Balancing Innovation and Operation in Organizations:A Multiple Case Study on Ambidexterity

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Master Thesis

Balancing Innovation and Operation in

Organizations:

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Master Thesis Degree in General Management

Title: Balancing Innovation and Operation in Organizations: A Multiple Case Study on Ambidexterity

Authors: Hisham Abu Sitta & Mohannad AlNujoom Tutor: Jerker Moodysson

Date: 2021-05

Abstract

Background: Since quick change is one of the most distinguishing qualities of today's market, organizations must be able to cope with it and match markets by keeping up with new market trends and wants, as well as adapting to changes in market features. This can be achieved by pursuing both exploration and exploitation to ensure success in the short and long term. Since this is the case, it is vital that companies find the right balance between operation and innovation to be able to exploit present opportunities and explore future directions.

Purpose: This research aims to study the role of ambidexterity in achieving the desired balance in different industries. Every organization is unique, and companies differ from each other in many ways such as; work system, organizational structure, work philosophy and size. This study discussed the issue of balancing innovation and operation, to evaluate the process of choosing the right ambidextrous approach to be followed by different organizations across different industries.

Method: Multiple case study was used. Data collected had both primary and secondary sources where the primary sources were collected through semi-structured interviews and the secondary sources were archives and reports. Grounded analysis was used in the analysis process to conclude the theory.

Conclusion: The research results showed that when organizations achieve ambidexterity by following one of the ambidexterity approaches, the choice of the right approach depends on certain factors on different levels that need to be considered, and the four tensions of ambidexterity differ from one approach to another. Hence, the tensions should be verified and handled in relevance to the followed ambidexterity approach.

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List of Figures

Figure 1. Theoretical Framework Map ... 9

Figure 2. Organizational Chart for Case 1 ... 15

Figure 6. Code to Theory Model... 27

Figure 7. Codes ... 28

Figure 8. Categories & Themes ... 29

List of Tables

Table 1. Empirical Results ... 25

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1 Introduction

Innovation plays an important role in business nowadays, since rapid change is one of the most distinctive characteristics in today’s market, and organizations need to involve it in their processes to be able to cope with this change and fit markets by following up with the new market trends and needs and adapt to the changes in market characteristics. There are different types of innovations that can have different targets, which can be aimed towards helping in creating competitive advantages, meeting the needs and demands of those who the companies serve, and facilitating creating value for the stakeholders. Those targets may include existing markets or new undefined markets.

There are four types of innovation (Henderson and Clark, 1990), the first type of innovation is Incremental innovation, the underlying core concepts and links remain the same, but improvements occur in individual components in the existing services and products to deliver a better value to customers and markets. Examples can be seen in product and service improvements, process automation, minimizing waste and internal process and tool improvement. The second type of innovation is Modular innovation, which uses the architecture and configuration associated with the existing system of an established product while employing new components with different design concepts, it may result in the complete redesign of core components, while leaving linkages between the components unchanged. The third type is Architectural innovation, it reinforces the core design concepts but changes the nature of interactions between core components which can result in changing a certain element in the concerned firm. The fourth is Radical (Discontinuous) innovation, it has a revolutionary nature and creates novel technologies that change the whole industries and/or the basis of competition.

“Innovation marks a vital but challenging managerial responsibility. Innovation denotes intricate knowledge management processes of identifying and utilizing ideas, tools, and opportunities to create new or enhanced products or services” (Subramaniam and Youndt 2005, Andriopoulos and Lewis 2009). Indeed, for many organizations, the dedication of skills and resources to help in changing to create value for stakeholders, especially customers, is becoming increasingly difficult, but it is essential for the long-term success of these organizations, and failing to achieve such changes can have severe consequences. Consider the case of Lloyds TSB Bank Plc, based in the United Kingdom, delivered spectacular shareholder returns throughout the 1980s and 1990s, they focused on return on equity. But little attention was paid to understanding changing customer needs or to the morale of the workforce, which ultimately undermined the company’s performance. From 1998 to 2003, Lloyds TSB lost 60% of its market value (Birkinshaw and Gibson 2004).

In contrast, “too much focus on exploration leads to a "failure trap" of underdeveloped new ideas: Innovations are replaced by new ideas before they have had the opportunity to contribute to the firm's revenue stream” (Levinthal & March, 1993, Article 10). Too much attention on exploration

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means building tomorrow’s business at the expense of today’s business. Consider the case of Sweden’s Ericsson, which has led the technological development of the mobile telephony industry. Ericsson developed one of the first analog mobile systems; it led the industry wide development of the global system for mobile communication; and it has pioneered general packet radio system and third-generation mobile technology standards. But the impressive growth in sales in Ericsson’s systems business masked a high-cost and bloated organizational structure. At its peak, the R&D organization employed 30,000 people in approximately 100 technology centers with considerable duplication of effort. Adaptability, in other words, had taken precedent over alignment, and the subsequent crash in the telecom industry meant that Ericsson was hit harder than most. Since its peak in 2000, Ericsson has laid off around 60,000 employees and closed most of its technology centers in a bid to restore the profitability of its current businesses (Birkinshaw and Gibson 2004). One of the more enduring ideas in organization science is that firms need to ensure that they have the optimal mix of exploration and exploitation to ensure success in the short and long term, it is vital that companies find the right balance between operation and innovation to be able to exploit present opportunities and explore future directions.

When considering the study of organizations, the ability of organizations to pursue both exploratory and exploitative activities sequentially or simultaneously is referred to as organizational Ambidexterity (O'Reilly & Tushman, 2004), which emerged as a topic that catches the interest of researchers and leads to an outpouring of studies, and was a focus for scholars especially in the last decades. Ambidexterity will be the focus of our research and theoretical frame of references which will be explained later in this paper.

In the last decades, there were many studies on ambidexterity which provided rich content in the ambidexterity research area. We performed a literature review, which is further explained in the chapter of theoretical frame of references, and we identified some research gaps that needs further investigation.

One of the gaps is seen in addressing questions on the dynamic processes underlying organizational ambidexterity, and that more research is needed to further understand the role of industry dynamics in Organizational Ambidexterity. Another gap is that studies spanning multiple levels of analysis are also scarce and studies that examine the conditions under which ambidexterity leads to success are relatively scarce. Furthermore, there is a need to develop more fine-grained accounts that consider the mediators and moderators that may affect the ambidexterity-performance relationship.

