The value-rational organizational form as the context for distributed ambidexterity By

The value-rational organizational form as the context for distributed ambidexterity

By

Paul S. Adler (University of Southern California)

Charles Heckscher (Rutgers University)

Abstract

This article aims to advance our understanding of the context required to support ambidextrous behavior distributed across a wide swathe of individuals, teams, and subunits within the organization. In the management studies literature, ambidexterity is the ability simultaneously to exploit existing capabilities and to explore new opportunities. Prior research has shown that exploitation and exploration require very contrasting organizational contexts, and ambidexterity therefore poses an organizational paradox. Most of the prior scholarship has focused on approaches to ambidexterity that resolve this paradox by separating the two types of activity into different time periods or different organizational subunits. Distributed ambidexterity, by contrast, requires that the paradox be resolved by synthesizing the contrasting organizational requirements. Prior research has offered only limited insight into how organizations can achieve this synthesis. We offer a fuller theory based on a model of the value-rational organizational form. We show how this form can be operationalized to support distributed ambidexterity by its distinctive values that sustain shared purpose, norms that generate enabling systems, authority structures that afford participative contingent centralization, and the development of T-shaped capabilities.

Acknowledgements

This paper has benefitted from comments by colleagues in the Organizations & Strategy working group at USC, as well as Costas Andriopoulos, Julian Birkinshaw, Cris Gibson, Marianne Lewis, and the reviewers.

The value-rational organizational form as the context for distributed ambidexterity
Under the pressure of intensifying and globalizing competition, many firms have found that they must compete simultaneously on multiple dimensions of performance. In particular, many are under pressure to become ambidextrous—that is, to develop the ability both to exploit existing capabilities and to explore new opportunities (building on March, 1991). As a result, management scholars are paying increasing attention to the notion of ambidexterity. Evidence is accumulating that, notwithstanding the considerable organizational challenges involved, some firms are indeed able to become ambidextrous and that in some contexts this ability contributes to overall business performance (Academy of Management Journal, 2006; Academy of Management Perspectives, 2013; Katila & Ahuja, 2002; Lavie, Stettner, & Tushman, 2010; Lin, McDonough, Lin, & Lin, 2013; Lubatkin, Simsek, Ling, & Veiga, 2006; Organization Science, 2009; Simsek, 2009; Simsek, Heavey, Veiga, & Souder, 2009; Tushman, Smith, Wood, Westerman, & O'Reilly, 2010; Uotila, Maula, Keil, & Zahra, 2009).

Prior research has delineated several approaches to achieving organizational ambidexterity (see discussion below and reviews by Lavie et al., 2010; Raisch & Birkinshaw, 2008; Simsek, 2009). This paper focuses on the approach that relies on distributing ambidextrous behavior across a broad swathe of individuals, teams, and sub-units the organization. This “distributed ambidexterity” (DA) approach has also been called “contextual ambidexterity” because it relies on creating a distinctive context that supports widespread ambidexterity (Gibson & Birkinshaw, 2004). The distributed approach is contrasted with “architectural” and “switching” approaches to ambidexterity, which rely respectively on separating exploration and exploitation activities into organizationally differentiated units and on alternating over time between these activities.

A long tradition of organizational scholarship inclines us to skepticism towards the idea of DA, because exploration and exploitation have diametrically opposed requirements at both the psychological and organizational levels, and combining these activities in the same people at the same time therefore seems deeply paradoxical (Burns & Stalker, 1961; Ghemawat & Costa, 1993; Hannan & Freeman, 1977). Paradoxes, argue Poole and Van de Ven (1989), can be resolved by either separating or synthesizing the opposing terms, and DA demands a synthesis type of resolution of the organizational paradoxes of ambidexterity—a resolution which on its face appears far more challenging than the separation-type resolution afforded by the architectural and switching approaches.

It is therefore noteworthy that a growing body of evidence finds that some organizations can indeed distribute ambidextrous behavior widely and reap considerable performance benefits from doing so (Andriopoulos & Lewis, 2009; Bodwell, 2011; De Clercq, Thongpapanl, & Dimov, 2014; Fiset & Dostaler, 2013; Gibson & Birkinshaw, 2004; Gotsi, Andriopoulos, Lewis, & Ingram, 2010; Güttel & Konlechner, 2009; McCarthy & Gordon, 2011; Napier, Mathiassen, & Robey, 2011; Ramesh, 2013; Wang & Rafiq, 2014). A growing number of firms are experiencing competitive pressures for simultaneous improvements in both their innovativeness and their efficiency, and many seem to be responding to these pressures with efforts to create DA—encouraging ambidextrous behavior by each subunit and member, for example, by pushing routine operational functions to become not only more efficient but also more innovative, and by pushing research and development functions to become not only more innovative but also more efficient.

