Financial managers and organizational ambidexterity in the German Mittelstand: the moderating role of strategy involvement

Abstract

Relying on the upper-echelons perspective, this paper investigates the effect of financial managers’ characteristics on the level of organizational ambidexterity reached in German Mittelstand firms. These firms are often depicted as highly innovative and able to compete on worldwide markets despite significant resource constraints. We theorize that skilled financial managers are very important in making the optimal use of Mittelstand firms’ scarce resources and, in particular, for balancing exploitation and exploration, thus reaching high levels of ambidexterity. Our findings from a survey of German Mittelstand firms broadly confirm our expectations and show that financial managers’ individual entrepreneurial behavior correlates positively with the firms’ level of organizational ambidexterity. In addition, we find that firms with financial managers having enjoyed business education are more likely to reach high levels of ambidexterity if these financial managers are heavily involved in strategy development. Overall, these results indicate that well-suited financial managers are an important human resource for Mittelstand firms. In addition, our findings are among the first to show that financial managers not only influence finance and accounting choices, but also innovation-related outcomes such as organizational ambidexterity.

Digitalization and entrepreneurial firms' resilience to pandemic crises: Evidence from COVID-19 and the German Mittelstand

“…To test our hypotheses, we conducted an online survey targeting German Mittelstand firms since they have been depicted as usually showing high levels of entrepreneurship ( De Massis et al, 2018 ; Heider et al, 2021 ; Logue et al, 2015 ). Such high levels of entrepreneurship are often due to the need for German Mittelstand firms to innovate despite their scarce financial and human resources ( De Massis et al, 2018 ; Weigel et al, 2022 ). This high level of innovation efficiency is usually found to be rooted in German Mittelstand firms' pronounced entrepreneurial mindset ( Heider et al, 2021 ), which makes them a useful sample to study entrepreneurial firms.…”

Automation, organizational ambidexterity and the stability of employee relations: new tensions arising between corporate entrepreneurship, innovation management and stakeholder management

“…As indicated above, several studies have noted that ambidexterity may help organizations realize their corporate entrepreneurship endeavours (Burström & Wilson, 2015 ; Hill & Birkinshaw, 2014 ; Michl et al, 2013 ; Pan et al, 2021 ). In addition, actors’ skills have been marked as crucial in these processes (Pan et al, 2021 ; Volery et al, 2015 ; Yeganegi et al, 2019 ).…”

“…Our study focused on corporate entrepreneurship, but did not address in detail how entrepreneurs – including those in newly founded firms – approach the potential tensions between increasing levels of automation in modern economies and employee relations. From the existing literature, we already know that successful entrepreneurs often possess a form of individual ambidexterity (e.g., Andriopoulos & Lewis, 2009 ; Volery et al, 2015 ; Yeganegi et al, 2019 ), but future research is needed on how such individual ambidexterity helps them address new tensions in their employee relations arising from technological innovation that may endanger such relations, including developments due to automation, but also related concepts such as artificial intelligence and robotics (Jungmittag, 2021 ; Santarelli et al, 2022 ; Wright & Schultz, 2018 ). Second, in our above theorizing, we basically assume a specific sequence of events.…”

“…For instance, Yeganegi et al ( 2019 ) found that employees that experience ambidexterity in their employer organization are more likely to found their own businesses afterwards. Relatedly, based on observations of the everyday behaviour of successful entrepreneurs, Volery et al ( 2015 ) reported that these entrepreneurs show ambidexterity at the individual level. That is, they deliberately try to balance their time devoted to exploitative and explorative activities, including the identification, recognition and exploration of opportunities.…”

“…That is, they deliberately try to balance their time devoted to exploitative and explorative activities, including the identification, recognition and exploration of opportunities. All these findings suggest that for entrepreneurship to be successful, it is important to embrace a dual focus on exploitation and exploration, although such individual ambidexterity may come with severe tensions between these two modes due to entrepreneurs’ limited time and capital resources (Andriopoulos & Lewis, 2009 ; Volery et al, 2015 ). As suggested by Yeganegi et al ( 2019 ), entrepreneurs’ ability to balance exploration and exploitation may be gained by working as an employee before founding a new business and thus experiencing organizational ambidexterity in employer organizations.…”