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2 Research purpose

The aim of our research is to define the criteria where the optimum balance can be found between operation and innovation within businesses, this will lead us to study from organizations perspective, the approaches which need to be followed by organizations in order to reach the criteria needed to achieve the optimum balance which will assure high levels of innovation and stable operations.

This research aims to study the role of ambidexterity in achieving the desired balance in different industries. Every organization is unique, and companies differ from each other in many ways such as; work system, organizational structure, work philosophy and size.

It can be summarized by saying that the purpose of this research is to find the best approaches that enable organizations to work innovatively without affecting its operations’ stability. The main focus of our thesis is to explore the following research question:

How can companies across different industries pursue innovative futures while enhancing their present operations, i.e., achieve ambidexterity?

In order for us to address this research question, we address two other sub-questions:

1- What factors might affect the adoption of the most optimum approach of achieving ambidexterity in different companies across different industries?

2- how do the four tensions of ambidexterity relate to each different approach of achieving ambidexterity?

3 Theoretical frame of references

3.1 Background

ambidexterity is an attribute that refers to mastering both adaptability and alignment in order to achieve short-term and long-term success. Adaptability is the ability to move quickly toward new opportunities, to adjust to volatile markets and to avoid complacency, while Alignment is a clear sense of how value is being created in the short term and how activities should be coordinated and streamlined to deliver that value (Birkinshaw and Gibson 2004).

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Organizational ambidexterity means that the organization is able to exploit and explore to compete in mature technologies and markets where efficiency and control are important and to also compete in new technologies and markets where flexibility, autonomy, and experimentation are needed (O'Reilly and Tushman, 2013).

3.1.1 Tensions

(Raisch et al, 2009) suggested four central tensions of Ambidexterity that can help researchers adding to the literature of Ambidexterity when they further explore them. The first tension explores differentiation and integration as two pathways to Ambidexterity that serve as two different options or as a combined interdependencies that enhance each other. Differentiation in this context means to separate exploration and exploitation into different units with different dedicated resources, this approach was emphasized by a group of studies since it develops appropriate clear contexts for exploration and exploitation, also considering the exploration unit to be smaller, less centralized and more flexible. Differentiation was criticized building on the idea that creating value needs to recombine exploration and exploitation. On the other hand, integration links to the structures that enable an organizational unit to pursue both exploration and exploitation within its own, such structures are aimed to allow and enable employees of the same unit to shift back and forth between a bureaucratic structure for routine tasks and an organic structure for nonroutine tasks. Integration had its share of criticism, researchers pointed out that integration depends more on the ability of the individuals to take on both exploitative and explorative tasks and can be constrained by this. Most research viewed differentiation and integration as complementary pathways rather than alternatives, this creates a paradox which actively demonstrates that continuous managerial attention is needed to find the right balance when combining differentiation and integration, this balance may vary according to different industries, time periods, tasks and activities at hand. The second tension relates to the ambidexterity levels, i.e.; individual versus organization. Ambidexterity research has usually described organizational mechanisms that enable firms to simultaneously address exploitation and exploration (Raisch et al, 2009), a firm can become ambidextrous by creating two units where one of them pursues exploration while the other pursues exploitation, a unit can be ambidextrous by creating two teams with two different focus, and a team can achieve ambidexterity by assigning different roles to its members, this suggests that individuals should focus on either exploration or exploitation depending on their assigned roles. Studies also suggest that managers on the top must be able to integrate both exploration and exploitation, Ambidextrous managers must manage contradictions and conflicting goals (Smith and Tushman 2005), engage in paradoxical thinking (Gibson and Birkinshaw 2004), and fulfill multiple roles (Floyd and Lane 2000). But how can managers acquire such ability? Research explored that Individuals with a breadth of prior knowledge categories, as well as various linkages across them, may thus be better prepared to take on both tasks (Raisch et al, 2009). In addition to managers personal characteristics, there are organizational factors that enhance individual ability

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to act ambidextrously, practices such as socialization, recognition, and team-building facilitate these factors. Building on these arguments, it can be said that organizational ambidexterity is influenced to a certain level by the individuals’ ability to act ambidextrously.

The third tension relates to the perspectives of ambidexterity, i.e.; static versus dynamic perspectives, studies that focused on ambidexterity being “sequential ambidexterity” which is achieved by organizations cycling through periods of exploration and exploitation considered ambidexterity from a dynamic perspective. In contrast, studies focusing on ambidexterity as “simultaneous ambidexterity” which is achieved when organizations adopt certain configurations and structures considered ambidexterity from a static perspective. Recent studies showed that organizations managing for ambidexterity may require different solutions over different times, these solutions may include structural and contextual approaches, which will be discussed further later on, and achieving ambidexterity requires both simultaneous and sequential attention, thus, managing ambidexterity is more of a dynamic perspective which changes over time.

The fourth tension relates to the internal versus external perspectives, since solutions were suggested to solve the paradox of exploration and exploitation by externalizing one of these activities by creating alliances or even outsourcing, these solutions are backed up by the research especially in exploration which point out the importance in acquiring external knowledge and the emphasis on following an open innovation process than a closed one. On the other hand, studies conclude that the externalization of exploitation or exploration processes may be harmed by the difficulties in realizing strategic integration across independent firms (Benner and Tushman 2003, Raisch et al 2009). Still studies indicate that external knowledge can contribute in the reconfiguration of internal knowledge, such as “combinative ability” which defines as the firm’s ability to “synthesize and apply current and acquired knowledge.” (Kogut and Zander 1992, p. 384), and “architectural competence” which defines as “the ability to access new knowledge from outside the boundaries of the organization and the ability to integrate knowledge flexibly across boundaries within the organization” (Henderson and Cockburn 1994, p. 66). Studies also indicate that interorganizational activities Enable exploitative and explorative knowledge processes. It is also important to mention that internal knowledge processing and external knowledge acquisition are both necessary and ambidexterity may depend on them, excessive focus on one of them is still considered a disfunction, and that the ability to integrate external knowledge relies on a combination of external brokerage and internal absorptive capacity of the organizations.

