Fluent Essays

Hi! I need to write a 300 word paper using the document attached Write a 300 word paper in APA 7.0 to reflect on the issues ambidextrous organization face when implementing innovation as part of the local or global strategy.  What concepts do you consider relevant to get a more in-depth understanding of this concept.  This is not a summary paper.  The intention is to demonstrate your understanding, knowledge and express your discussion in a research paper. International ambidexterity in firms’ innovation of multinational enterprises from emerging economies: an investigation of TMT attributes Hang Wu East China University of Political Science and Law, Shanghai, China, and Jin Chen Tsinghua University, Beijing, China Abstract Purpose – Extant research has integrated ambidexterity perspective into international business studies and calls for emerging market multinational enterprises (EM MNEs) to implement exploration and exploitation activities simultaneously in foreign markets. However, less attention has been paid to empirically test whether and how international ambidexterity can benefit the innovation performance of EM MNEs. Based on the data of international manufacturing firms in China, this paper explores the relationship between international ambidexterity and innovation performance and investigates four contingency factors of top management team (TMT): two external resource accumulation elements (i.e. TMT business ties and TMT political ties) and two internal resource integration elements (i.e. TMT contingency rewards and TMT social integration). Design/methodology/approach – The author conducts multiple hierarchical linear regression analysis to test the hypothesis by collecting survey data from 227 MNEs from several Economic Development Zones located in Zhejiang province in China. Findings – The results show that international ambidexterity is positively related to innovation performance, and the international ambidexterity–innovation performance relationship is amplified when TMTs build strong ties with external business partners and political departments, when EM MNEs link top managers’ income to team collective performance and create a highly social integrated TMT. Originality/value – The results contributes to answer the question that how well EM MNEs will succeed and enrich the context specificity of international ambidexterity. The findings also help us better understand the inconsistent empirical findings in organizational ambidexterity by uncovering the contingency role of several TMT attributes. Keywords International ambidexterity, Exploratory internationalization, Exploitative internationalization, EM MNEs, TMT Paper type Research paper 1. Introduction In view of the tremendous global integration speed of emerging market multinational enterprises (EM MNEs) and the strategic significance of internationalization to EM MNEs’ innovation and catch-up (Wu et al., 2017; Dong et al., 2019), researchers have paid great attention to explaining the distinct motivation and antecedents of EM MNEs and testing the performance implication of different entry modes (Luo and Zhang, 2016; Li et al., 2017), but ignored to uncover how well companies will succeed when investing and operating overseas (Luo and Rui, 2009). Existing theoretical perspectives on EM MNEs’ international operations have undergone a transformation from exploration, exploitation to ambidexterity. Some International ambidexterity in firms’ innovation 431 The authors are indebted to Dr. Umans, Prof. Ruta Kazlauskaite and anonymous reviewers for their many constructive insights and suggestions. The research was supported by the National Natural Science Foundation of China (71972075, 71702057). The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/1746-5265.htm Received 24 July 2019 Revised 12 December 2019 3 March 2020 Accepted 3 March 2020 Baltic Journal of Management Vol. 15 No. 3, 2020 pp. 431-451 © Emerald Publishing Limited 1746-5265 DOI 10.1108/BJM-07-2019-0267 https://doi.org/10.1108/BJM-07-2019-0267 researchers have highlighted that EM MNEs should become ambidextrous and conduct exploratory and exploitative activities simultaneously in foreign markets to assure both short-term survival and longer-term growth (Luo and Rui, 2009; Prange and Verdier, 2011; Bandeira-de-Mello et al., 2016). Despite the intuitive appeal of ambidexterity to EM MNEs, less attention has been paid to empirically test the performance effect and contextual conditions of international ambidexterity. Since Luo and Rui (2009) extend ambidexterity perspective into the foreign operation of EM MNEs, a few scholars have started to investigate the capability attribute, performance implication and implementation process of international ambidexterity. Prange and Verdier (2011) argue that international ambidexterity is a third-order dynamic capability, which in turn increases internationalization performance. Hsu et al. (2013) firstly conduct an