This paper explains how dynamic client portfolios can be a source of ambidexterity (i.e. exploration and exploitation) for knowledge intensive firms (KIFs). Drawing from a unique qualitative dataset of firms in the global reinsurance market, we show how different types of client relationships underpin a dynamic client portfolio and become a source of ambidexterity for a KIF. We develop a process model to show how KIFs attain knowledge by segmenting their client portfolios, use that knowledge to explore and exploit within and across their client relationships, and dynamically adjust their client portfolios over time. Our study contributes to the literature on external sources of ambidexterity and dynamic management of client knowledge within KIFs.Keywords: Ambidexterity, client relationship management; knowledge intensive firms, strategic business relationship, exploration and exploitation
Accepted for publication at Long Range Planning
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IntroductionSince March's (1991) seminal work, the concept of organizational ambidexterity -the concurrent pursuit of exploitation, "the development of things already known", and exploration, the development of new knowledge (Levinthal and March, 1993, p. 105;Lavie et al., 2010) -has captured the imagination of organizational scholars. Ambidexterity is considered critical for organizational success and yet also extremely difficult to achieve within a single organization (Andriopoulos and Lewis, 2010;He and Wong, 2004;Raisch and Birkinshaw, 2008). In response to this recognized difficulty in achieving ambidexterity internally, interest in the role of external relationships in enabling ambidexterity has recently burgeoned, primarily with a focus on strategic alliances (e.g. Koza and Lewin, 1998;Lavie and Rosenkopf, 2006;Raisch and Birkinshaw, 2008;Rothaermel and Deeds, 2004). Yet, we still have much to learn about other external sources of ambidexterity, foremost among them client relationships. Initial studies highlight clients as sources of knowledge (Im and Rai, 2008), but tell us little about how knowledge is attained and used within and across client relationships to enable ambidexterity over time.The literature on knowledge-intensive firms (KIFs), by contrast, has developed some understanding of how firms can use client relationships for their own knowledge development (Bettencourt et al., 2002;Fosstenløkken et al., 2003;Skjolsvik et al. 2007). 1 Such KIFs critically rely on their ability to create, preserve and replenish a stock of valuable knowledge that they apply in their knowledge-based services (Alvesson, 1995;Moore and Birkinshaw, 1998;Starbuck, 1992;Von Nordenflycht, 2010). KIFs thus offer a useful context in which to study the potential of client relationships to fuel exploration and exploitation. Client knowledge can be a source of both exploration and exploitation within KIFs (He and Wong, 2005;Levinthal and March, 1993;Lavie et al., 2010); either refining existing knowledge, such as improving an existing solution, or 1 To maintain the authenticity of our data we ...