3.1.2 Achieving Ambidexterity

There are three forms of ambidexterity, the first approach is sequential Ambidexterity views that firms can realign their structures over time to align them with their strategy and to reflect changed environmental conditions. In this approach, firms use "semi-structures" and "rhythmic switching"

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to move back and forth between periods of exploitation and exploration. It was also suggested that sequencing changes in organizational structure to promote temporary decentralization can be an effective way of exploring and exploiting (Siggelkow and Levinthal 2003). Examples of firms with such an approach can be seen in the studies that involved firms like Ford and Hewlett-Packard. Overall, the studies suggest that sequential ambidexterity may be more useful in stable, slower moving environments such as service industries and for smaller firms that might lack the sufficient resources to pursue a different approach of Ambidexterity.

Second, the standard approach which is to create a Structural ambidexterity that is to create separate structures for different types of activities. It is referred to also as Simultaneous ambidexterity which balances the exploration/exploitation trade-off through the simultaneous pursuit of both using separate subunits. For example; the core business units are given responsibility for creating alignment with the existing products and markets; and the R&D department and business development group are given the job of prospecting for new markets, developing new technologies and keeping track of emerging industry trends (Birkinshaw and Gibson, 2004). But this separation can lead to isolation, and lacks the linkages between the two activities. Thus, to avoid extreme form of separation, many companies have followed different approaches of structural ambidexterity, some pull individuals out of their current jobs to work in a dedicated cross-functional team for a limited period of time. Others separate the different types of activities within a single business unit — for example, to create a small business-development team attached to a business unit (Birkinshaw and Gibson, 2004).

The third form which has been developed and explored by (Birkinshaw and Gibson, 2004), is Contextual ambidexterity, that calls for individual employees to make choices between alignment-oriented and adaptation-alignment-oriented activities in the context of their day-to-day work. “In a business unit that is ambidextrous, the systems and structures are more flexible, allowing employees to use their own judgment as to how they divide their time between adaptation oriented and alignment-oriented activities” (Birkinshaw and Gibson, 2004). Contextual ambidexterity is defined as “"the behavioral capacity to simultaneously demonstrate alignment and adaptability across an entire business unit” (Birkinshaw and Gibson, 2004, p209). Contextual Ambidexterity differs from the other two modes in the fact that it emphasizes on the individual rather than the unit, and that the organizational systems that enable individual adjustments are never concretely specified.

Some studies suggested that a simultaneous approach may be more appropriate in dynamic markets where conditions are changing, while in more stable environment, firms may be able to afford a sequential approach. Contextual ambidexterity within a business unit may promote the local innovation and change needed to continually adapt to small changes in the environment (O'Reilly and Tushman, 2013).

These three approaches differ from each other, but two of them are best viewed as complementary, successful organizations use a combination of all approaches. This can be seen in the example of Hewlett-Packard, the firm illustrated all three modes and how each promotes exploration and

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exploitation, this is seen in the development of the laser printing business which resulted from the discovery of an ink used for integrated circuits (contextual ambidexterity) followed by the establishment of a separate printing business (structural ambidexterity) that ultimately led to a firm-wide reorganization to better align with the personal computer business (sequential ambidexterity).

3.1.3 Ambidexterity VS. firm performance

Perhaps the question about whether Ambidexterity is associated with a positive relation with firm performance or not, is one of the most important questions and aspects in the body of research. Evidence can be seen in a clear pattern in different sides of firm performance, studies suggest that Ambidexterity has been shown to be positively associated with sales growth (Auh &Mengue, 2005; Caspin-Wagner, Ellis, & Tishler, 2012; Geerts, Blin denbach-Driessen, &Gemmel, 2010; Han & Celly, 2008; He & Wong, 2004; Lee, Lee, & Lee, 2003; Nobeoka &Cusumano, 1998; Venkatraman, Lee, &Iyer, 2006; Zhiang, Yang, & Demirkan, 2007), subjective ratings of performance (Bierly & Daly, 2007; Burton, O'Reilly, & Bidwell, 2012; Cao, Gedajlovic,& Zhang, 2009; Gibson & Birkinshaw, 2004; Lubatkin, Simsek, Ling, & Veiga, 2006; Markides & Gharitou, 2004; Masini, Zoilo, & van Wassenhove, 2004; Schulze, Heinemann, & Abedin, 2008), innovation (Adler, Goldoftas, & Levine, 1999; Burgers, Jansen, Van den Bosch, & Volberda, 2009; Eisenhardt &Tabrizi, 1995; Katila & Ahuja, 2002; McGrath, 2001; Phene, Tallman, & Almeida, 2012; Rothaermel &Alexandre, 2009; Rothaermel & Deeds, 2004; Sarkees& HuUand, 2009; Tushman, Smith, Wood, Westerman, & O'Reilly, 2010; Yang &Atuahene-Gima, 2007), market valuation as measured by Tobin's Q (Goosen, Bazzazian, &Phelps, 2012; Uotila, Maula, KeU, & Zhara, 2008; Wang & Li, 2008), and firm survival (Cottrell & Nault, 2004; Hensmans &Johnson, 2007; Hill & Birkinshaw, 2012; Kauppila, 2010; Laplume & Dass, 2012; Mitchell & Singh, 1993; Piao, 2010; Tempelaar & Van de Vrande, 2012; Yu & Khessina, 2012). Studies also suggest that Ambidexterity can be inefficient and duplicative under certain circumstances and conditions, yet the empirical evidence suggests that under conditions of market and technological uncertainty, it typically has a positive effect on firm performance.

According to the research conducted by Junni and colleagues (Junni et al. 2013) to study the relationship between organizational ambidexterity and performance, they found that organizational ambidexterity was positively and significantly associated with performance, yet the results indicated a strong presence of moderators such as, research method, performance measure, measurement of OA, level of analysis and the industry.

As for the research method, studies based on cross-sectional surveys reported stronger results than archival studies concerning both the effect of OA and the effects of its dimensions (exploration and exploitation), possibly because the relationship between OA and performance is a complex one and was not fully captured with some of the archival measures. The second moderator is the

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performance measure, as indicated in the previous studies, it includes both objective and perceptual. The objective performance focuses on growth and profitability, and it was found that certain aspects of performance were significantly related to OA (e.g., growth) whereas others were not (e.g., profit).

