Managing tensions in the narrative - Ambidexterity and tensions management in growth oriented s

3. METHODOLOGY

4.6 Managing tensions in the narrative

Ambidexterity represents the ability of the firm to manage tensions (Hughes, 2018;

Andriopoulos & Lewis, 2009; Nosella et al., 2012). For the management, the challenge is how they are able to prepare for discontinuous environmental change and at the same time increase the fit among culture, processes, and strategy. Management skills are required to compete in mature markets and at the same time develop new products and/or services (Tushman and O’Reilly, 1996).

“After doubling the revenue, Ulla noticed that the old way of doing things is not working and therefore, she has started a project to improve the processes and IT systems.” – Story about Ulla

The selection of employees and corporate culture has a role in managing tensions in growth-oriented SMEs in Ulla’s case. Selecting certain types of employees and maintaining a certain type of corporate culture are ways to manage tensions related to ambidexterity, which is in line with findings by Tushman & O’Reilly (1996).

“The first reaction from one of the key employees was a bit disappointing, and Reijo thinks that he has to prepare the idea further to get support from others.” – The story about Reijo

As Reijo has recently acquired the company, he has not been able to select employees or create a company culture yet. Reijo tries to communicate the importance of exploiting and exploring activities to employees. He also involves employees in the processes and strategic planning to manage tensions and resistance against the dynamics related to ambidexterity,

and by that way he is building the company culture. Reijo is also paying attention to open communication and creating a culture that shares information. Reijo approaches the tensions in a very hands-on manner, and at the same time, he is involving employees in the processes and holding discussion to manage tensions and to avoid further resistance against balancing ambidexterity. He is building trust between him and employees. Many aspects of this management style are familiar from previous research conducted on frontline managers (e.g.

Yu et al. 2020).

The need to interact between individuals is found to be important in previous literature (Jarzabkowski, 2013), and communication helps actors within organizations to share the same values and beliefs, which reduces tensions. Ulla has created a work environment that allows failing, and in that way she has lowered the tensions related to exploitation and exploration activities. Reijo has an approach that carefully prepares exploitation and exploration initiations before introducing them to his employees. Adequately preparing the necessary steps helps employees to understand the requirements needed to balance ambidexterity, and this helps to reduce tensions.

Both companies are growth-oriented, and their balancing and focus between exploitation and exploration tasks change constantly at the same time while the organization structures and way of doing is changing. Tensions arise while the same employees need to change from exploitation tasks to exploration tasks, and Ulla mentions scheduling as an important part of her job in balancing the different activities. To lower the tensions from exploitation activities, both entrepreneurs receive valuable information from their employees about which development areas and with what magnitude needs attention. Tensions are managed on a continuous basis by the entrepreneurs at both companies; currently, tension management focuses on reactive actions based on situation. Both entrepreneurs have some key employees who are involved in processes related to exploitation and exploration. Involving employees and participating them to achieve ambidexterity is a solution to manage tensions and bring clarity among employees. Both entrepreneurs are developing their own skills and knowledge to meet the new requirements and gain understanding. Having a proper amount of knowledge helps the company to navigate efficiently through constant change and reduces the tensions related to the resources.

“After Ulla discussed with others about the failure, they agreed that it was a good idea to kill the project since it seemed to go waste.” – Story about Ulla

“Nowadays they have a culture of failure and Ulla usually fails more than others. They tell about failures and laugh. Ulla says that it helps to create work environment which allows failing and by that way people are confident enough to tell about their new, even crazy ideas.” – Story about Ulla

“Reijo has tried to manage tensions by letting the employees participate in the strategy planning. He has also arranged a monthly session where they have open Q&A and they look for some key numbers of last month, mainly sales and profit/loss. Reijo thinks that when he is an open person, he expects that other persons are open to him.” – Story about Reijo

Chen (2017) states that failing is usually early starting point for exploration and to be able to explore, one needs to accept that failures are part of exploring new uncertainties. In the stories about Ulla and Reijo discussion, openness and peer support are key elements in managing tensions. The role of employees and their commitment are crucial. Ulla has lowered uncertainty by allowing employees to fail. By communicating this way, Ulla has created an environment that accepts failure. While the company pursues new businesses, it is possible to fail during the exploration. This builds trust between employees and Ulla and enables an innovative working culture since employees are allowed to bring their ideas to the attention.

