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

Extending to other approaches to ambidexterity

O’Reilly and Tushman make a compelling argument that DA is unlikely to generate radically discontinuous innovations: if that is the goal of the exploration, some other ambidexterity approach would probably be more suitable, one allowing for greater structural differentiation and specialization (O'Reilly & Tushman, 2013). Nevertheless, the achievement and maintenance of value-rationality may be important to these other approaches. The locus and degree of collaboration varies across these approaches; but in all of them, all the relevant actors must feel confident that others will be oriented to their shared ultimate purpose even in circumstances that cannot currently be defined or predicted—and the value-rational organizational form offers this advantage.

Let us review the other ambidexterity approaches in turn, to see how the value-rational form might contribute to their success. In the functional approach, the firm needs a sense of shared purpose across functionally-differentiated subunits, such as R&D and operations (e.g. Lovelace, Shapiro, & Weingart, 2001): the R&D unit must be willing and able to anticipate downstream issues (such as “manufacturability”), and the operations units must be willing and able to embrace rather than resist the disruption occasioned by the introduction of new designs. In the network approach, the focal firm needs a shared purpose with its various network partners, particularly when achieving an ambidextrous result is a priority (Kauppila, 2010) (MacDuffie & Helper, 2006). In the structural approach, ambidexterity requires a shared purpose within the top-management team to combine the efforts of exploitation and exploration business lines (e.g. Jansen et al., 2008; Tushman et al., 2010). It seems likely that achievement of the desired ambidexterity depends in any these approaches on the institutionalization of value-rationality as the modal form of action among the relevant actors.

Beyond ambidexterity

Our argument has focused on the achievement of distributed ambidexterity; we have just noted that it might also be extended to other approaches to ambidexterity; however, it might also be extended further, to situations where the organization faces multiple heterogeneous demands that do not fit the exploration/exploitation frame. For example, many organizations today are under pressure both to offer higher quality products to their customers and to reduce their environmental footprint. More generally, many organizations are under pressure to satisfy the demands of more diverse stakeholders. In current scholarship, these challenges have been addressed by the literature on “hybrid” organizations in institutional theory (Greenwood, Raynard, Kodeih, Micelotta, & Lounsbury, 2011) or hybrid identities (Albert, Ashforth, & Dutton, 2000).

One lesson from this identity literature is that, insofar as organizations aim to create a hybrid identity that synthesizes the heterogeneous identities and their associated institutional logics, the organization must contend not only with the internal managerial challenges that have been the focus of the present paper, but also with external legitimacy challenges. Each of the constituent identities and logics will typically require some degree of supra-organizational legitimacy, and the success of the organization in hybridizing internally will be influenced by these broader field-level actors and factors. Kaiser provides a nice example: the success of this organization’s ambidexterity efforts hinged considerably on Kaiser’s ability to enroll a range of external, field-level actors so as to legitimate its efforts, such as the medical profession, patient-rights groups, and the relevant state agencies. Scott, Ruef, Mendel, and Caronna (2000) explore some facets of this struggle, and future research might explore how appeals to value-rationality acquire legitimacy in this broader, field-level transformation.

Practical hurdles facing value-rational organization

While the value-rational organizational form seems in principle ideally suited to the challenges of DA, its practical implementation faces considerable hurdles. Perhaps most fundamentally, it depends on maintaining the salience of the shared higher purpose when, in the real world of business, market competition often unravels any sense of shared purpose among firms, and wage-cost pressure often unravels any sense of shared purpose within firms. It is hardly surprising, then, that the stabilization of the value-rational organization form is difficult and not yet complete in any for-profit business setting that we know of.

We remain, however, guardedly optimistic. The performance benefits of value-rational organization and the DA it can support are considerable, at least in settings where simultaneous improvement in exploration and exploitation capabilities are valued by markets: that much seems clear from the research cited above. Precisely because value-rational organization is difficult to create, organizations that do manage to create it can benefit while their competitors struggle to replicate it.

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Figure 1: A conceptual model of how the value-rational organizational form has been operationalized and how it supports distributed ambidexterity