Regarding the measurement of OA, the results suggest that combined measures of OA (high level of both exploration and exploitation) contribute most to performance and capture the performance effects better than balanced measures (obtaining an optimal ratio between exploration and exploitation). In some cases of the balanced ambidexterity, it may represent a low level of exploration and exploitation. “These kinds of cases mixed in with cases in which exploration and exploitation are both at medium or at high levels could explain why we found a positive but weaker performance effect for balanced measures compared with combined measures”. (Junni et al. 2013). Level of analysis is crucial in OA studies because it can be examined at different levels and could have different effects. Referring to the study conducted by (Junni) it was found that the OA-performance relationship became stronger as the level of analysis progressed from lower to more aggregate levels. Firms can create OA in several different ways, some involving separation and others integration, which in combination influence performance at the firm level.

The last moderator is the industry. Results of the study show that organizational ambidexterity is less important and has a weak performance impact in manufacturing industries, where in dynamic markets such as service and high technology sectors, firms need to explore and exploit existing resources, that suggests an increased and constant need for OA in dynamic environments. On the other hand, the traditional and more stable markets and because these markets have a longer period of stability, this may allow firms to focus on exploitation for longer periods before they need to pay increased attention to exploration, even though ultimately both are needed. (Bingham & Eisenhardt, 2008; Brown &Eisenhardt, 1997, Junni et. al. 2013).

(O'Reilly and Tushman, 2013) concluded three suggestions for the relation between Ambidexterity and Firm performance, the first suggestion relates to Ambidexterity having a positive relationship with firm performance. The second suggestion is that these effects of Ambidexterity on firm performance are influenced by the firm’s environment with Ambidexterity being more effective under uncertainty conditions and when sufficient resources are available for the firm, suggesting that this case usually applies for large firms rather than small ones. The third suggestion is that evidence shows both under-use or over-use of Ambidexterity comes at a cost, which implies an inverted U-shaped relationship between Ambidexterity and Firm financial performance.

3.2 Theoretical framework

In this part, we will introduce our theoretical framework which we formulized building on the literature review performed, and to allow us to answer our research questions to fulfill the research

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purpose. The theoretical framework will be applied and further developed with the analysis process which is performed on the collected data through our primary source of data, which is the interviews with a semi-structured protocol performed with several companies serving different markets, and our secondary source of data which includes archives and statistical reports.

The current literature of ambidexterity argues that there is no certain favorable approach among the three ambidexterity approaches that achieves better results when pursuing both alignment and adaptability in all cases, rather there are certain factors that relate to each different case that affect the adoption of the most optimum approach of ambidexterity. Our theoretical framework will focus on certain factors and relate them to the ambidexterity approaches that are adopted by different companies in different industries. Thus, the factors considered will be mainly on a micro environment (industry) level and internal environment (organization) level.

Another important part of our theoretical framework is building the relation between the four tensions of ambidexterity and the three approaches. The analysis of the data will further develop this relation to define how each type/level of the four tensions relates to each of the three approaches separately. The figure illustrates our theoretical framework map.

Figure 1. Theoretical Framework Map Industry rganizational structure Size egion b ectives ifferentiation and Integration Individual vs rganization Static versus ynamic Internal versus External Structural Ambidexterity Contextual Ambidexterity Sequential Ambidexterity Factors Ambidexterity Approach Tensions elate to Affect

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4 Methodology

In this section, we will discuss the methodology and the research philosophy of our thesis

including the ontological position and the epistemological position of the research, then explaining the methods and tools used in data collection data analysis which were followed in the research. We will conduct a qualitative research where we will use Multiple Case Study Methodology, the goal of the Case Study research is to provide an in-depth understanding for a phenomenon in its “real life” context, Case study research is used to test theory and/or develop theory about a bounded phenomenon (Easterby-Smith M. et al, 2018). Moreover, the multiple case study aims to understand the unique cases as well as the unique and common themes. Multiple case study will best serve our research, since we aim to investigate factors and tensions that vary among different industries and different organizations, by identifying the similarities and differences among different cases to increase the level of generalization.

4.1 Research Philosophy

The main reasons why an understanding of philosophical issues is very useful can be summed in four points. First, researchers have an obligation to understand the philosophical underpinnings of their research to have a clear sense of their reflexive role in research methods. Second, understanding the philosophical foundations of one’s research is essential for clarifying research designs. Third, knowledge of philosophy can help researchers to recognize which designs will work and which will not. Finally, it can help researchers to identify, and create designs that may be outside their experience (Easterby-Smith M. et al, 2018).

Ontology is the basic assumption that the researcher makes about the nature of reality (Easterby-Smith M. et al, 2018, p. 109). Ontology has different positions; from realism and internal realism to relativism to nominalism. The first two believe that one reality exists and categories and structure of the world are causally independent but the difference between them is that realism believes that the truth and facts can be revealed while internal realism believes truth is obscure and cannot be accessed directly. Relativism believes that that the reality depends on the perspectives from which it is observed, and that the knowledge of the external world is relative to the procedures used in gathering it. Nominalism believes that there is no truth and the facts are all human creations.

In this research that we are conducting in our thesis, we assume Relativism as an ontological position since relativism believes there are multiple truths and that the facts vary between different perspectives which matches with our study field and area of research, since we are considering the paradox from the perspective from organizational ambidexterity strategies in following innovation

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rather than the other traditional strategies. Moreover, we studied the problem from the perspective of organizations, i.e., management point of view.

Epistemology is the topic of knowing, it is the study of the nature of knowledge and ways of inquiring into the physical and social world (Easterby-Smith M. et al, 2018, p. 120). There are two different positions in epistemology; positivism and social constructionism. Positivism's position adopts the key idea that the social world exists externally, and that its properties can be measured through ob ective methods. While social constructionism position tells that ‘reality’ is determined by people rather than by objective and external factors, and hence it is most important to appreciate the way people make sense of their experience (Easterby-Smith et al., 2018, p. 120).

A Social constructionist position is adopted for our research since the elements of social constructionism will be followed in our study. Firstly, the data in this study is contextualized thick qualitative data that are collected through interviews as a primary source where the observers are part of the process. Secondly, sampling strategy used is Theory-guided sampling in which the selection of cases depends on whether they meet certain theoretical characteristics (specific reasons). Thirdly, the study is holistic and it includes the complexity of whole situations. Finally, generalization in social constructionism is achieved through theoretical abstraction, and this study takes an inductive approach where theory is generated from the cases studied, then theory is used to generalize the findings.