“She finds comfort in being able to discuss with her colleagues and advisors and to hear that she is doing the right things.” – Story about Ulla

“Sometimes Reijo thinks that he should discuss more with other employees. They have been so supportive, but sometimes, it feels a bit confusing to explain his ideas when they are not ready and organized in his head.” – Story about Reijo

“He sometimes discusses the running of the company, employees and other matters regarding business with his wife. It is vital to have this kind of person with whom you can share your thoughts, successes, and failures privately and confidentially.” – Story about Reijo

Both entrepreneurs face tensions personally as frontline managers, and it is vital to find a way to manage these tensions to maintain performance. Both entrepreneurs tend to discuss with persons outside the company, and it seems to be a good way to manage tensions related to ambidexterity. It is notable that both Ulla and Reijo try to benefit by learning to live with tensions and competing demands, and trying to convert those to benefits.

It is also notable that some tools to manage tensions were absent. Miron-Spektor et al. (2018) highlights that a paradox mindset is a key to unlocking the potential of everyday tensions.

Smith and Lewis (2011) argue that some people are able to leverage tensions and competing demands to their benefit. They argue that a paradox mindset has an effect on the relationship between experiencing tensions and in-role performances, stating that a high paradox mindset leads to higher in-role job performances. There is a lack of organizing and managing ambidexterity in both stories. Ambidextrous organizations need knowledge that is suitable for their context and goals. To develop proper knowledge, the focus should be on available human resources and the need to develop capabilities. In both stories, there was a lack of organizational learning models (Jarzabkowski, 2013), which seems to be a managerial problem.

To manage tensions, entrepreneurs need to make sure that their organization has enough knowledge and ways to learn new skills before executing ambidexterity with full potential.

Managing employees performing exploitation and exploration tasks is complicated due to missing architectures and processes that support these opposite and often competing actions.

Both companies in the stories are quite small. The entrepreneurs are general managers handling various tasks and simultaneously managing their employees. Tensions arise as organization architectures do not support ambidexterity (Simsek, 2009), and processes focusing on balancing exploitation and exploration are missing in both stories.

Growth-oriented SMEs have different resources than large multinational companies. They might have scarcity of resources (time, money, and human resources). The entrepreneur plays a crucial role in keeping the projects going forward so that exploration and exploitation

activities are performed continuously. The lack of resources also seems to apply to the capability and ability to systematically manage tensions while balancing ambidexterity.

6 DISCUSSION

The purpose of the study was to gain new knowledge about ambidexterity and related tension management at the entrepreneurial level in growth-oriented SMEs. Ambidexterity is related to the balance of exploitation and exploration, introduced by March (1991). The previous research focuses mainly on large companies and management level. Entrepreneurs interviewed face conflicting demands continuously and understand that it is important to efficiently exploit current competencies while simultaneously addressing the need to explore new business opportunities.

Achieving ambidexterity in SMEs is a challenging task from a managerial perspective.

Entrepreneurs have a decisive role in different managerial issues, including human resources, company structures, and processes. The results show the importance of the entrepreneur’s role as a frontline manager and as a key person in fostering ambidexterity and managing tensions in SMEs. In other words, entrepreneurs can create ambidexterity in their organizations by creating structures, processes, supportive environments, and encouraging employees’ participation on a continuous basis. In both stories of the case companies, individual-level ambidexterity among entrepreneurs seems to be strong, and entrepreneurs’

position at their companies is optimal based on previous literature that emphasizes decision-making autonomy at the frontline managers in enabling ambidexterity. One role of entrepreneurs is to act as frontline managers to their employees in SMEs. Because of entrepreneurs’ decisive role in their companies, they could actually pursue ambidexterity and execute the incentives that come from their employees (Zimmermann et al., 2018; Yu et al., 2020; Yeganegi et al., 2019; Bruyaka & Prange, 2020).

