How firms undertake organizational changes to shift to more-exploratory strategies: A process perspective

Abstract

Firms' organization of exploratory research has interested scholars of both research policy and organizational theory, yet we still know too little about how firms undertake organizational changes to shift to more-exploratory strategies. Adopting a process perspective, we explore this question through a longitudinal, comparative case study of a Danish pharmaceutical firm and a French-Italian semiconductor firm. We demonstrate how firms adjust their organizational structures to increase exploration, a process of constantly addressing countervailing organizational and interorganizational demands by deploying, combining, and changing balancing mechanisms at the organizational and managerial levels. Moreover, our findings show that firms' different organizational structures affect their adaptations to exploratory outcomes. These findings advance theory because they illuminate the dynamic interplay between firms' adjustments of organizational structures and their movements toward more exploration. We use a recursive process model to theorize our findings.

Balancing Conflicting Goals in Interorganizational Collaborations in the Pharmaceutical Industry: A Contractual Dynamics View

“…Second, the integration of goals was important all along: Lundbeck defined the value of basic research activities in terms of future commercial applications, and vice versa; commercial activities were considered relevant only if they related to basic research activities. While scholars have established the dynamic and sometimes tense relationship between exploitation and exploration (e.g., Eisenhardt et al, 2010;Lavie et al, 2010;Vedel and Kokshagina, 2021), this study indicates the contractual dynamics involved in relating such different activities.…”

Design thinking implementation for innovation: An organization's journey to ambidexterity

“…We thus complement Röth et al’s (2019) work on the role of sensegiving and sensebreaking in innovation portfolio management. We show how using DTI flexibly can help MMs adapt innovation portfolios to changes and opportunities, reconcile conflicting interests and understandings among groups (Andriopoulos & Lewis, 2010; Smith & Tushman, 2005), and account for the complexity and uncertainty in exploratory innovation (O’Connor & Rice, 2013; Vedel & Kokshagina, 2021). In so doing, our study challenges the effectiveness of formal and rational but potentially inflexible innovation portfolio management processes.…”

“…While these studies focus on strategy, Liedtka (2015) suggests that DT challenges nine individual‐level cognitive biases that influence innovation outcomes, and Zheng (2018) argues that DT facilitates ambidextrous learning required for innovation, thus cultivating individual ambidexterity among managers. Researchers have argued that innovation is related to shifts in organizational cognition (Greve & Taylor, 2000; Kaplan, 2008) which is particularly pronounced when organizations must balance the contradictory rationalities of ambidextrous innovation (Karhu & Ritala, 2019;) and manage the ambiguity and uncertainty related to explorative innovation (O’Connor & Rice, 2013; Robbins & O’Gorman, 2014; Vedel & Kokshagina, 2021).…”

“…As a result, few organizations succeed in achieving explorative and exploitative innovation simultaneously (He & Wong, 2004; Tushman & O’Reilly III, 1996). In particular, managers struggle with the “exploratory” side of ambidexterity (O’Connor & Rice, 2013), given it involves coping with ambiguity and unpredictability (Robbins and O’Gorman, 2014; Vedel & Kokshagina, 2021). DTI has been conceptualized as a way of balancing exploration and exploitation (Martin, 2009) in situations where ambiguity and uncertainty are high (Liedtka, 2015) and as a cognitive driver of ambidextrous innovation (Zheng, 2018).…”

Exploratory and Exploitative Internationalization: Effects of Social Capital Antecedents and Fit Moderators of Innovation Consequence

“…When firms age, successful exploitative practices tend to be retained, reinforced, and developed into organizational memories and routines [38], which make firms fall into organizational simplicity, competency traps and core-rigidity [39,40]. Then, it is a wise choice for older firms to choose and implement exploratory internationalization, which provides them with significant learning opportunities to renew obsolete resources and capabilities.…”