We study the evolution of firms’ exploration–exploitation allocations and their long-term performance outcomes. Extending current ambidexterity theory, we suggest that not only firms pursuing one-sided exploration or exploitation orientations show self-reinforcing tendencies but also ambidextrous firms adopting balanced exploration–exploitation orientations. Integrating formal modeling arguments, we further propose that reinforcing ambidexterity can be good or bad for firms’ long-term performance, depending on the environment they face: In contexts characterized by incremental change, firms benefit more from the learning effects of maintaining ambidexterity, which lead to superior performance. Firms in discontinuous change contexts, however, suffer more from the misalignment that reinforcement creates, which affects their performance negatively. A longitudinal data set of global insurance firms (1999–2014) supports our arguments. Building on these findings, we reconceptualize ambidexterity as the ability to dynamically balance exploration and exploitation, which emerges from combining capability-building processes (to balance exploration and exploitation) with capability-shifting processes (to adapt the exploration–exploitation balance). We contribute to the organizational literature by developing a dynamic perspective on balancing exploration and exploitation, by clarifying the contingent nature of the ambidexterity–firm performance relationship, and by integrating and extending the ambidexterity and formal modeling perspectives on exploration and exploitation.

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Dynamic Balancing of Exploration and Exploitation: The Contingent Benefits of Ambidexterity

This article theoretically elaborates and empirically investigates the alignment of the value creation and capture capabilities of Treacy and Wiersema's (1993, 1995) typology of three strategies for superior customer value (product leadership, operational excellence, and customer intimacy). Drawing on configuration theory, the current study develops three propositions that predict how each strategy in Treacy and Wiersema's typology corresponds to a particular mix of value creation and capture capabilities, which lead to competitive advantage and success in the marketplace. Using fuzzy set qualitative comparative analysis, data from a multi-industry sample of 110 R&D managers and 242 customers serve to empirically identify the operating models of the three conceptually derived strategies and their customer value performance. The results confirm the three strategies and indicate that each exhibits a unique combination of value creation capabilities and a carefully aligned set of value capture capabilities. Although the three strategies demand clear trade-offs in the value creation domain, those trade-offs do not exist for value capture.

Effective Configurations of Value Creation and Capture Capabilities: Extending Treacy and Wiersema's Value Disciplines

Effective configurations of value creation and capture capabilities:extending Treacy and Wiersema’s value disciplines

Innovation is a key driver of sustainable competitive advantage and one of the key challenges for small-and medium-sized companies (SMEs) (O’Regan et al., 2006). Therefore, SMEs need to remain active in new product development (NPD). It is difficult for SMEs1 in regulated sectors to development new products, because heavy regulatory involvement imposes a number of difficulties on the NPD process. Products have to meet these strict regulations in terms of quality, safety, functionality, and manufacturability, which makes it difficult for SMEs to differentiate in terms of the effectiveness of the product concepts. However, there are big differences in the NPD performance of SMEs. Then, the questions are (1) how do SMEs in regulated sectors distinguish themselves in terms of innovation performance? And, (2) how can SMEs in regulated sectors be successful in NPD?

Successful new product development by optimizing development process effectiveness in highly regulated sectors: the case of the Spanish medical devices sector

by Optimizing Development Process Effectiveness in Highly Regulated Sectors: The Case of the Spanish Medical Devices Sector

The article presents management science research on new product development and creation of significant technological innovations. Two major forms of organizational structure for integrating new pr...

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Ambidexterity in npd: the impact of differentiated integration structures on innovation performance.