PurposeDrawing on social learning theory, the purpose of this study is to examine the relationship between team cohesion and employee adaptive performance directly and through employee ambidexterity. The study also investigates the moderating role of team empowerment climate in the relationship between team cohesion and employee adaptive performance.Design/methodology/approachTime-lagged data were collected in two waves from a sample of 212 employees from 43 teams working in software houses in Pakistan. R (lavaan package) was used to analyze the multilevel framework.FindingsThe findings reveal that both team cohesion and employee ambidexterity positively relate to employee adaptive performance. Moreover, employee ambidexterity mediates the cross-level relationship between team cohesion and employee adaptive performance. The results also support that team empowerment climate (a contextual boundary condition) moderates the direct relationship between team cohesion and employee adaptive performance.Originality/valueThe primary novelty of this study lies in developing and examining a holistic conceptual framework for a multilevel model in the software industry that incorporates team cohesion (level 2) as an antecedent, employee ambidexterity (level 1) as an underlying mechanism, employee adaptive performance (level 1) as an outcome and team empowerment climate as a boundary condition (level 2).