The results of this study show that entrepreneurs at growth-oriented enterprises have a more ambidextrous mindset than their employees. To balance this, Ajayi et al. (2017) suggest decentralized decision making and reducing formal rules and processes to improve employee ambidexterity. Achieving ambidexterity is a managerial challenge for entrepreneurs; the entrepreneur needs to focus on human resource management in the appropriate manner. It is not enough to have an entrepreneur with an ambidextrous mindset; active communication is necessary to get employees to accept ambidexterity and its related tensions in balancing exploitation and exploration activities on a continuous basis. This finding supports those of Mom et al. (2009) that managers’ decision-making authority, participation in cross-functional interfaces, and connectedness to other organization members are positively related to

ambidexterity. Further, Zimmermann et al. (2018) found that, from the managerial point of view, balancing ambidexterity and managing tensions seems to be a continuous and recursive challenge for managers. Lüscher and Lewis (2008) emphasize the need for continuous activities, as actors are likely to return to past practices. Clegg et al. (2002) suggest that managers must remain reflective. To prepare employees to adopt an ambidextrous way of working, the entrepreneurs need to emphasize the importance of both dimensions.

Communicating consistently about both exploitation and exploration and their vision helps managers face competing demands (Lewis et al., 2014).

Tensions and ambidexterity are managed in a task-oriented and practical way in growth-oriented SMEs rather than in a highly formalized or structured way, as in large corporations (Gibson & Birkinshaw, 2004). Here, the results show that growth-oriented entrepreneurs do not separate exploration and exploitation, but execute mixed actions regarding their needs.

This finding is supported by that of Voss and Voss (2013), who argue that SMEs are limited in their ability to create structures that separate exploration and exploitation activities. Volery et al. (2015) state that entrepreneurs tend frequently to switch between exploration and exploitation and engage in a multiplicity of activities. Zhang et al. (2019) suggest strategic decisions based on their resources. Findings from this study show that entrepreneurs act on exploitation and exploration tasks simultaneously and carefully evaluate the business opportunity of each activity. This kind of multitasking feature is supported by previous literature (Gibson & Birkinshaw, 2004; Volery et al., 2015). Cao et al. (2009) suggest that a relative balance between exploratory and exploitative activities is more beneficial to resource-constrained firms. The way entrepreneurs tend to balance ambidexterity seems to follow contextual ambidexterity (Gibson & Birkinshaw, 2004), in which people are working together toward the same goals and entrepreneurs seem to reconfigure activities quickly to meet changing demands. Entrepreneurs do both exploitation and exploration tasks simultaneously and divide their time depending on current needs. However, they do not pay enough attention to enabling and encouraging individuals (employees) to make their own decisions about balancing their time between activities related to exploitation and exploration. Andriopoulos and Lewis (2009) argue that differentiation is crucial; clearly focused actions (projects targeted at different strategies, freedom during project phases) help maximize the benefits of ambidexterity. Previous research shows that the leadership of entrepreneurs is crucial in matching the complexity and pace of innovation with their teams (Cao et al., 2010; Gupta et al., 2004; Volery et al., 2015). Due to the lack of resources, the same people inside the

organization participate in both exploitation and exploration activities. The entrepreneurs involve some of their key employees by temporal separation (to either exploitation or exploration tasks) to certain projects, which allows focused action on each need at a time;

however, entrepreneurs are not otherwise managing ambidexterity at the firm or employee level. Raisch et al. (2009) stress the importance of active management of tensions.

Exploitation is seen as an important activity by entrepreneurs, because current business generates revenues that are important to the firm and enable future endeavors, unlike risk-taking and opportunities by new business areas, which only seem to be interesting options for growth-oriented entrepreneurs if the return on investment is attractive (as explained by Andriopoulos & Lewis, 2009). Previous research has noted the importance of exploitation, and that companies must improve their efficiency on a continuous basis to be profitable. Firms seem to balance the magnitude of explorative and exploitative actions to prevent overcommitment to exploration at the expense of exploitation or vice versa (Cao et al., 2009;

Tan & Liu, 2013).

Personal drivers are an important factor in discussing growth-driven SMEs and entrepreneurs.

Processes, targets, and roles seem clear in enterprises when discussing exploitation. Whereas in exploration, passion steps in, and entrepreneurs tend to see exploration as a personal challenge. It seems that not all growth-oriented SMEs have the resources, capabilities, and experience necessary to successfully implement ambidexterity (Voss & Voss, 2013).