empirical test about the impact of international ambidexterity on financial performance using balancedpanel dataof 207 Taiwanese firms. Bandeira-de-Mello et al. (2016) use a singleprocess- based case study in a Brazilian multinational to explore how ambidexterity implementation process actually happens. Ina word, existing researchers havejustconductedan initial study to integrate ambidexterity perspective with international business research to answer the question of “how EM MNEs can succeed”; future research calls for more empirical work to explain how international ambidexterity acts on EM MNEs’ performance. Moreover, it is noteworthy that although ambidexterity research in such fields as organizational learning (March, 1991), innovation (Jansen et al., 2006) and knowledge search (Katila and Ahuja, 2002) inspires us and has empirically investigated the performance effect of various kinds of ambidexterity, the ambidexterity–performance relationship remains unclear. Some researchers find that organizational ambidexterity directly improves firm performance (Gibson and Birkinshaw, 2004; He and Wong, 2004), while others show a contingent effect (Lin et al., 2007), negative effect (Atuahene-Gima, 2005) and even no support for the ambidexterity hypothesis (De et al., 2014). These conflicting empirical results indicate that the path from ambidexterity to firm performance is not straightforward but paved with implementation challenges, and ambidextrous firms should be capable of providing enough resources for and promoting the resource integration of both exploration and exploitation departments (Clercq et al., 2013, 2014). Therefore, it is vital to consider what contingencies enable firms to convert ambidexterity into improved performance. In response, the purpose of this study is to empirically examine the impact of international ambidexterity on innovation performance and reveal the boundary conditions under which such ambidextrous strategy for EM MNEs works. The reason why we focus on the innovation performance consequence is that researchers in the fields of strategy and international business have argued that internationalization has been conducted as a vehicle for EM MNEs to broaden their knowledge base (Wu et al., 2016, 2017) and to achieve innovation catch-up with their competitors in developed countries (Hitt et al., 1997; Bauer et al., 2016). A lot of empirical studies have empirically tested such various measures of internationalization as foreign direct investment, exporting and international diversification on firm’s innovation (Hitt et al., 1997; Salomon and Shaver, 2005; Bauer et al., 2016; Wu et al., 2016, 2017). In this paper, we propose that implementing international ambidexterity can avoid the drawbacks of overemphasizing each strategy, which in turn improves innovation performance. In view of the strategic significance of top management team (TMT) played in external resource accumulation (Park and Luo, 2001; Collins and Clark, 2003) and internal resource integration (Jansen et al., 2009; Umans et al., 2018), we will investigate the moderating impact of TMT on the relationship between international ambidexterity and innovation performance. TMT is a team composed of senior managers who make strategic decisions and are responsible for the organization and coordination of the entire enterprise (Asghar et al., 2018). For lacking of such facilitating mechanism as resource search mechanism and hierarchical administrative systems, EM MNEs’ TMT must represent an important locus for BJM 15,3 432 accumulating critical resources and resolving integration tensions in achieving organizational ambidexterity (Wang et al., 2015; Li and Huang, 2019). In this study, we use the ties with external business partners and ties with government departments to reflect TMT’s resource accumulation mechanism. We expect that both TMT’s business and political ties may provide EM MNEs with a lot of resources, which may enhance the positive relationship between international ambidexterity and innovation performance. Except that, we use contingency rewards and social integration to reflect TMT’s resource integration mechanism. We also argue that the impact of international ambidexterity on innovation performance will be positively moderated by TMT contingency rewards and TMT social integration. The reason is that when EM MNEs link top managers’ income to team collective performance and create a highly social integrated TMT, it is likely more beneficial for facilitating mutual negotiation and combining strategic contradictions, which in turn enhances the innovation performance of international ambidexterity. Figure 1 presents our theoretical model. 