Model development

The central logic of the theoretical framework development is that organisational ambidexterity is not limited to a single organisational level (Simsek, 2009; Cantarello et al., 2012), or a specific functional area (Lisboa et al., 2011; Rubera et al., 2012), or a single product (Tripsas & Gavetti, 2000; Smith & Tushman, 2005; Sarkees & Hulland, 2009). Instead, organisational ambidexterity transcends the interactions between corporate-level exploratory and exploitative strategies and business-level exploratory and exploitative capabilities (Cantarello et al., 2012), as well as the interactions between different functional areas such as research-and-development (R&D) and marketing (Lisboa et al., 2011; Rubera et al., 2012). This transcendence enables firms to become truly ambidextrous and represents a fuller delineation of the synchronicity required to develop and market a product. In addition, ambidextrous firms can achieve superior financial performance when they manage the continuous generation of new products, as well as improving the ongoing performance of their established products (Smith & Tushman, 2005; Sarkees et al., 2010).

Following this line of reasoning, corporate-level exploratory and exploitative strategies, business-level exploratory and exploitative R&D and marketing capabilities, new product and established product performance, and firm performance are considered as the basic components (or constructs of interest) to develop the theoretical framework for this study. Table 3.1 presents the definition of constructs of interest used in this study.

As shown in Table 3.1, firm performance and product performance are two prominent performance indicators of organisational ambidexterity at the corporate- and business-level of the firm, respectively. According to Richard et al. (2009), firm performance is the ultimate

68

dependent variable of interest for scholars to evaluate the outcomes of a firm’s strategies and capabilities. In this study, firm performance reflects a firm’s effort to develop and market products (i.e., new and established product) that create and deliver superior value to customers and achieve its overall financial, market, and customer-based goals (Langerak et al., 2004; Richard et al., 2009; Shea et al., 2012).

Product performance represents a micro-level (i.e., project or business level) performance indicator of the effects of a firm’s strategies and capabilities with respect to a specific product development project. In this sense, new product and established product performance are the performance indicators of different product development projects. In this study, the term new product(s) is set within the context of a product that has been launched in the previous 12 months (1 year old) and encompasses “new to the world” and “new to the firm” categories in the Griffin and Page’s (1996) new product category matrix (Chapter Two, Section 2.3.5, Figure 2.1, p. 62). The term established product(s) is a product that has been marketed for three or more years and encompasses “product improvement”, “line extension”, “cost reduction”, and “repositioning” categories in the Griffin and Page’s (1996) new product category matrix. Given that new and established products represent different forms of new product category matrix suggested by Griffin and Page’s (1996), this study adopts the same performance indicators to measure new product and established product performance. In this sense, new product and established product performance reflect a firm’s efforts to achieve specific goals set by the firm in terms of sales, sales growth, market share, return on investment, profitability, development costs, customer satisfaction, and customer loyalty (Griffin & Page, 1993; Langerak et al., 2004) those respective products.

69

Table 3.1 – Differences between exploration and exploitation

Construct Definition

Ambidexterity at the corporate-level of the firm (Strategic Ambidexterity)

Strategic ambidexterity represents the synchronous pursuit of exploratory and exploitative strategies (Gupta et al., 2006; Judge & Blocker, 2008).

Exploratory strategy

represents the firm’s emphasis on new product-market opportunities, new and innovative products, and emerging customer needs (He & Wong, 2004; Siren et al., 2012).

Exploitative strategy

represents the firm’s emphasis on the existing product-market opportunities, automation and productivity of existing operations, and existing customer needs (He & Wong, 2004; Siren et al., 2012).

Ambidexterity at the business-level of the firm (Operational Ambidexterity)

Operational ambidexterity represents the synchronous deployment of exploratory and exploitative capabilities (Gupta et al., 2006; Raisch et al., 2009).

Exploratory R&D

represents the generation and deployment of new R&D routines to physically develop a product (He & Wong, 2004; Atuahene-Gima, 2005; Jansen et al., 2005; Danneels, 2008).

Exploitative R&D

represents the refinement and deployment of existing R&D routines to physically develop a product (Atuahene-Gima, 2005; Jansen et al., 2005; Peng et al., 2008; Lisboa et al., 2011).

Exploratory marketing

represents the generation and deployment of new marketing routines to link a product to customers (Kyriakopoulos & Moorman, 2004; Atuahene-Gima, 2005; Danneels, 2008).

Exploitative marketing

represents the refinement and deployment of existing marketing routines to link a product to customers (Kyriakopoulos & Moorman, 2004; Atuahene-Gima, 2005; Lisboa et al., 2011).

Product Performance

New Product Performance

represents the extent that a new product achieves market success compared to competing products over the past year. Market success is related to the goals set by the firm in terms of sales, sales growth, market share, return on investment, profitability, development costs, customer satisfaction, and customer loyalty (Griffin & Page, 1993; Langerak et al., 2004).

Established Product Performance

represents the extent that an established product achieves market success compared to competing products over the past year. Market success is related to the goals set by the firm in terms of sales, sales growth, market share, return on investment, profitability, development costs, customer satisfaction, and customer loyalty (Griffin & Page, 1993; Langerak et al., 2004).

Ultimate performance outcome

Firm Performance represents the extent that a firm achieves its overall financial, market, and customer- based goals over the past year (Langerak et al., 2004; Richard et al., 2009).

Premised on constructs of interest shown in Table 3.1, Figure 3.1 presents the theoretical framework developed for this study, namely the “Synchronised Multi-level - Multi-unit Ambidexterity framework”. As shown in Figure 3.1, this theoretical framework

70

encompasses two distinctive stages, Stage A and B. Stage A pertains to the extent that the implementation of corporate-level exploratory and exploitative strategies influence a firm’s new product and established product performance, respectively. This stage underscores the implementation roles of exploratory and exploitative R&D and marketing capabilities at the business-level of the firms. Stage B pertains to the extent that synchronising the pursuit and implementation of exploratory and exploitative strategies drive a firm’s new product performance, established product performance, and ultimate performance. This stage underscores the implementation roles of two forms of operational ambidexterity (i.e., R&D and marketing ambidexterity) at the business-level of the firm. Specifically, Stage A emphasises the independent performance-outcomes of exploratory and exploitative strategies, whereas Stage B focuses the extent that a firm synchronously pursues and implements exploratory and exploitative strategies.

71

Figure 3.1– The synchronised multi-level - multi-unit ambidexterity framework Stage A

Stage B

The following sections articulate the theory development leading to the hypotheses related to Stage A (Section 3.3, hypotheses 1 to 4) and Stage B (Section 3.4, hypotheses 5 to 8).