Ambidexterity in SBUs: TMT Behavioral Integration and Environmental Dynamism

• Author: Abraham Carmeli,Nir N. Brueller,Meyrav Yitzhack Halevi
• Date: 01 December 2015
• DOI: http://doi.org/10.1002/hrm.21665
• Published date: 01 December 2015

Human Resource Management, December 2015, Vol. 54, No. S1. Pp. S223–S238

© 2015 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21665

Correspondence to: Abraham Carmeli, Professor of Strategy and Management, Tel Aviv University, Tel Aviv 69978,

Israel, Phone: +972-3-640-6335, E-mail: avic@post.tau.ac.il

AMBIDEXTERITY IN SBUs: TMT

BEHAVIORAL INTEGRATION AND

ENVIRONMENTAL DYNAMISM

MEYRAV YITZHACK HALEVI, ABRAHAM CARMELI,

AND NIR N. BRUELLER

This study seeks to advance previous research by linking top management team

(TMT) processes to organizational ambidexterity, and highlights the importance

of environmental dynamism as a boundary condition on the effectiveness of

TMTs in promoting balance between exploratory and exploitative learning. The

fi ndings from multiple respondents (245 TMT members, including the CEO of

the SBUs, and 883 employees) in 101 small-sized strategic business units (SBUs)

with a defi ned product line indicate that TMT behavioral integration helps build

ambidexterity, but that the infl uence of TMT behavioral integration on ambidex-

terity is stronger when the task environment is characterized by a high level of

dynamism. These fi ndings contribute to a better understanding of the conditions

under which behaviorally integrated TMTs are able to pursue an ambidextrous

orientation in relatively small-sized units. ©2015 Wiley Periodicals, Inc.

Keywords: top management teams, behavioral integration, ambidexterity,

exploration, exploitation, balance

Introduction

Researchers have directed considerable

attention to the foundations of orga-

nizational ambidexterity. Ambidexterity

refers to an individual’s ability to use

both hands with equal skill, and acts as

a “metaphor” to describe competent organizations

(Tushman & O’Reilly, 1996, 1997, 2004) that are

capable of balancing and mastering differing stra-

tegic orientations such as exploration and exploi-

tation. The existence of organizational paradoxes,

contradictions, and conflicts is crucial to keeping

a system viable (Thompson, 1967, p. 7). An orga-

nization’s competitive edge largely depends on its

capacity to adapt to changes and create fit with

the task environment. In increasingly turbulent

environments that generate multiple and inconsis-

tent contextual demands (W. K. Smith & Tushman,

2005; Tushman & O’Reilly, 1997), building capaci-

ties to successfully confront intensifying paradoxes

and effectively manage different strategic orienta-

tions is a major managerial challenge.

In an attempt to explore how organizations

build capacities to master conflicting strategic

orientations, researchers have examined various

sources of ambidexterity. For example, schol-

ars have pointed to the importance of creating

separate structures for those activities involving

exploration and those involving exploitation (i.e.,

structural ambidexterity) (Benner & Tushman,

2003; Tushman & O’Reilly, 1997). Researchers have

also noted that creating a context that encour-

ages members to make their own judgments as to

S224 HUMAN RESOURCE MANAGEMENT, DECEMBER 2015

Human Resource Management DOI: 10.1002/hrm

In an attempt

to explain some

inconsistent empirical

findings that link

TMT demographic

attributes to

organizational

outcomes, calls have

been made to further

explore the “black

box” through upper

echelon studies.

of how TMTs address or reconcile contradictions

and pursue exploration and exploitation simulta-

neously (e.g., Lubatkin et al., 2006; W. K. Smith

& Tushman, 2008). Furthermore, Jansen, George,

van den Bosch, and Volberda, (2008) noted that

“there is little empirical evidence about the role

of senior executives in ambidextrous organiza-

tions” (p. 983). Tushman and O’Reilly discussed

the role of TMTs in building ambidexterity, and

considered that the latter is largely determined by

“internal processes that enable them (the TMTs)

to handle large amounts of information and

decision alternatives and deal with conflict and

ambiguity” (1997, p. 23). Lubatkin et al. (2006,

p. 647) examined how TMT behavioral integra-

tion, an all-encompassing TMT process con-

struct (Hambrick, 1994), relates to ambidexterity

and enhances organizational performance. This

stream of research has also linked senior man-

agement group processes to behavioral complex-

ity and ambidexterity (Carmeli & Halevi, 2009).