4.2 Data collection

The primary source of data collection of our research was interviews, since it enables an in-depth exploration and provides qualitative data which aligns with our research study. Moreover, this method best serves the limited period of our thesis.

An initial sample of organizations is selected, then initial interviews are conducted to check correspondence with the sample criteria, that serve our research aim, which were defined prior to sampling. Furthermore, measures are taken to achieve an unbiased sample. This sampling strategy can be considered as Theory-guided sampling in which the selection of cases depends on whether they meet certain theoretical characteristics. We aim to increase the transferability level by using this theoretical/purposive sampling.

The sample criteria are defined to include companies that aim to achieving innovation while having stable operations, as well as companies that adopt ambidexterity in some or all their organizational structures.

Our refined sample included four different organizations across four different industries, which are: Organization 1 (Construction Industry), Organization 2 (Information Technology Industry),

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Organization 3 (Power Tools Industry), and Organization 4 (Wind Energy Industry). Also, the four organizations differ in regions they serve.

Interviews are conducted based on a “semi-structured interview” protocol, and data are collected from them. Qualitative interviews are directed conversations evolving around questions and answers about a certain topic (Lofland and Lofland, 1984, Easterby-Smith M. et al, 2018, p. 277). Interviews differ from everyday conversations in that they are based on series of questions that follow a particular purpose, usually the in-depth exploration of a particular topic or experience (Charmaz, 2014). An interview is always contextual and negotiated, and in contrast to an interrogation its purpose has to be negotiated between the interviewee and the interviewer.

Semi-structured interviews are used when the aim of the interviews is to develop an understanding of the respondent’s ‘world’ so that the researcher might influence it, either independently or collaboratively – as in the case with action research (Easterby-Smith M. et al, 2018, p. 278). Also, it is necessary to understand the constructs that the respondents use as a basis for their opinions and beliefs about a particular matter or situation (Easterby-Smith M. et al, 2018, p. 278).

Interviews were conducted at two different levels to study how organizations achieve ambidexterity at different levels. First, at a strategic level, with a top management team like directors, vice presidents and senior managers. Second, at the project level, where project leaders and team members were interviewed. A total of 12 interviews were conducted. During the interviews, we ensured the credibility by summarizing the information obtained from participants and questioning them again to ensure the accuracy of the reflection of their views.

A secondary source of data collection for the research was archives and reports. Data collected from the secondary sources contribute in understanding the organizations sample which we are interviewing and the different industries they are serving.

During the data collection, thick descriptive data were collected from our sources to increase the level of transferability.

4.3 Data Analysis

Data analysis is the process of turning data into information by summarizing the collected data and interpreting it into theory, it is the ways in which complexity is reduced and how theories are developed. According to (Easterby-Smith M. et al, 2018) there are eight different approaches to qualitative data analysis: content analysis, grounded analysis, template analysis, visual analysis, discourse analysis, conversation analysis, argument analysis and narrative analysis. Each of these

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approaches’ frames data in a certain way, and involves a number of methods and techniques for exploring, interpreting and comparing data.

In this study the grounded analysis approach is used. Grounded analysis aims at building theory from categories that are ‘grounded’ in the data. Hence, grounded analysis tends to be more holistic as it aims to derive structure from data in a process of comparing different data fragments with one another (Easterby-Smith M. et al, 2018). Grounded analysis suits the Epistemological position of our research where theory is generated from the cases studied, then theory is used to generalize the findings.

There are seven steps to grounded analysis; familiarization, reflection, open-coding, conceptualization, focused re-coding, linking, and re-evaluation (Easterby-Smith M. et al, 2018). These seven stages imply the “code-to-theory” model of the grounded analysis which starts by deriving codes from data, then categories from codes, then themes from categories where theory is constructed from these themes.

5 Empirical Findings

This part will summarize the raw results and the pure data collected from the different organizations through the semi structured interviews which we conducted. Our sample of organizations included four different companies serving four different industries including construction industry, IT industry, power tools industry, and educational industry.

Organization 1 (construction industry)

About the company

The company was founded in 2007 in Qatar, it is a contracting company that specializes in high rise buildings, army camps, hotels, residential compounds, and many other building constructions. It started as a small company with 8 employees including the owner working on small construction pro ects such as building private houses, house extensions, renovations…etc. The company grew gradually each year, in 2013 it managed to sign several big projects including a 300 villas compound, two 4-star hotels, and several commercial and residential buildings, which resulted in expanding the company size to include over 800 employees. Nowadays, the company has over 2500 employees and has 23 ongoing projects including 12 mega projects with budgets ranging between $17M to $450M.

The company is privately owned by two partners; the first partner with 51% share of the company and a second partner with 49% share of the company. The former partner is a silent partner who is investing in the company while the later is the General Manager of the company.

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14 The Construction industry in Qatar

In a market study done by Mordor Intelligence in 2020, The Qatari construction market is expected to register a CAGR of more than 8% over the forecast period, 2020-2025. Qatar is expected to be among the fastest-growing global construction markets during the forecasted years, with robust growth forecasts. The country’s construction industry will grow from investments made in preparation for the 2022 FIFA World Cup and Qatar National Vision 2030. The main focus in construction will be to develop the infrastructure, create a modern residential and hospitality environment to support the predicted increase in population and to create a range of world-class sporting venues.

The growth is mostly driven by the public expenditure, the major development of the infrastructure with the government planning to spend over USD 200 billion on major transport projects, coupled with the rapid expansion of tourism, education, and real estate, are expected to dominate economic diversification efforts under the auspices of Qatar National Vision 2030, while the 2022 FIFA World Cup has set a mid-term deadline for several high-profile projects. In addition, the country in 2018 announced the investment of an estimated USD 85 billion worth of planned projects in the coming years to reach the Qatar National Vision 2030.

The organizational structure

The company has five main departments; financial department, operations department, PMO department, human resources department, and legal department. Each of the departments has its own director and all the directors report to the general manager. The main focus will be on the Operations department and the PMO department since most of the exploitation and exploration activities generate in them.

