Top Management Team Shared Leadership and Organizational Ambidexterity: a Moderated Mediation Framework

• Author: Henk W. Volberda,Oli R. Mihalache,Frans A. J. Van den Bosch,Justin J. P. Jansen
• DOI: http://doi.org/10.1002/sej.1168
• Date: 01 June 2014
• Published date: 01 June 2014

TOP MANAGEMENT TEAM SHARED LEADERSHIP

AND ORGANIZATIONAL AMBIDEXTERITY:

A MODERATED MEDIATION FRAMEWORK

OLI R. MIHALACHE1,2*, JUSTIN J. P. JANSEN3, FRANS A. J.

VAN DEN BOSCH3*, and HENK W. VOLBERDA3

1School of Business and Economics, Wilfrid Laurier University, Waterloo,

Ontario, Canada

2Faculty of Economics and Business Administration, VU University Amsterdam,

Amsterdam, The Netherlands

3Rotterdam School of Management, Erasmus University, Rotterdam, The

Netherlands

This study proposes top management team (TMT) shared leadership as an important enabler

of organizational ambidexterity. Moreover, we examine both how and when TMT shared

leadership enhances organizational ambidexterity by considering two TMT processes as

mediators (i.e., cooperative conflict management style and decision-making comprehensive-

ness) and two elements of organizational structure (i.e., connectedness and centralization

of decision making) as important contingencies. We test our moderated mediation frame-

work using time-lagged data from a cross-industry sample of 202 firms. We discuss how our

findings extend strategic entrepreneurship, ambidexterity,and leadership research and provide

implications for practice. Copyright © 2013 Strategic Management Society.

INTRODUCTION

A central tenet of strategic entrepreneurship research

is that firms need to simultaneously engage in

opportunity-seeking and advantage-seeking activi-

ties to survive over time (Hitt et al., 2001; Ireland,

Hitt, and Sirmon, 2003; Ireland and Webb, 2007;

Ketchen, Ireland, and Snow, 2007; Snow, 2007).

Supporting this idea, studies have indeed shown that

the ability to engage in both exploratory and exploit-

ative innovation, often referred to as organizational

ambidexterity, is associated with higher levels of

performance (He and Wong, 2004; Lubatkin et al.,

2006; Sirén, Kohtamäki, and Kuckertz, 2012; Uotila

et al., 2009). However, ambidexterity is difficult for

most firms to achieve due to inherent tensions

between exploratory and exploitative entrepreneurial

processes. Both processes compete for scarce

resources, have different time horizons, and may

cannibalize on one another (March, 1991; Smith

and Tushman, 2005). Given the importance of

ambidexterity for sustained performance, research

on strategic entrepreneurship and organizational

ambidexterity has started to explore how firms may

overcome these hurdles and to engage in both

exploratory and exploitative innovation.

Pioneering studies proposed structural solutions

for ambidextrous organizations by suggesting to

separate exploratory and exploitative processes

in different units (e.g., Kleinbaum and Tushman,

2007; Tushman and O’Reilly, 1996; O’Reilly and

Tushman, 2004). In this way, the top management

team (TMT) is considered an important locus for

Keywords: ambidexterity; TMT shared leadership; cooperative

conflict management style; decision-making comprehensive-

ness; connectedness; centralization

*Correspondence to: Oli R. Mihalache, School of Business

and Economics, Wilfrid Laurier University, 75 University

Avenue West, Waterloo, ON, N2L 3C5, Canada. E-mail:

oli.mihalache@gmail.com

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Strategic Entrepreneurship Journal

Strat. Entrepreneurship J., 8: 128–148 (2014)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej.1168

Copyright © 2013 Strategic Management Society

resolving conflicting tensions within ambidextrous

organizations and engaging in balanced resource

allocation (Burgelman and Grove, 2007; Smith and

Tushman, 2005; O’Reilly and Tushman, 2004).