2. Theory and hypotheses 2.1 Organizational ambidexterity Organizational ambidexterity is defined as the ability of firms to pursue and synchronize disparate exploration and exploitation simultaneously (He and Wong, 2004). Exploration is related to search, experimentation and variance increase, whereas exploitation is associated with activities such as refinement, efficiency, selection and implementation (March, 1991). Overemphasizing exploitation and neglecting exploration will be subject to core rigidities and powerful path dependencies, finally leading to the risk of obsolescence. Similarly, paying excessive attention to exploration against exploitation will provide firms with a large amount of differentiated innovation information, which will lead to overload of information processing and reduction of innovation efficiency. At the same time, excessive exploratory activities make it difficult for firms to recover search costs and ultimately lead to innovation failure. In comparison, balance and coordination of exploration and exploitation enable firms to avoid the risk of overemphasis on one aspect over the other and more critically achieve the complementary integration effect (Gibson and Birkinshaw, 2004; Cao et al., 2009). 2.2 Ambidexterity perspective of EM MNEs’ internationalization Inspired by organizational ambidexterity research, which highlights the importance of pursuing disparate goals concurrently for firms’ survival, international business scholars insist that MNEs can not only exploit existing advantages overseas to bolster short-term survival but also explore and capture resources in overseas markets to compensate competitive disadvantages for long-term growth (Chen and Chen, 1998; Makino et al., 2002). This is significantly different from the traditional international business theories proposed based on MNEs in developed countries, which view internationalization as the exploitation of TMT contingency rewards International ambidexterity Innovation performance TMT business ties TMT political ties TMT social integration Resource accumulation Resource integration H1 H2 H3 H4 H5 Figure 1. Conceptual model International ambidexterity in firms’ innovation 433 MNEs’ ownership advantage in foreign markets (Caves, 1971), and is especially true for EM MNEs that face an unprecedented competitive environment and want urgently to compete more effectively against global rivals. Luo and Rui (2009) first introduce an ambidexterity perspective into the international expansion of EM MNEs, emphasize EM MNEs’ need to build and leverage ambidexterity to offset late-mover disadvantages and specifically answer the question “why ambidexterity is unique to EM MNEs.” After that, several researchers have called for ambidextrous strategic action of EM MNEs in international markets (Prange and Verdier, 2011; Hsu et al., 2013; Bandeira-de-Mello et al., 2016). According to existing literature, this study divides EM MNEs’ internationalization into two types, including exploration and exploitation. Exploratory internationalization is regarded as a compensatory response to search or acquire strategic assets in foreign countries to secure new capabilities (Makino et al., 2002; Luo and Tung, 2007; Rui and Yip, 2008), associated with broad and distant learning activity beyond the current knowledge area of the firm, which leads to greater experimentation and radical innovation (Katila and Ahuja, 2002). In contrast, exploitative internationalization is viewed as the transfer of such ownership-specific advantages as cost-effective mass production capabilities across borders to bolster short-term profitability (Makino et al., 2002; Peng, 2012), accompanied by local and deep learning activity within a well-defined and limited knowledge space related to the firm’s previous experience, which ensures efficiency and incremental innovation (Katila and Ahuja, 2002). International ambidexterity means the simultaneous pursuit of exploratory and exploitative internationalization to achieve complementary effects (Prange and Verdier, 2011; Hsu et al., 2013). 2.3 Impact of international ambidexterity on innovation performance Innovation performance refers to the innovation outputs reflected in new product development and patenting frequency (Chen et al., 2011; Wu et al., 2016). There are two distinct mechanisms by which international ambidexterity contributes to better innovation performance. The first is that exploratory internationalization can avoid the competence trap caused by exploitative internationalization. Although exploitative internationalization can bring short-term cash income and increased innovation efficiency, excessive emphasis on exploitative internationalization can lead to the core rigidity and competence trap (Levitt and March, 1988), which lead EM MNEs to gradually lose its environmental responsiveness and hinder the further improvement of innovation performance. Exploratory internationalization can help EM MNEs avoid short-sightedness caused by exploitative internationalization (Hsu et al., 2013). Exploratory internationalization will bring a large amount of differentiated information, which can greatly promote the integration of existing knowledge and new knowledge and thus