All the projects are run by the operations department. The operations department is divided into four subdivisions that are called “areas”, each area has an area manager who is responsible for several projects and each project has a project manager who reports directly to the area manager. Each project has its own budget, resources and on-site staff that differ in each project depending on the project size and contractual specifications. The collaboration and reallocation of resources among different projects in the same area is achieved through the area manager, while these processes are communicated among the different areas through the operations manager.

On the other hand, the market planning and innovative activities are under the responsibility of the PMO department through the R&D unit. The PMO department is divided into four sub-departments; the commercial department, the technical department, the project planning department and the R&D unit. The main targets of the R&D unit are aligned in exploring future opportunities while the rest of the PMO department is serving as support to the operations department in technical issues, procurement, contractual aspects and project planning and scheduling.

The company has a hierarchy structure and it is centralized, the decision making is done through the upper management by conducting meetings that include the general manager with the heads of the departments. The main objectives and goals are set in an annual meeting which coincides with

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the annual budget meeting and a follow up meeting is conducted after six months. In addition, there are meetings that are conducted which include the general manager and the departments’ directors in the case of awarding new projects, and monthly follow up meetings.

Figure 2. Organizational Chart for Case 1

Communications

Communications happen between departments on different levels. The first level happens on daily basis and it involves collaboration in routine tasks through different levels of employees. The second level is achieved by weekly progress meetings through middle management. The third level is done through the directors of the departments to follow up on the main objectives of the year and discuss challenges and opportunities, and a report is submitted to the general manager by the end of the meeting.

An important part of transferring knowledge comes from the operation department, after the completion of each project and when submitting the closeout documents, one important document is called the “lessons learned” document that contains ideas and adaptation strategies that helped the project to overcome certain challenges and exploit certain opportunities throughout the project.

Employees

“One of the cornerstones of the business is being fully committed to staff retention and development they are essential components in meeting the challenges faced by the company, and to realize the opportunities that face us today and in the future.”

The company aims to develop the employees since they play a big part in the company’s success, monthly training seminars are provided to each department. The employees are awarded roles not randomly but depending on their capabilities such as experience and educational backgrounds. The employees are encouraged to grow and empowered by being responsible for their roles and the success of their departments and by giving them the opportunity to take a bigger part in the company by offering promotions upon an annual evaluation done for each employee.

HR team Administration Area 1 Area 2

Area 3

General Manager

Operations Human Resources

Legal PMO Finance

Area 4

R&D Unit Technical Department

Project Planning

Commercial Department

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The annual evaluation serves as one part of an incentive plan, in which certain monetary bonuses are given to the employees upon client satisfaction, tasks completion and other criteria which are all connected to both alignment and adaptation.

Achieving Ambidexterity

The company achieves ambidexterity by following a structural approach to ambidexterity since the exploitation is the responsibility of the operations department and exploration is the responsibility of the R&D unit. Each of the departments has separate dedicated resources, and within the PMO department the R&D unit has separate resources from the rest of the department. The structural ambidexterity is achieved by the differentiation between exploration and exploitation in two different units, yet a level of integration is needed to have better results in both activities. The integration between both departments in this company is achieved through upper management; i.e., the departments directors and the general manager.

Although the company follows a structural approach to ambidexterity, the R&D unit in certain situations (such as the start of a new mega project) shifts focus to exploiting present opportunities for a certain period of time, this makes the unit follow a sequential approach to achieving ambidexterity within the unit itself. Both exploration and exploitation are achieved internally within the organization.

Organization 2 (Power tools supplier)

About the company

Founded in 1985, it is a fast-growing world leader in Power Tools, Accessories, Hand Tools, Outdoor Power Equipment, and Floorcare, professional and industrial users in the home improvement, repair, maintenance, construction and infrastructure industries. The Company is committed to accelerating the transformation of these industries through superior environmentally friendly cordless technology.

The Company maintains a powerful brand portfolio, global manufacturing and product development footprint, healthy financial position with record 2020 worldwide sales of US$9.8 billion and over 48,000 employees.

Its operation around the world includes manufacturing, R & D facilities as well as sales, marketing and administrative offices in North America, EMEA, Australia and New Zealand, Asia and South America, and they have factories in two different countries. In our thesis, we have studied its office in the middle east.

Power tools industry

Power tools are equipment powered by additional power sources such as battery and electric motors. Power tools are used in a variety of sectors, including the construction sector, manufacturing, and others. Moreover, power tools are used for a variety of tasks around the home, including cutting, shaping, grinding, and drilling.

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The expanding construction industry is largely responsible for the power tools market's growth across the globe. According to Invest India, the construction industry is projected to be the third-largest sector in the world by 2025, and construction production is expected to rise at a rate of 7.1 percent per year on average.

According to the study “Middle East and Africa Power Tools Market - Industry Trends and Forecast to 2027”, by Data Bridge Market Research which was published in June 2020, Middle East & Africa power tools market is projected to register a CAGR of 3.4% in the forecast period of 2020 to 2027. The report addresses some major factors that contribute to the growth of the Middle East & Africa power tools market; first, the rising need of power tools for bigger structures. Second, the rising number of infrastructure companies in the region.

The organizational structure:

The company has a hierarchy structure, they have five departments with a total number of 50 employees; Sales, marketing, customer service, maintenance, finance and administration. Sales division has six business development managers in six different countries, who are responsible for business-to-business relationships. They set strategies, targets, work to open markets in new countries and develop new channels to achieve these targets. As for the marketing division, they are responsible for setting communication plans and for the pricing of the products.

The company has one separate innovation center in North America, which includes its engineers and product development team that has its dedicated resources to develop new products and explore new opportunities.

Business development managers Sales officers HR team Accountants Customer service Head Customer service team New product introduction PPE Tools General Manager Marketing Director Finance and admin

director

Sales director Service manager

Warehouse

Service team

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18 Communication

“We strongly believe that without the right communication channels in place, it will become extremely challenging for us to achieve the desired goals”. To the company, maintaining the right communication channels is one of main concerns. A great attention is given to always keep every employee regularly updated. Moreover, the company has an identified communication plan that outlines what structures and procedures are in place to meet communication needs, as well as what processes and documents are needed to optimize communication effectiveness.

In this company, the knowledge moves around different departments and collaboration is communicated among different units through quarter review meetings, online portals and announcement meetings. In our case, we focused on the communication that is happening among the three departments; Sales, marketing and the innovation center. Given that the innovation center is responsible to work with the marketing teams from all regions, the BDMs from the sales department are communicating and reporting only to the marketing team, who in turn communicates and reports to the innovation center the customer’s feedback and suggestions on product development.

