Ambidextrous Knowledge Sharing within R&D Teams and Multinational Enterprise Performance: The Moderating Effects of Cultural Distance in Uncertainty Avoidance.

Date01 Junio 2020
AuthorLee, Jeoung Yul

1 Introduction

The seminal work of March (1991) on exploration and exploitation has inspired a search for the optimal balance between these two types of activities, known as 'organizational ambidexterity' (hereafter ambidexterity). As the optimal level of ambidexterity is concurrently associated with the firm's current performance and future survival, prior research has focused on exploring the question of which organizational instruments can help to achieve an optimal balance of ambidexterity. While one stream of literature has predominantly focused on formal structure or strategy approaches (Benner and Tushman 2003; Choi et al. 2016; Rosenkopf and Nerkar 2001; Rothaermel and Deeds 2004; Siggelkow and Levinthal 2003; Tushman and O'Reilly 1996), another stream of research has paid more attention to contextual approaches (O'Reilly and Tushman 2008; Raisch and Birkinshaw 2008; Smith and Tushman 2005). The latter stream of literature posits that ambidexterity can be accomplished via creating an organizational context, such as organizational culture and supportive human resource management (HRM) practices, that encourages individuals to develop capabilities enabling the pursuit of both explorative and exploitative activities that match the needs of the firm (Junni et al. 2015; O'Reilly and Tushman 2008; Raisch and Birkinshaw 2008). In this context, the innovation and HRM literature has consistently emphasized the importance of organizational culture in recruiting, encouraging, and retaining people who are engaged in innovation activities (Amabile 1988, 1996; Choi et al. 2019; Scott and Bruce 1994).

Building upon prior research, we aim to deepen our understanding of how cultural factors influence the association between ambidexterity and firm performance. While existing literature has mainly examined the specific cultural dimension of intraorganization that potentially impacts innovation activities of employees, we instead shift our attention to the 'cultural distance' in uncertainty avoidance (hereafter UA) between the R&D teams of multinational enterprises (MNEs) and the region where those teams operate. Because innovation activities are innately associated with taking risks and challenging conventional systems, UA has been considered to be one of the most critical cultural dimensions in the context of innovation (Amabile et al. 1996; Choi et al. 2019; Maseland et al. 2018; O'Connor et al. 2008). As Amabile et al. (1996) note, even the efficacy of management instruments and practices for innovation are largely influenced by how the entire organization maintains a supportive environment for risk-taking behavior.

In addition to exploring the role of the UA distance between the region and the team, rather than on the UA cultural value itself, we expand the scope of research on ambidexterity in a few other ways. First, while prior literature on ambidexterity has mainly explored the question of what determines the balance between exploration and exploitation, recent studies investigate the inside dynamics of ambidexterity (Cao et al. 2009; He and Wong 2004). Building on the concept of joint effects between two distinctive strategic activities (Venkatraman 1989), 'strategic fit as moderating' and 'strategic fit as matching', He and Wong (2004) and Cao et al. (2009) suggest two types of ambidexterity. 'Combined ambidexterity' refers to the interaction between exploration and exploitation, which captures the complementary effect between explorative activities and exploitative activities. 'Imbalanced ambidexterity' refers to the absolute difference between exploration and exploitation, which estimate the relative imbalance between explorative activities and exploitative activities. By using team-level data, we investigate how these distinctive dimensions of ambidexterity in R&D teams affect the performance of MNEs.

Second, our study focuses on ambidexterity in virtual knowledge sharing within the context of digitalization and recent advances in information and communication technologies (ICTs) (e.g., smartphones, tablets, computers, messengers, social networking services, etc.) rather than ambidexterity stemming from the traditional ways of co-located knowledge sharing within international R&D teams (e.g., face-to-face meetings and paper documents). Although the importance of conventional methods within a knowledge-sharing system to play in achieving ambidexterity is well-documented in prior literature, the virtual sharing of knowledge in an ambidextrous context has received relatively limited attention. Hence, we investigate how different dimensions of ambidexterity (combined and imbalanced) embedded in R&D teams affect an MNE's performance and how those relationships vary with the cultural distance between those R&D teams and the region where the R&D teams are located.

