of the 4I organizational learning process. Conversely, exploitation of existing knowledge (implementation) is closely linked to the process of institutionalization. One of the most challenging phases of the 4I framework is in the integrating phase, which requires trade-offs, particularly in resource allocation with individuals or groups often competing for scarce resources to explore and exploit.

A qualitative approach was adopted to address the research aims of this study. Case studies of four large Australian service organizations were undertaken in an exploratory analysis of the complex phenomenon of ambidexterity for innovation to account for contextual differences. The reason for choosing large service organizations is that service organizations need to continuously explore new approaches to provide better service to their customers, but being large, these organizations often find it difficult to pursue innovation due to the complexity of their structures and bureaucracies. The service organizations studied are a regional private bank, a public university, a police academy, and a private hospital (having public-private partnership arrangements). These organizations had or are engaged in innovation. For the purpose of this study, innovation does not refer only to new services or practices in the industry but can also refer to something new to the organization being observed. Semi-structured interviews were conducted with 29 organizational members from the four organizations, mostly from the top and middle managerial levels due to the significant importance of the leadership role in ambidextrous organizations. The interviews were complemented by the use of documentary sources, such as the organizations’ official websites, annual reports, and press releases. Interview data was classified thematically based on the predetermined framework of factors in the external and internal contexts and compared to the corresponding documentary sources to build interpretation for the within and cross-case analyses. The semi-structured interviews also allowed for any new or emerging themes to be considered.

Findings emerging from this research indicate that a resource-constrained environment has compelled the four service organizations to achieve increased efficiency, which is often associated with process innovation or exploitation. This was a common theme across the organizations despite their different contexts. Interestingly, for the researched organizations, exploration in a resource-constrained environment can also relate to significant or radical process improvements to increase efficiency and therefore exploration is not simply about developing new products or services. For example, the researched organizations strived to achieve higher efficiency by pursuing radical technological-based innovation and adopting administrative innovation i.e. structural reform. Nevertheless, the cases revealed that while these organizations strived to pursue both cost-leadership (efficiency) and differentiation strategies simultaneously, they tended to focus on efficiency (exploitation) rather than on product differentiation (exploration) in the face of a resource–constrained environment. However, the relative optimal level of or balance between exploration and exploitation varied between these organizations due to their contextual differences. The tendency of focusing on cost-leadership or efficiency was higher among the public organizations (e.g. the public university) compared to their private counterparts (e.g. the regional private bank). Conversely, the competitive pressure for product innovation or differentiation was higher in private than public organizations.

This thesis contributes to the discussion on organizational ambidexterity by demonstrating how the external context affects what leaders actually do to provide internal contextual support in order to facilitate organizational learning for both exploratory and exploitative innovation and thus achieve ambidexterity. It demonstrates that leaders should use the framework proposed in this study to consider their organization-specific contexts in managing ambidexterity for innovation because the combinations of and interplay between external and internal contexts vary among different organizations.

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