Hybrid Ambidexterity: How the Environment Shapes Incumbents’ Use of Structural and Contextual Approaches

Abstract

According to the literature on ambidexterity, organizations can use structural or contextual approaches to simultaneously explore novel opportunities and exploit existing ones. So far, however, we know very little about what induces organizations to focus on structural versus contextual ambidexterity, or how they combine the two approaches to maximize organizational learning. To shed more light on these questions, we investigate how the environment shapes a firm’s use of structural and contextual ambidexterity. Drawing on a comparative, longitudinal case study of the four largest electric utility companies in Germany, we show that firms focused on structural ambidexterity whenever they perceived emerging opportunities in the environment as requiring organizational culture and capabilities fundamentally different from their own. Contextual ambidexterity, on the other hand, became particularly important when opportunities in the environment were both numerous and uncertain, requiring the organization to leverage the distributed attention and expertise of its frontline employees. We show that environments characterized by opportunities that are numerous/uncertain and require novel culture and capabilities lead organizations to invest in initiatives that combine elements of both structural and contextual ambidexterity—an approach we label hybrid ambidexterity. Our theory framework synthesizes and complements existing work that has started to investigate the antecedents of structural versus contextual ambidexterity. We challenge the prevailing understanding of contextual and structural ambidexterity as dichotomous categories and reconceptualize them as two ends of a continuum. In addition, we provide initial evidence that firms’ ambidexterity approaches are influenced by managers’ perceptions of capabilities and opportunities.

Leaders or laggards? The evolution of electric utilities’ business portfolios during the energy transition

“…This was particularly the case for utilities that focused on power generation and sale as opposed to distribution grid owners, which could leverage energy efficiency for integrated resource planning (Sousa et al, 2013). In light of the changing business environment, however, in which producing and selling electricity had become increasingly unprofitable (Hoppmann et al, 2018;Ossenbrink et al, 2018;Vahlenkamp et al, 2014), this portfolio element experienced a boost similar to the one renewable electricity generation experienced (see Figure 1). Activities related to energy efficiency were embraced early on and then stagnated somewhat at an adoption-rate of roughly 80% from 2009 onwards 2 .…”

“…Second, amid increasing incentives to save electricity, many utilities have started offering contracting services as part of which utilities helped commercial electricity consumers install and operate energy efficiency solutions. Third, in several countries the increase in renewable energygeneration capacities has contributed to the drop in electricity wholesale prices, which has put strong downward pressure on profit margins, thereby forcing utilities to look for new business models beyond electricity generation (Helms, 2016;Hoppmann et al, 2018;Ossenbrink et al, 2018;Vahlenkamp et al, 2014). In addition to the increasing diffusion of renewable energy and energy efficiency technologies, the development toward decentralization has been fueled by broader technological changes, such as digitization or the electrification of the transport sector.…”

Building an ambidextrous organization: a maturity model for organizational ambidexterity

“…A mature body of literature has investigated how OA can be attained, focusing on three OA types (or combinations of them): temporal, structural, and contextual ambidexterity (Lavie et al 2011;O'Reilly and Tushman 2013;Ossenbrink et al 2019). Temporal ambidexterity refers to the sequential switching between exploitation and exploration (Klarner and Raisch 2013;Siggelkow and Levinthal 2003;Tushman and Romanelli 1985).…”

“…Scholars have intensively researched outcomes, moderators, and types of OA (i.e., temporal, structural, and contextual ambidexterity) in conceptual and empirical studies (Nosella et al 2012;O'Reilly and Tushman 2013;Ossenbrink et al 2019;Raisch and Birkinshaw 2008). This mature knowledge underscores the need for and benefits of OA.…”

Building resilient renewable power generation portfolios: The impact of diversification on investors’ risk and return

“…DeLlano-Paz et al[28] provide a comprehensive overview of studies that investigate the effects of diversification in the energy sector 3. Note that we do not consider traditional or fossil fuel based power production technologies given that many countries have started to phase out these technologies[64][65][66], and that they have become less profitable due to the prioritized feed-in of VREs in many countries[57,67].…”