Abstract
The aim of this article is to examine absorptive capacity and innovation-oriented corporate culture as moderators of the relationship between the ambidexterity of a CV unit and its performance. Accordingly, we propose that the absorptive capacity of a CV unit and an innovation-oriented, corporate culture positively moderate the effect of a CV unit's ambidexterity on its performance. We test our hypotheses with data from 180 CV units and their Taiwanese parent firms. Our paper contributes to a more fine-grained understanding of the role of ambidexterity in the CV units of emerging-market MNCs.
| Original language | English |
|---|---|
| Article number | 101930 |
| Number of pages | 13 |
| Journal | Long Range Planning |
| Volume | 53 |
| Issue number | 6 |
| Early online date | 2 Nov 2019 |
| DOIs | |
| Publication status | Published - Dec 2020 |
| MoE publication type | A1 Journal article-refereed |
Funding
The first two authors contributed equally. Paulina Junni mainly contributed to the theoretical aspects of this work, and Yi-Ying Chang mainly contributed to the empirical aspects. We thank Professor Tomi Laamanen (editor-in-chief) and two reviewers for constructive feedback. We acknowledge the financial support from the Ministry of Science and Technology in Taiwan awarded to Professor Chang.Table 3 summarises the results. Although we did not hypothesise a direct effect between CV-unit ambidexterity and CV-unit performance, the results confirmed the direct relationship (estimate = 0.29, p = 0.000; 95% confidence interval = CI = [0.02, 0.56], ?R2 = 16%9 9 R2 refers to the numerator in the Cohen's effect size formula below, R2(variable included) - R2(variable excluded), and shows the percentage of variance in CV-unit performance that is uniquely accounted for by the independent variable, i.e. CV-unit ambidexterity (16%) (Selya et al., 2012).; effect size10 10 The effect size is derived using Cohen (1988) formula for calculating the effect size = (f2) [R2(variable included) - R2(variable excluded)]/1 - R2(variable included)]. = f2 = 0.19). This effect size value approximately signifies a medium effect size according to Cohen (1988) guidelines (f2As to the hypotheses, the results support Hypothesis 1 by showing that CV unit absorptive capacity is a significant positive moderator of the relationship between CV-unit ambidexterity and CV-unit performance (estimate = 1.49, p = 0.000; 95% CI = [0.39, 2.59], ?R2 = 14%, effect size = f2 = 0.18), which corresponds approximately to a medium effect size according to Cohen (1988) guidelines (f2Our findings also support Hypothesis 2 by indicating that an innovation-oriented corporate culture positively moderates the relationship between CV-unit ambidexterity and CV-unit performance (estimate = 0.85, p = 0.000; 95% CI = [0.18, 1.52], ?R2 = 10%, effect size = f2 = 0.16). This effect size value can be interpreted as approximately medium according to Cohen (1988) guidelines (f2 Furthermore, the results support Hypothesis 3 as demonstrated by significant three-way interaction between innovation-oriented corporate culture, CV-unit absorptive capacity and CV-unit performance (estimate = 0.31, p = 0.000; 95% CI = [0.06, 0.56], ?R2 = 8%, effect size = f2 = 0.15). This effect size value approximately signifies a medium effect size according to Cohen (1988) guidelines (f2 For further testing of Hypothesis 3, we plotted CV unit absorptive capacity and innovation-oriented corporate culture following Cohen et al. (2003) and Dawson and Richter (2006) (see Fig. 2). In addition, we conducted simple slope difference tests.11 11 Results of the simple slope tests are available from the authors by request. Finally, we split the sample into ?high? and ?low? ambidexterity subsamples using the mean as the splitting criterion and examined the effect of the interaction between absorptive capacity and innovation-oriented corporate culture, which was more significant in the ?high ambidexterity? sample. These additional tests were in line with Hypothesis 3. The control variables were not significant.By illustrating the interaction mechanisms between CV-unit ambidexterity, CV-unit absorptive capacity and an innovation-oriented corporate culture, we contribute to a more nuanced understanding of the role of ambidexterity in the CV units of emerging-market MNCs. While CV-unit ambidexterity can be performance-enhancing on its own (Hill and Birkinshaw, 2014), we identify absorptive capacity, an innovation-oriented corporate culture and their combined effect (interaction) as important factors that help further boost the performance of CV-unit ambidexterity. This contributes by addressing calls for examining when ambidexterity is most performance-enhancing (e.g., Junni et al., 2013; O'Reilly and Tushman, 2013). By enabling a better understanding of external technological and internal corporate developments, CV-unit absorptive capacity can help the CV unit to focus on developing the novel capabilities (exploration) that enhance performance most and to build effectively on current internal resources in order to address market opportunities (exploitation). This enhances the positive effect of CV-unit ambidexterity. In addition, we establish that an innovation-oriented corporate culture is a critical aspect for the CV unit because it facilitates additional support and more engaged participation for exploitation and exploration by other parts of the MNC. Furthermore, an innovation-oriented corporate culture interacts with absorptive capacity to enhance the performance benefits of CV-unit absorptive capacity because absorptive capacity increases the CV unit's ability to achieve optimal allocation of the high quality resources and support it receives from other parts of the MNC as a result of the corporation-wide, innovation-oriented culture. These findings provide empirical support for early studies on ambidexterity that theoretically emphasised the importance of a supporting corporate culture (e.g., O'Reilly and Tushman, 2013; Tushman and O'Reilly, 1996). This suggests that the benefits of CV-unit ambidexterity are increased if supported by an organisation-wide culture (Crossan and Apaydin, 2010; O'Reilly et al., 2009) that enhances the effects of CV-unit ambidexterity and absorptive capacity.
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