significantly enhance the ability of enterprises to innovate. The second is related to the fact that exploitative internationalization reduces the uncertainty of exploratory internationalization. Although EM MNEs can acquire the latest technology and understand innovation development trend through extensive exploration overseas, the knowledge stemming from a high degree of exploratory effort is always novel, distant and accompanied by unsure international partners, which may not yield the desired outcome (Katila and Ahuja, 2002; Wu and Wu, 2014). Active exploitative internationalization can help alleviate these problems by rapidly internalizing the knowledge explored overseas. Through the reuse of existing knowledge, managers can better understand the distribution and functionality of internal knowledge and thus be able to integrate existing knowledge to discover and integrate new innovation opportunities. Except that, a thorough understanding of the foreign context developed through extensive exploitative internationalization can help EM MNEs refine any technologies discovered and adapt them to address foreign market needs, leading to successful new products that appeal to foreign customers. Based on these ideas, we propose the following hypothesis. BJM 15,3 434 H1. International ambidexterity is positively related to innovation performance 2.4 TMT of EM MNEs: accumulating and integrating resources in implementing international ambidexterity We have just proposed that international ambidexterity of EM MNCs can facilitate innovation by avoiding the competence trap of exploitative internationalization and reducing the uncertainty of exploratory internationalization. However, what is worth mentioning is that international ambidextrous firms are inherently unstable because of the higher resource requirements imposed upon EM MNCs to synchronously implement exploratory and exploitative activities (Cao et al., 2009) and lack of internal consistency, which restricts the resource exchange and combination process (Clercq et al., 2014). Therefore, the international ambidexterity–innovation performance assumption is built on the premise that resources are abundantly available (O’Reilly and Tushman, 2004) and can be effectively exchanged and integrated so as to appropriate the potential value embedded in spatially separated activities (Jansen et al., 2009). This logic suggests that the innovation performance effect of international ambidexterity will depend on the capability of EM MNCs to accumulate and provide enough resources for and to facilitate the integration during the ambidextrous implementation process. When EM MNEs are more capable of accumulating resources and contributing to the integration process, the positive relationship discussed earlier becomes stronger. As the principal decision-making unit of EM MNCs, TMTs play an important role in establishing external links for resource accumulation (Park and Luo, 2001; Collins and Clark, 2003) and promoting internal coordination to support decision-makings regarding resource integration processes (Jansen et al., 2009; Umans et al., 2018), which are crucial for EM MNCs to balance exploration and exploitation. As a complement of formal institutional framework, external network ties act as a vital channel in providing rich source of resources for firm’s foreign operation (Mesquita and Lazzarini, 2008). In our research, we focus on the external ties of TMT members because they are in a particularly favorable position to gather, sift and collate timely and relevant knowledge and information that enables EM MNEs to conduct exploratory and exploitative internationalization concurrently (Collins and Clark, 2003). Except that, TMTs in international ambidextrous organizations typically face role conflicts that may diminish acceptance of decisions, so TMTs are responsible for coordinating and translating contradictory expectations across differentiated exploratory and exploitative units into workable strategies (Jansen et al., 2008), which is crucial to get integrative and synergetic value from exploratory and exploitative internationalization. In this section, we examine the moderating role of two TMT resource accumulation mechanisms that are considered to be good for providing resource support: TMT business ties and TMT political ties, and two TMT resource integration mechanisms that are deemed to be beneficial for combining strategic contradictions: TMT contingency rewards and TMT social integration. 