Employees

The employees of this company are motivated and empowered to think innovatively, as the company is keen to offer its employees the right tools and the required training to get the best of them in a changing market.

There are certain practices done by the company to ensure that everyone in the business is working to improve the product and sustain business relationships. Especially when it comes to the sales department, as the business development managers who are closed to the market, are responsible to always look into the market demand and follow up with the latest trend.

“We always encourage our employees to be open, explore and share initiatives without fear”.

The employees in the sales department are offered to attend seminars on a regular basis during the year, where they meet with other BDMs from other countries to discuss and share their experiences, and reflect the customers' feedback on both the product and the service.

Achieving Ambidexterity:

The company achieves ambidexterity by following a structural approach to ambidexterity. They have an innovation center which is separated from sales, production and other divisions and is responsible to do a thorough research about the new product or service. The research phase includes determining product specifications, production costs and a production timeline.

The communication between the innovation center and other departments happens in three different cases; the first case, when there is a feedback report from the business development managers that a certain product needs to be developed. First, the maintenance department first tests

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and evaluates if there is a valid point in such reporting before they open an official case to be reported to the marketing division.

The second case happens every 6 months, the top management conduct a meeting that includes BDMs from the sales department and managers from the marketing to present the NPIs (new product introduction), after having the new products introduced, the business development managers present these new products to their agents and conduct a research to develop a forecast for the production volume of these new products to reflect the agents’ response, and then communicate this market study results to the marketing department.

The third case happens when the upper management conducts a meeting, almost every two years that include the design engineers from the innovation center, the business development managers from the sales department and the product head from the marketing department. In this meeting, the three departments communicate and discuss the latest market trends, the feedback from the company’s agents and end users.

To regulate the process and control it, only the marketing department has a direct contact with the innovation center, feeding them with the latest market trends and demands, and conveys the customer’s feedback on certain products or services.

The innovation center is then responsible to study and process the information, to decide on how to develop and improve, as well as deciding on the end product characteristics.

Organization 3 (IT services)

About the company

The company is an Information Technology Services provider that operates in the MENA Region since 1989. offering Cloud Solutions, Computing, Cyber Security, and Networking.

For more than three decades, the company has led the market in the provision of diverse IT solutions. Based in Jordan with offices in KSA, UAE, Bahrain, Palestine, and Iraq, and with its longstanding partnerships with industry pioneers such as Cisco, Dell EMC, IBM, Microsoft, Oracle, Corning and others, the company has positioned itself as a key player in the digital transformation of the IT sector. With a wide range of offerings in infrastructure integration, software, and professional services, the company also boasts IP in e-commerce and compliance products and solutions, cementing its standing as one of the best providers of turnkey solutions in the region - serving over 1,500 customers within the Financial, Government, Health, and Education, Telecom and Commercial sectors.

More recently - in line with the advent of the Fourth Industrial Revolution – the company, upholding its reputation as a market pioneer, embarked on its digital transformation journey by launching its own Cloud in 2015 and began investing heavily in cloud computing as its enabling technology vehicle. This has led to the expansion of its capabilities in cloud infrastructure and operations along with Security Solutions and SOC, allowing the company to grow its portfolio to

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cover offerings in managed cloud infrastructure and Managed Security Solutions, as well as scalable, unique-to-the-region productized SaaS offerings.

IT service industry in the middle east

According to the study “ICT Market in the Middle East, forecast to 2024” by Frost & Sullivan, Over the forecast era, the Middle East's ICT market will grow steadily, due to governments' digital transformation initiatives and businesses' adoption of disruptive technologies like the Internet of Things (IoT) and Artificial Intelligence (AI).

In addition, operators are focused on the development of an enterprise-centric or application-specific service portfolio to be able to monetize 5G network investments, which is expected to boost telecom service revenue in the region. Some of the key technology trends in the telecommunication and media space include 5G, fiber network expansion, software-defined networks, and IoT network investments, whereas cloud computing and data centers, AI, cybersecurity, and conversational platforms are the important trends in the IT ecosystem.

Also, the study shows that several Middle Eastern countries are developing strategies to increase the contribution of the ICT sector to GDP, with the aim of reducing reliance on the oil industry. As part of their digital transformation efforts, governments and businesses have adopted a variety of disruptive technologies. These factors, in turn, will drive market growth. Moreover, Over the projected period, market growth will be driven by the introduction of 5G networks and their importance across a variety of business applications and industry verticals.

In addition, and according to the study “GCC Data Center Market - Investment Analysis and Growth Opportunities 2020-2025”, by “Arizton Advisory and Intelligence”, the GCC's ma or oil companies are looking for ways to integrate smart technology into their fields, they implement big data and analytics technologies and control systems. It also adds that data center market is expected to grow at a CAG of over 3% during the period 2019−2025. The study also shows that from 2019 to 2022, Saudi Arabia's data consumption is projected to increase by 30%. As a result, data center investments are flocking to the region.

Organizational Structure

The company has a hierarchy structure consisting of four main departments working under the CEO with a total number of 300 employees; Operation department, HR and administration department, commercial department and financial department. Operation department is managed by the COO and it includes the engineering team, project management office and customer service team. On the other side, the commercial department is managed by the CCO and it includes the sales team and the pre-sales team.

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Communication

The company believes in the importance of communication, and how departments interact among each other can lead to success and growth. So, to ensure that they have effective communication that improves the organizational practices and keep both the employees and the management informed, they schedule a certain training every 3 months to ensure that all the information and knowledge are spread wisely throughout different departments.

This training is conducted by a specialized team, who is qualified to both train different levels of employees and follow up the communication channels on a regular basis to determine its effectiveness.

As for the communication between the team leaders in both the commercial and operation department and the upper management, the company conducts a bi-weekly meeting to report every pro ect’s financial, risk, issue and progress to the C-level and the company’s director.

Employees

We value our people and empower them with a holistic environment, providing them with respect, responsibility, autonomy and the tools they need to inspire and motivate them to realize their full potential, professionally and personally, while remaining true to their uniqueness.

The company provides its employees with continuous training in different areas, especially when it comes to innovation. They foster a culture that supports agility and creativity; offering mentorship, addressing challenges and providing the tools to transform ideas into reality.

