Enterprise Performance and Organisational Ambidexterity

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The prevailing consensus in OA, is that, those enterprises that leverage both explorative and exploitative activities, whether via optimal OA or combined OA undertakings – are likely to realise superior performance outcomes, in comparison with those that emphasise one undertaking over the other (Raisch & Birkinshaw, 2008; Tushman & O’Reilly, 1996). Hence, an overemphasis on the exploitation of current competencies at the expense of the exploration of new ideas, for instance, would ignite a perceived “success trap”. A success trap amounts to some sort of organisational inertia, which impedes an enterprise from adequately adapting to revolving environmental conditions that would ultimately lead to substandard performance outcomes – in the long-term (Levinthal & March, 1993; Smith & Tushman, 2005). On the contrary, an overemphasis on exploration could ignite a perceived “failure trap”. A failure trap amounts to the lack of precision in operationalizing new, possibly fruitful ideas. Hence, for instance, innovations would be substituted with new ideas before they have been fully operationalized, and as a result – unable to contribute to an enterprise’s revenue stream (Levinthal & March, 1993). Under these prevailing circumstances, optimal OA (i.e., balance perspective) allays that enterprises should ensure that they integrate an optimal mix of exploration and exploitation activities – to possibly guarantee realisation of short and long-term success (March, 1991). Thus, owing to the fact that exploration and exploitation activities ideally compete for similar resources, ascertaining an optimal balance between the two pertinent activities is arduous, because in entails possible trade-offs (Simsek et al., 2009). Correspondingly, combined OA (i.e., high-level intensity perspective) allays that enterprises would most likely ensure a more sustained advantage in the event that they preserve high-levels of both explorative and exploitative activities. Thus, the underlying assumption is that efficiency would be elevated within contemporary operations, whilst advocating for the simultaneous identification and implementation of new opportunities at high-levels – to impede organisational inertia and the unwarranted effect of path dependence (Simsek et al., 2009).

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As hitherto debated, OA appears to be a significant enabler of enterprise long-lived success (Gibson & Birkinshaw, 2004; Tushman & O’Reilly, 1996). More pertinently, it has been forward that the growth of enterprises is positively and significantly related to explorative activities (), and that the profitability of enterprises is positively and significantly related to exploitative activities (). Hence, explorative activities most likely contribute towards heightened enterprise growth, whereas exploitative activities most likely contribute towards heightened enterprise profitability. Furthermore, these performance effects are further conditioned by the modes in which they are executed. For instance, at the individual and team, business unit, enterprise and alliance levels. At lower-levels such as amongst individuals and teams, it has been found that explorative and exploitative activities are mildly connected to realised performance effects. Correspondingly, at higher-levels, such as within business units, enterprise and alliances – it has been found that explorative and exploitative activities are positively and significantly connected to realised performance effects ().

This overall observed disposition entails that, for instance, in relation to industries – the OA could be less potent within the manufacturing sector, in comparison with service and high-technology sectors. The overriding assumption pertains environmental dynamism related effects. Hence, in this case, within the service and high-technology sectors, it is expected that high-levels of dynamism would be witnessed. Therefore, enterprises would be required to concurrently be alert about new possible opportunities (explorative activities), and to exploit existing resources (exploitative activities) – due to the fact that the lifespan of a contemporary competitive advantage would considerable unpredictable (Bingham & Eisenhardt, 2008; Brown & Eisenhardt, 1997). Thus, suggests a heightened pertinence for OA in dynamic environments. On the contrary, traditional and more stable markets are usual portrayed as endowing longer periods of stability, succeeded by shorter episodic revolutions, and as such – could be less competitively intense than dynamic markets (Davis, Eisenhardt, & Bingham, 2009). Therefore, this outlook could enable enterprises to emphasise upon exploitative activities for prolonged periods – prior to switching to more explorative-based activities. However, it is important to note that ultimately, pursuing both explorative and exploitative activities would be an inevitable requirement (Bingham & Eisenhardt, 2008; Brown & Eisenhardt, 1997).

Taken together, and by referencing the aforementioned postulations, it would appear that an enterprise would be able to act in a superior ambidextrous fashion. Acting in a superior ambidextrous fashion pertains to an elusive critical organisational trait, in this regard as relates to the tactful combination of internal organisational exploration and exploitation activities (Bednarek et al., 2016; D’Souza et al., 2017; Goel & Jones, 2016; Junni et al., 2013; Moss et al., 2014; Simsek; Solís-Molinaa-2018). In particular, this development entails the possible attainment of combined ambidextrous outputs, as opposed to optimal ambidextrous outputs (De Massis et al., 2018; Junni et al., 2013; Kammerlander et al., 2015; Kauppila, 2010; Parida, et al., 2016; Simsek, 2009). Hence, E.F.SMEs would be in an auspicious capacity to strategically leverage the newly accessed market and technological knowledge resources (in tacit and explicit form) to introduce innovative products and/or services to meet commercial-ends (Bednarek et al., 2016; Chirico & Salvato, 2016; Cozzolino & Rothaermel, 2018; De Massis et al., 2016; Junni et al., 2013; Laforet, 2016; Moss et al., 2014; Simsek, 2009; Tang & Tang, 2017). This inclination may thereby contribute towards assisting these enterprises to possibly outperform both their peers and industry counterparts/competitors – in successfully enhancing sustained entrepreneurial growth (Chirico et al., 2011; Chirico & Nordqvist, 2010; Chirico & Salvato, 2008; Chirico, 2008; Coad et al., 2017; Goel & Jones, 2016; Messersmith et al., 2018; Patel & Fiet, 2011; Sanchez-Famoso, et al., 2016). Comprehensively, it would seem that these enterprises could be adept at facilitating peculiar endogenous entrepreneurial processes that seemingly build dynamic alliance portfolio management capabilities. This peculiarity has been likened to the ever-elusive possession of higher-order capabilities by a certain pedigree of enterprises, in this view, as relates to E.F.SMEs. Therefore, a focal E.F.SME may be able to effectively leverage alliance portfolio know-how. This trait, would hence, aid in modifying and/or improving operational alliance portfolio management skills and thereby reinforce this distinctive acumen that in turn, could enhance overall alliance portfolio success (Gulati, 1999; Kale & Singh, 2007; Kunisch et al., 2017; Nadkarni et al., 2016; Wang & Rajagopalan, 2015; Wilden et al. 2018; Zollo & Winter, 2002).

In the following, more elaborate delineations of the endogenous entrepreneurial processes involved in building enterprise-level micro-foundations of dynamic alliance portfolio management capabilities that heterogeneously enhance sustained entrepreneurial growth in E.F.SMEs are explicated, respectively.

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