While research has begun to address how individuals can resolve the individual psychological challenges of ambidexterity (Adler & Chen, 2011; Bledow, Frese, Anderson, Erez, & Farr, 2009; Bonesso, Gerli, & Scapolan, 2014; Eisenhardt, Furr, & Bingham, 2010; Good & Michel, 2013; Hafkesbrink, Bachem, & Kulenovic, 2012; Keller & Weibler, 2014; Mom, Van Den Bosch, & Volberda, 2009; Moon, Quigley, & Marr, 2012; Rogan & Mors, 2014; Volery, Mueller, & von Siemens, 2013), we know far less about how to resolve the paradoxical organizational requirements of DA. Gibson and Birkinshaw (2004) show that a climate that combines “trust and support” with “discipline and stretch” leads to an ambidextrous combination of adaptability and alignment (further support on this is offered by Ramesh et al. 2012); but we know little about the organizational form that would engender and sustain such a climate. While several case studies offer inductive insights into the nature of this organizational form (Andriopoulos & Lewis, 2009; Gotsi et al., 2010; Güttel & Konlechner, 2009; Heracleous & Wirtz, 2014; Volery et al., 2013), so far we lack a compelling theory-based account.

To fill this gap, we build on two strands of classical sociology: Parson’s structural-functional theory of social structure and Weber’s theory of value-rationality. Parsons (1971) argues that any viable social system must satisfy four key functional requirements: Latency (pattern-maintenance), Integration, Goal attainment, and Adaptation. Within organizations, these functions are fulfilled by four subsystems, respectively: shared values, relational norms, authority structure, and capabilities. We show that the pursuit of ambidexterity poses a key paradox in each of these subsystems. We then argue that the key to DA’s synthesis-type resolution of this four-fold paradox can be found in Weber’s theory of value-rationality (Weber, 1978, Vol. 1, pp. 25 ff.). Value-rational action is a type of action guided by “ultimate values,” rather than by tradition, affect, or instrumental pursuit of material self-interest. We argue that an organizational form that institutionalizes value-rationality—that is, a form is which value-rationality has become the “taken-for-granted” type of action—is capable of assuring a synthesis of the organizational paradoxes of DA in each of Parsons’ four subsystems.

Our main theoretical contribution is to specify the distinguishing features of this value-rational organizational form, and to show how these features can be operationalized so as to allow the synthesis-type resolution of DA’s four main organizational paradoxes. More specifically, we argue:

* Ambidexterity requires a paradoxical combination of values that celebrate simultaneously creativity and efficiency. To reach the synthesis-type resolution of this paradox required by DA, the value-rational form fosters an ethic of contribution. When this ethic is operationalized in the organization’s culture and strategy, the result is a widespread sense of shared purpose that renders meaningful and significant to all members the challenge of synthesizing creativity and efficiency.

* Ambidexterity paradoxically requires that interactional norms be simultaneously organic (to support exploration) and mechanistic (to support exploitation). To reach the synthesis required by DA, the value-rational form relies on the principle of substantive rationality. When this principle is operationalized in a process we call “interactive process management and design,” both formal and informal organizational systems are experienced as enabling rather than coercive or merely ceremonial: in this context, mechanistic and organic norms no longer appear as “oil and water” but instead can be synthesized to support DA.

* Ambidexterity requires an authority structure that affords a paradoxical combination of individual autonomy (for exploration) and centralized control (for exploitation). To reach the synthesis required by DA, the value-rational form ensures that authority—both dispersed and centralized—is based on widely-acknowledged ability to contribute to the organization’s shared purposes. When this form of authority is operationalized through negotiated chartering and matrix structures, it allows for an authority structure that we characterize as “participative contingent centralization,” and this type of authority structure can provide a foundation for DA.

* Ambidexterity requires a paradoxical combination of capabilities that are simultaneously broad (for exploration) and deep (for exploitation). To reach the synthesis required by DA, the value-rational form operationalizes the principle of contribution-oriented capability development, first, by selecting people who already have this unusual combination of technical and social skills; second, by leveraging their members’ commitment to the organization’s ultimate purposes so as to steer individuals’ skill development paths towards such a combination; and third, by tailoring compensation systems to encourage the mobilization of these skills. These techniques allow the value-rational organization to cultivate a “T-shaped” synthesis of deep and broad capabilities that supports DA.

The present paper’s basic goal is to establish the theoretical foundations for a basic proposition: that if an organization chooses to rely on DA, it will perform best if it adopts the value-rational form as characterized here. We recognize that ambidexterity in general and the DA approach in particular are surely not competitively valuable in all industry settings or at all stages of firm growth (Carmeli & Halevi, 2009; Davis, Eisenhardt, & Bingham, 2009; De Clercq, Thongpapanl, & Dimov, 2013; Ebben & Johnson, 2005; Junni, Sarala, Taras, & Tarba, 2013; Uotila et al., 2009): while further research on this theme is surely important, it is outside the scope of the present article. We recognize too that the value-rational organizational form may not be cost-effective for organizations that are pursuing one-dimensional strategies that are focused on exploration or exploitation alone, or for organizations that are pursuing separation-based approaches to ambidexterity: these issues too are important but outside our scope.

The paper proceeds as follows. We first define ambidexterity and explain the distinctive features of DA in comparison with the other approaches to ambidexterity. We then introduce Parsons’ structural-functional theory as a way to understand four key organizational paradoxes entailed by ambidexterity. The core of the paper characterizes the value-rational organizational form and shows how it offers a path towards a synthesis of each of these four paradoxes and thereby enable organizations to achieve distributed ambidexterity. We illustrate these syntheses with examples from prior research and from our research on one healthcare organization. A Conclusion summarizes and identifies some implications for future research and practice.