The company always motivates its employees to always explore for new ideas, whether it is for a new solution or to improve the existing one. The company has its incentive plan that encourages the employees to not only focus on their assigned tasks but also to look into improving the process and adapt with the market change. Such a plan increases the level of engagement of the employees.

HR team Administration Sales team Pre-sales team

CEO

CCO Chief commercial officer CHRO

Chief human resources officer COO

Chief operating officer

CFO Chief financial officer

Finance

Engineering PMO

Customer service

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22 Achieving ambidexterity

While the company does not have a separate R&D department that is dedicated to explore and innovate, the company achieves ambidexterity by following a contextual approach to ambidexterity. The pre-sales team from the commercial department and the engineering team from the operation department work together to achieve ambidexterity.

The system and structure for both teams are flexible, employees use their own judgement to divide their time between operation and innovation. As the pre-sales team is considered close to the market and in direct contact with the customers, they are responsible to determine the market demand and convey the initial design to the engineering team, who in turn test and evaluate whether or not the design is valid and doable. When the new product or solution is finalized and is being used in the market by the customers, the engineering team is still responsible to keep an eye on the changing market and is responsible to continuously check the product validity. In case the engineering team determines that the new product reaches the threshold considering the rapid change in the technology industry, they notify the pre-sales team who in turn is responsible to alert the customers with such changes.

The company has four board meetings during the year, where the heads of the four main departments set the company’s goals and set the strategies to achieve them. In addition, there are weekly meetings between the operational and commercial departments, where team leaders ensure the smooth operation and solve any conflict.

Organization 4 (Wind Energy)

About the company

The company was founded in 1945 in the Nordic country, it started as a small company with 7 employees in total as a producer of household appliances. In 1959 the company reached a new high in turnover and the company expanded to include 100 employees and introduced new products such as turbo coolers for trucks while having customers from all over the world and serving global markets. In 1971 the company started investing highly in alternative energy research which was translated in 1979 with introducing the first wind turbine. The company continued improving the turbines and started mass production and had many clients in Europe and the U.S. In the end of the 80’s the company took wind turbines as a specialty. The company was serving more than 15 countries by the end of the 90’s. Nowadays, the company has pro ects all over the world serving more than 83 countries. The company specializes in designing, manufacturing, installing, and servicing wind turbines across the globe, with more than 29000 employees.

The Wind Energy Industry

The Wind Energy Industry is set to register over 4% CAGR between 2021 and 2027, propelled by strict governmental policies toward limiting the GHG emissions from energy sector. The wind energy market value is projected to cross USD 180 Billion by 2027, as reported in the latest study by Global Market Insights Inc. Growing investments toward renewable addition in the energy mix

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coupled with stringent emission norms will proliferate the business outlook. Offshore wind energy market is anticipated to witness a substantial growth on account of availability of uniform wind flows and high efficiency across the oceans.

Easy availability of raw materials coupled with ongoing technological advancements across the support structure components will fuel the product penetration across the globe. Moreover, increasing investments in R&D activities by the component manufacturers to enhance the efficiency of the overall plant will further augment the business outlook across the globe.

The organizational structure

The company has a flat organizational structure with basic hierarchy. The company’s organization is structured on eight key areas representing all key disciplines of the company and all employees. The key areas are: Corporate Strategy and Global Intelligence; Group Marketing Communications and Public Affairs; Service; Manufacturing and Sourcing; Finance; Power Solutions; Sales; People and Culture. The well-functioning of the company as well as the overall performance is ensured by the Executive Management, which consists of seven members. As a structurally lean organization, the company has offices in 24 countries and five strong regional sales business units in Northern Central Europe, Americas, Mediterranean, Asia Pacific, and China.

The company has a separate R&D unit under the area of the Manufacturing and Sourcing. The R&D unit has a department that is coordinating the communications between the R&D and the operational level employees.

The objectives and goals are set on an annual basis. The year starts with a meeting for setting the objectives and goals and quarterly follow up meetings are performed throughout the year. The seven members of the Executive Management are the ones involved in setting these objectives and goals.

Service

Group President & CEO

Corporate strategy, M&A and Global

Intelligence

Group Marketing Communication & Public

Affairs

Manufacturering

& Sourcing Finance

Power

Solutions Sales

People & Culture

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24 Communications

The company has a flat organizational structure which promotes and encourages communications between all employees and the upper management. There are weekly meetings with the operational level project managers and upper management which is called risk management meetings, bi-weekly meeting one on one with the upper management, and bi-weekly meetings between the operation level employees and the R&D unit through its knowledge department with topics such as the week’s achievements, challenges and bouncing new ideas and brainstorming. There are other progress meetings between employees and their direct managers which happen twice every week.

Another form of communication happens through reports, the employees are submitting weekly progress reports to their direct managers, and the project managers are submitting two monthly reports to the head of their departments, one report is a progress report while the other is a strategy steering report.

Employees

“Without the people to develop, produce, sell and maintain our wind turbines, we cannot sustain our business, we cannot generate profits, and we cannot help to protect our world from the environmental dangers of fossil fuels.”

The company believes that its core strength and competence is its employees, that’s why the company is always investing in the employees to enhance their knowledge and prepare them to deal with the everyday challenges of the industry. There are many training programs available through the company’s systems which the employees have to attend and pass as part of their tasks. Moreover, the dedication of a two-hour weekly meeting for brainstorming and ideas exchange help in developing the employees’ capabilities and experience.

The company also pays attention to the well being and empowerment of its employees, the flat organizational structure and the open communication channels between all the employees and all levels of management are serving these goals and promoting the company’s culture and values.

Achieving ambidexterity

The company has a structural approach in achieving ambidexterity and pursuing alignment and adaptation activities and reaching exploitative and explorative goals. There is a separate R&D unit that has dedicated resources, but much smaller and more flexible than the rest of the departments. The integration is achieved through the knowledge department which plays the role of coordinator and serves as an open communication channel that insures high levels of communication between the R&D unit and the rest of the departments with focus on the frontline employees.

The knowledge management department provides a two-way communications channel between the R&D unit and the operational departments, although it aims to keep the R&D informed of the operational challenges and opportunities, it also provides support and technical solutions to the operational departments especially in case of introducing new products, strategies and markets.