However, the boundary conditions of antecedents

of ambidexterity and its implications for firm per-

formance have only recently been specified in a

way that captures a more complex phenomenon

(Auh & Menguc, 2005; Jansen, van den Bosch,

& Volberda, 2005), and even fewer studies have

examined the moderating role of environmental

dynamism (Raisch & Birkinshaw, 2008).

In this study, we focus on TMTs of small-sized

SBUs to explore whether and how behavioral inte-

gration cultivates ambidexterity in conditions

of high environmental dynamism. Specifically,

we draw on W. K. Smith and Tushman’s (2005)

notion of “teamcentric” as a key to facilitating

cognitive processes. Our study aims to contribute

to a stream of research that underscores individ-

ual strategic business units as the unit of analysis

(Gupta & Govindarajan, 1986). Research on the

role of TMT processes in improving organizational

outcomes “has been slow to accumulate” (Barrick,

Bradley, & Colbert, 2007, p. 544), particularly in

certain environmental conditions (Simsek, 2009).

Our study addresses this issue and aims to deepen

our understanding of the importance of TMT

processes in balancing differing strategic orien-

tations in dynamically changing environmental

conditions (Gupta, Smith, & Shalley, 2006; Uotila,

Maula, Keil, & Zahra, 2008).

Theoretical Background and Hypotheses

Top Management Team Processes

A TMT is composed of the CEO and senior execu-

tives who hold positions at or above the level of

vice president, such as the chief financial officer

(CFO) and chief technology officer (CTO), and are

how best to divide their time between the con-

flicting demands of exploration and exploita-

tion (i.e., contextual ambidexterity) is crucial for

building an ambidextrous organization (Carmeli

& Halevi, 2009; Gibson & Birkinshaw, 2004). One

case study, for instance, explored the ways New

United Motors Manufacturing, Inc. (NUMMI), a

joint venture between GM and Toyota, achieved

exceptional levels of both efficiency and flex-

ibility through such key mechanisms as meta-

routines, job enrichment, role switching between

improvement tasks and production tasks, and par-

titioning of the plant structure (Adler, Goldoftas,

& Levine, 1999). More recently, researchers have

also contributed to the literature by studying

how different factors such as psychological safety

(Kostopoulos & Bozionelos, 2011), organizational

culture (Wang & Rafiq, 2014), or

HRM practices (Kang, Snell, & Swart,

2012) contribute to achieving con-

textual ambidexterity.

Leadership at the apex of the

organization plays a key role in

enabling, cultivating, and manag-

ing the mechanisms that enable a

balance between differing orienta-

tions (Gibson & Birkinshaw, 2004;

Lubatkin, Simsek, Ling, & Veiga,

2006; W. K. Smith & Tushman,

2005). As Adler and colleagues (1999)

noted: “Leadership would appear to

be the key precondition for (per-

sistently and continually reassert-

ing) the simultaneous importance

of flexibility and efficiency” (p. 65).

However, understanding leadership

in context is crucial for unpacking

the conditions in which executives

can make an impact and what lead-

ership is required for creating and

maintaining ambidextrous system. A focus on

environmental dynamism to gauge such a context

is important because it studies indicate that it mod-

erates the effect of transformational and transac-

tional leadership on exploration and exploitation

(Jansen, Vera, & Crossan, 2009), and showed how

these antecedents affect organizational perfor-

mance directly (Ensley, Pearce, & Hmieleski, 2006).

Researchers have suggested that “a promis-

ing extension … would be to more systematically

examine the behaviors of senior executives in an

effort to understand how they help create ambi-

dexterity” (Gibson & Birkinshaw, 2004, p. 223).

However, research on top management team

(TMT) processes and ambidexterity is still in stages

of development (Simsek, 2009), and relatively lit-

tle empirical effort has been directed to the study