In a U.S. sample of nonprofit professional theaters, we examine how slack resources interact with environmental threat appraisal to influence product exploration and exploitation. We find systematic variation depending on the extent to which a resource is rare and absorbed in operations, and the extent of perceived environmental threats. Absorbed, generic resources are associated with increased exploitation and decreased exploration. Unabsorbed resources, both generic and rare, result in higher exploration and lower exploitation, but only when perceived environmental threat is high. Overall, results reveal pragmatic decision making balancing the benefits of superior strategic position against the risks of jeopardizing viability.

Conventional marketing wisdom holds that a customer orientation provides a firm with a better understanding of its customers, which subsequently leads to enhanced customer satisfaction and firm performance. However, there are cautions that being too customer focused can lead to inertia, and anecdotal evidence suggests that it may be better to "ignore your customer" when developing new products. Building on the market orientation research stream, the authors examine the impact of three alternative strategic orientations-customer orientation, competitor orientation, and product orientation-on a variety of subjective and objective measures of performance in the nonprofit professional theater industry, which is marked by high rates of artistic innovation and largely unpredictable customer preferences. The results indicate that the association between strategic orientation and performance varies depending on the type of performance measure used. However, the most unambiguous result is that a customer orientation exhibits a negative association with subscriber ticket sales, total income, and net surplus/deficit.

B alancing exploration and exploitation is a critical challenge that is particularly difficult for smaller, nascent organizations that lack the resources, capabilities, and experience necessary to successfully implement ambidexterity. To better understand how small and medium-sized enterprises achieve ambidexterity, we develop theoretical arguments that link organizational performance to strategic combinations of exploration and exploitation in both product and market domains. We test the hypotheses with a longitudinal study in a dynamic industry that combines objective measures of competition, firm size, age, and revenue performance with self-reported measures of product and market exploration and exploitation. The empirical results offer new insights with respect to several tensions at the heart of the ambidexterity challenge: (1) pure strategies that combine product exploration with market exploration or product exploitation with market exploitation have complementary interaction effects on revenue, (2) cross-functional ambidexterity combining product exploitation with market exploration also exerts complementary interaction effects on revenue, (3) product ambidexterity has positive effects on revenue for older and larger-but not younger and smaller-firms, and (4) market ambidexterity has positive effects on revenue for larger-but not smaller, younger, or older-firms. Two ambidexterity paradoxes emerge: (1) larger, older firms have the resources, capabilities, and experience required to benefit from a product ambidexterity strategy, but larger, older firms are less likely to implement product ambidexterity; and (2) only larger firms have the resources and capabilities required to benefit from a market ambidexterity strategy, but developing and sustaining market ambidexterity is necessary to drive long-term growth.

This study examines how the organizational success of 113 nonprofit professional theatres was affected when two top leaders responsible for different parts of the organization held divergent views about organizational identity. Focusing on five values that differentiate theatres, we find that leaders’ disagreement about organizational identity was related to lower ticket revenues and lower net income, and that organizational performance was lowest when disagreement about identity was extreme. Although some findings suggest that minor identity disagreement between leaders may not hurt organizations, results generally support the perspective that leaders should actively promote a single identity.

This study explores the organizational values that characterize firms in the nonprofit professional theatre industry, and examines the links between firms' organizational values and their relationships with external constituents. Using grounded research methods, we uncover five value dimensions that are relevant to arts organizations: prosocial, artistic, financial, market, and achievement. Using a sample of 97 nonprofit theatres, we extend our qualitative inquiry with an empirical investigation of how firms enact their organizational values to build and maintain relationships with external constituents. Results from a two-wave survey design indicate consistent patterns of association between organizational values and (1) perceptions of values congruence with external constituents, (2) human resource allocation and programming decisions that firms make to support relationships with external constituents, and (3) the level of financial resources that firms obtain from their relationships with different external constituents. Interestingly, results from both investigations hint at underlying tensions between competing values in cultural firms, such as pressures to be both artistic- and market-oriented.