Building on these insights, research so far has pro-

posed that characteristics of TMTs can predispose

TMT members to certain behaviors that may contrib-

ute to the ambidexterity of organizations (Beckman,

2006; Carmeli and Halevi, 2009; Lubatkin et al.,

2006). Moving beyond TMT predispositions, recent

studies on ambidexterity have also argued that the

leadership style of senior executives is particularly

important in understanding the effectiveness of TMT

processes and the ability of organizations to pursue

exploratory and exploitative activities (Jansen et al.,

2008). Yet, research has merely adopted a top-down

view on leadership, in which the CEO is mainly

responsible for leadership effects that influence

both TMT and organizational members. Emergent

research, however, has identified an alternative per-

spective on the role of leadership and suggested that

leadership behaviors may also flow laterally within

TMTs by sharing leadership responsibilities among

their members. Largely overlooked so far, we argue

that this latter perspective on leadership holds great

potential to better understand the ability of firms to

achieve ambidexterity because ‘usually the leader’s

style is not sufficiently effective to overcome the

natural differentiation of interests in a multifunc-

tional senior team’ (Beer et al., 2005: 452).

Our study contributes to this discussion by pro-

posing that TMT shared leadership can help

overcome the tensions between exploratory and

exploitative entrepreneurial processes. Shared lead-

ership refers to ‘the distribution of leadership influ-

ence across multiple team members’ (Carson,

Tesluk, and Marrone, 2007: 1218). Applied at the

TMT level, shared leadership is a practice in which

the CEO and other TMT members share the respon-

sibility for and fully participate in the tasks of lead-

ership, such as setting goals and motivating task

behaviors (Carson et al., 2007; Yukl, 1989). We

propose that TMT shared leadership can stimulate

organizational ambidexterity by prompting TMTs to

engage in (1) cooperative conflict management and

(2) comprehensive decision making. Thus, by

explicitly considering the mediating mechanisms

both theoretically and empirically, we further con-

tribute to research on strategic entrepreneurship,

organizational ambidexterity, and leadership as we

open the black box of how shared leadership affects

ambidexterity.

Furthermore, there is a paucity of studies analyz-

ing important contingencies in understanding the

effectiveness of leadership in ambidextrous organi-

zations (cf. Raisch and Birkinshaw, 2008). While

previous studies have shown the influence of the

external environment (Jansen, Vera, and Crossan,

2009b), the role of the internal context remains less

well explored. For instance, despite accumulating

evidence that the effectiveness of leadership for

stimulating firm-level innovation depends on the

organizational structure (e.g., Jung, Wu, and Chow,

2008), our understanding of how leadership and

organizational structure jointly determine the ability

of organizations to engage in exploratory and

exploitative activities remains limited.We contribute

to prior research by considering when (i.e., under

what conditions) shared leadership is most effective

in stimulating ambidexterity. We make a distinction

between formal and informal structural aspects

(Ghoshal, Korine, and Szulanski, 1994; Tsai, 2002)

and argue that centralization and connectedness

affect the extent to which TMT shared leadership

promotes a cooperative conflict management style

and comprehensive decision making within the

TMT. That is, through their role as first-stage mod-

erators, centralization and connectedness qualify the

indirect effects of TMT shared leadership on ambi-

dexterity. By analyzing this contingency role of the

organizational structure, our study answers a call for

more research on the boundary conditions concern-

ing the determinants of organizational ambidexterity

(Raisch and Birkinshaw, 2008).

Overall, we contribute to a novel understanding

about the importance of shared leadership in ambi-

dextrous organizations. Our resulting moderated

mediation framework considers both how and when

TMT shared leadership affects organizational ambi-

dexterity (see Figure 1). We test the proposed rela-

tionships on time-lagged data from a cross-industry

sample of 202 Dutch organizations. We find strong

empirical support for our hypothesis that TMT

shared leadership can stimulate organizational

ambidexterity. Also, empirical results suggest that

TMT cooperative conflict management style and

TMT decision-making comprehensiveness mediate

this relationship. Furthermore, we find that these

indirect effects are stronger in organizations that

have higher connectedness. However, we do not

find empirical evidence for the moderating role of

centralization of decision making. As such, we

highlight the importance of simultaneously consid-

ering mediating and moderating effects to enhance

TMT Shared Leadership and Ambidexterity 129

Copyright © 2013 Strategic Management Society Strat. Entrepreneurship J.,8: 128–148 (2014)

DOI: 10.1002/sej