2.3.1 The moderating effect of TMTs’ resource accumulation. (1) TMT business ties TMT business ties refer to the sets of relationships TMT members have with outside business partners, such as customers, suppliers and competitors, who own resources of potential value to the firm (Park and Luo, 2001; Peng and Luo, 2000; Collins and Clark, 2003). Previous studies on EM MNEs have emphasized the importance of TMT business ties in firms’ international success (Elango and Pattnaik, 2007; Filatotchev et al., 2009), claiming that TMT business ties can act as a flexible resource supplement in an environment where factor mobility is severely constrained (Luo, 2003). In our study, we argue that TMT business ties can provide EM MNEs with enough resources to implement international ambidexterity. International ambidexterity in firms’ innovation 435 Establishing good relationship with upstream supplier can bring higher inventory turnover and timely delivery to EM MNEs, which greatly enhance manufacturing productivity, lower production cost and finally promote international exploitation activities (Mesquita and Lazzarini, 2008). Through cooperating with peer competitors closely, firms can understand the latest developments in the industry by information sharing and intelligence reconnaissance, significantly enhancing the ability of EM MNEs to explore and acquire high-end knowledge overseas. Except that, TMTs with a strong customer focus may both develop attractive products through listening to the voices of customers repeatedly and improve their technical capabilities in order to design and produce the final products, in favor of the exploratory and exploitative internationalization simultaneously. Therefore, TMT business ties provide resource guarantee for EM MNEs to implement and gain innovation benefits from international ambidexterity. Based on these arguments, we propose the following hypothesis: H2. TMT business ties positively moderate the relationship between international ambidexterity and innovation performance (2) TMT political ties TMT political ties refer to interpersonal social relationships of TMT members with officials of government agencies, industrial bureaus, regulatory and supporting organizations such as state banks, tax bureaus, commercial administration bureaus and other governmental agencies, which serve as an important form of social capital in emerging countries (Park and Luo, 2001; Peng and Luo, 2000; Collins and Clark, 2003). Top managers in EM MNEs tend to spend significant portions of time and energy in establishing contacts with government officials because the government department still controls a lot of strategic factor resources and has the power to decide on resource allocation and projects approval (Li and Zhang, 2007). Cultivating good networking ties with government officials means that TMT members can get financial, management and technical support much easily (Wang et al., 2015), which is significant for the smooth implementation of international ambidexterity. For example, entering such governmental programs as soft loan support, export subsidies, tax reduction and exemption can greatly reduce financial pressure and increase risk-taking capacity for EM MNEs’ foreign operation (Park and Luo, 2001; Lu et al., 2010), which is helpful for both the exploration of strategic assets through overseas mergers and exploitation of competitive advantages through greenfield investment. Lu et al. (2010) further persist that government can also offer opportunities for EM MNEs’ top managers, such as participating in international fairs, to learn foreign marketing and advanced technological knowledge, profitable for both leveraging competitive advantages and seeking novel knowledge and information overseas. Therefore, when TMT members have established close contact with government officials, international ambidextrous activities of EM MNEs will be carried out more effectively, and EM MNEs will be more likely to derive innovation value from international ambidexterity. Based on these arguments, we propose that: H3. TMT political ties positively moderate the relationship between international ambidexterity and innovation performance 2.3.2 The moderating effect of TMTs’ resource integration. (1) TMT contingency rewards The way of top management members earning performance rewards influences interactions and outcomes of TMTs (Siegel and Hambrick, 2005). As a kind of pay patterns among TMT members, contingency rewards reflecting the extent to which benefits for individual team BJM 15,3 436 members hinge on their team’s collective performance (Harrison et al., 2002) are conducive for TMTs to solve complex problems and pursue complex organizational goals, which demands mutual adjustment and the transcendence of individual interests (O’Reilly and Tushman, 2004). TMT contingency rewards reduce interpersonal competition and facilitate mutual negotiation. When EM MNEs emphasize joint rather than individual rewards, an interdependent cooperative atmosphere and commitment to organizational goals have been set up, beneficial for allocating resources to differentiated international exploratory and exploitative units, mobilizing and integrating resources across differentiated units to achieve success of innovation (Clercq et al., 2013). In the study of Govindarajan and Trimble (2005), they have described how Analog Devices, a semiconductor company, avoids strong incentives tied