We test our theory using data from a sample of 4037 R&D teams in 1468 MNEs that operated in 24 regions of China from 2013 to 2015. Building upon prior research, the survey was conducted using the support of researchers from 14 Chinese universities and a professional survey institution specializing in international R&D teams that belong to MNEs in China.

At the team level, our findings on the relationships between two dimensions of ambidexterity (combined and imbalance) and firm performance are consistent with previous studies (Cao et al. 2009; He and Wong 2004), even though we focused on the contexts of virtual knowledge and MNEs, thus linking the micro-level and macro-level of ambidexterity. Furthermore, we also find that these relationships are distinctively moderated by the cultural value gap between the team and the regions where the team operates. More specifically, when the R&D team has a higher UA level than the region does, the association between combined ambidexterity and firm performance is weaker. In contrast, when the team's UA is lower than that of the region, the association between imbalanced ambidexterity and firm performance is stronger.

2 Literature Review and Hypotheses Development

2.1 Ambidexterity in Virtual Knowledge Sharing

The concept of exploration and exploitation has been extensively used in research since its introduction by March (1991). These two concepts have been discussed and elaborated in various contexts, such as capability-exploring and exploiting (Argyres 1996), widening and exploiting innovation (Malerba and Orsenigo 1996), path-breaking and path-dependent innovation (Karim and Mitchell 2000), and search depth and search scope (Katila and Ahuja 2002). Although these studies have used distinctive terminologies to support their arguments, the commonly accepted notion is that exploitation and exploration are two fundamentally different types of knowledge and play different roles in a firm's sustainable competitiveness. Consistent with prior literature (e.g., Argyres 1996; Katila and Ahuja 2002; March 1991), in our study, we define exploration as a firm's activities to increase its knowledge base by acquiring new knowledge (e.g., future generations of products, new services, etc.). In contrast, we define exploitation as the firm's activities to enhance and extend its existing knowledge base for continuous improvement (e.g., improvement of an existing product or current technologies, etc.). Although many previous studies have focused on clarifying the nature of exploration and exploitation, researchers have also shifted their attention to how firms strategically use these two distinctive search behaviors. The central notion of this stream of research is how to achieve balanced exploration and exploitation--organizational ambidexterity--to maximize firm performance.

As previously mentioned, ambidexterity in virtual knowledge sharing is generated when explorative and exploitative knowledge are shared, communicated, and allowed to interact with each other in a virtual manner (e.g., ICTs). While virtual and traditional knowledge sharing have some overlapping goals and characteristics, they also differ in their tools and outcomes, and each has its own pros and cons. For example, sharing knowledge virtually allows greater flexibility and reduces travel cost (Jimenez et al. 2017), and it can also reduce conflict and social fragmentation in an intercultural context (Stahl et al. 2010). By contrast, virtual knowledge sharing may also lead to a loss of non-verbal communication, less interaction and trust, weaker social cohesion, lowered social obligation, and less reciprocity (Falk and Fischbacher 2006; Jarvenpaa and Leidner 1999). However, social cohesion, social obligation, and reciprocity are both an input and an output, and they can actually increase when participants anticipate or aim to increase future interactions (Ensign 2008).

2.2 Combine Ambidexterity in Virtual Knowledge Sharing by R&D Teams and Firm Performance

Recent studies have aimed to develop more concrete and rigorous measures for estimating a firm's degree of ambidexterity via examining the nature of the interaction between the firm's exploration and exploitation (Cao et al. 2009; He and Wong 2004). Rather than arguing generally whether the relationship between explorative and exploitative knowledge is complementary or substitutive, this stream of research examines the types of ambidexterity that can be produced through specific interaction patterns between exploration and exploitation.

For instance, based on He and Wong's (2004) work, Cao et al. (2009) introduced the concepts of combined and imbalanced ambidexterity. They illustrated this notion using an example of two hypothetical firms: firm A with a score of 10 on exploration and 5 on exploitation, and firm B with a score of 5 on both exploration and exploitation. As we stated in our introductory section, combined ambidexterity refers to the interaction between exploration and exploitation, which reflects the complementary effect and is usually operationalized as a product of two scores. In...

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