to mature businesses’ performance and starts to evaluate and reward TMT members based on team’s collective achievements, which finally enables Analog Devices to leverage and integrate assets across differentiated exploratory and exploitative units. Therefore, we predict that TMT contingency rewards enhance the potential contributions of international ambidexterity to innovation performance through facilitating the resource sharing and integration during the implementation of international ambidexterity. Based on these arguments, we propose the following hypothesis: H4. TMT contingency rewards positively moderate the relationship between international ambidexterity and innovation performance (2) TMT social integration Social integration refers to the “attraction to the group, satisfaction with other members of the group, and social interaction among the group members” (O’Reilly et al., 1989), which involves the affective factors or social forces among members of TMTs (Smith et al., 1994). Members in TMTs with higher social integration are expected to be willing to negotiate and compromise with others for team success (Barkema and Shvyrkov, 2007), indicating that senior executives always build realistic understandings of conflicting strategic agendas and make rational thinking on resource exchange and combination, which is beneficial for the pursuit of innovation profit during the simultaneous implementation of exploration and exploitation activities overseas. Social integrated TMT members are inclined to use cooperative methods and thinking to solve problems based on social interaction and trust among TMTs (Jansen et al., 2008), which suggests that TMT members responsible for exploratory and exploitative activities in foreign markets will keep close cooperation to push the resources integration contributed by differentiated units. Jansen et al. (2009) argue that social integrated TMTs can stimulate critical debate and recognize innovation opportunities through evaluating and reconsidering various possible combinations of differentiated resources. Therefore, we propose that TMT social integration facilitates the integration of resources between international exploratory and exploitative units to arrive at new innovation combinations. Based on these arguments, we propose the following hypothesis: H5. TMT social integration positively moderates the relationship between international ambidexterity and innovation performance 3. Methodology 3.1 Sample and data collection Our study’s sample frame was drawn from several Economic Development Zones located in Zhejiang province in China, including Hangzhou, Ningbo and Wenzhou, because of its highly developed private economy and early internationalization pace (Chen et al., 2011; Wu et al., International ambidexterity in firms’ innovation 437 2016). Due to budgetary constraints, we selected a random sample of 700 ventures from the aforementioned three zones, with 300 firms from Hangzhou Economic Development Zone, 220 firms from Ningbo Economic Development Zone and 180 firms from Wenzhou Economic Development Zone. We selected the top managers responsible for international operations and innovation management from each of the sampled firms as the key informant. In order to minimize the potential problem of common method bias originating from the same data source or a single respondent (Podsakoff et al., 2003), we followed the frequently used method to divide the survey questionnaires into two separate parts and asked for two different senior executives from the same company to answer the question. After several rounds of phone, fax and personal follow-ups, 227 valid questionnaires (32.4\%) were returned after deleting replies with missing observations. The firms were operating in a wide range of industries covering electronic information (30.40\%), special equipment manufacturing (19.38\%), transportation equipment manufacturing (13.22\%), ordinary machinery manufacturing (12.78\%), metal products (9.25\%) and other industries (14.97\%). We compared early (the first 25\%) and late (the last 25\%) respondents in terms of model variables. We observed no significant differences (p < 0.05), indicating that nonresponse bias was not a problem. As for the common method bias, because we had assured that the questionnaires were responded by two different senior executives in the same company, so the risk of common method variance could be greatly reduced through this research design (Eisenhardt and Tabrizi, 1995). The results of Harman’s one-factor test also showed that no single factor explained a majority of the variance, demonstrating that common method bias was not a serious concern in this study. 3.2 Measures 3.2.2 Dependent variable. The measurement scale of innovation performance consisted of six indicators used in prior research (Chen et al., 2011; Wu et al., 2016) to capture items such as the number, sales and novelty of new products, reflecting the performance …