Previous literature supports findings about tensions related to the ambidexterity (Schad et al., 2016; Smith & Tushman, 2005; Miron-Spektor et al., 2018). It seems that scarce resources (limited time, funding or human resources) intensify tensions. Employees’ mindsets also have an important role in coping with tensions, as they evaluate how they can (or not) benefit from tensions (Miron-Spektor et al., 2018). Majority of the tensions arise among employees while moving from exploitation toward exploration activities. Because of scarce resources, the employees are not able to pursue exploitation and exploration at the same time, but rather, need to choose one over the other (Andriopoulos & Lewis, 2009). Due to scarce resources, SMEs do not efficiently use or develop their knowledge for exploration and exploitation tasks.

Previous literature emphasizes the need for management when exploring new knowledge and exploiting existing knowledge and coordinating these knowledge bases (Taylor & Helfat, 2009). Practical suggestions include being a role model, developing shared goals, and creating

confidence among employees (Yu et al., 2020). Cao et al. (2009) state that to achieve ambidexterity, close relations between existing and new knowledge are needed.

Communication and relationships between entrepreneurs and employees are crucial for SMEs to successfully achieve ambidexterity. This is also supported by Harvey (2014), who suggests a process that includes dialect between group members to create a synthesis of their diverse perspectives for a radical innovation, and Yu et al. (2020), who emphasize the role of articulating vision and having shared goals. In SMEs, it is not enough that the entrepreneur tries to balance exploration and exploitation activities if the employees are not performing the required tasks. The entrepreneur must encourage employees to pursue ambidexterity and at the same time manage tensions at the front line by enabling communication.

6 CONCLUSION

This research offers empirical data and perspectives of entrepreneur-level ambidexterity in growth-oriented SMEs. The research results gained from interviewees underline that balancing ambidexterity and managing tensions in SMEs with scarce resources is a challenging task. Entrepreneur-level research about managing tensions in SMEs replenishes the previous research on ambidexterity and tensions (e.g., March 1991; Tushman & O’Reilly, 1996; Andriopoulos & Lewis, 2009; Nosella et al., 2012; Junni et al., 2013; Schnellbächer et al., 2019; Birkinshaw & Gupta, 2013; Birnkinshaw & Gibson 2004; Burgess et al., 2015;

Kassotaki et al. 2019).

The findings from this study emphasize the entrepreneur’s role as a frontline manager in fostering ambidexterity, as well as the employee’s role in enabling ambidexterity.

Entrepreneurs need team building, communication, and managing skills at growth-oriented SMEs to achieve ambidexterity. To achieve ambidexterity, it is not enough to have an entrepreneur with an ambidextrous mindset. From a managerial perspective, it is important to create a company culture, structures, and environment that allows employees to understand the need and participate in exploitation and exploration tasks. Communication and shared vision are important in managing tensions, building trust, and pursuing ambidexterity with scarce resources. Entrepreneurs tend to engage in either exploration or exploitation action simultaneously and without a precise plan, which creates tension. Entrepreneurs in the case companies were excited about exploration, as they felt that it offers a higher reward than exploitation. Exploration was seen as an attractive, personal challenge and opportunity for high rewards. The growth-oriented entrepreneurs did not seem to avoid this opportunity even if the returns seemed uncertain and more remote in time. This finding seems to be inconsistent compared to the previous research on organizational ambidexterity in larger firms (e.g. March 1991; Mom, 2006). Entrepreneurs as frontline managers experience tensions, and it is important to understand the need for tension management in this context.

Based on evidence, the entrepreneurs surveyed tend to manage these tensions by discussing them with advisors, colleagues, and family members.

The findings offer empirical insights into the importance of employees during balancing ambidexterity in growth-oriented SMEs. In the thesis, new insights about the different methods to manage tensions and the role of entrepreneur were presented.

6.1 Practical and managerial implications of the study

The empirical research on ambidexterity and tensions management in growth-oriented SMEs offers insights into companies with entrepreneurs as informants. Growth-oriented companies’ ability to perform exploitation and exploration activities efficiently with scarce resources was found a challenging task. The meaning of exploitation and exploration as a source of growth was found important for the entrepreneurs. The research offers insight into how to balance ambidexterity and manage related tensions. First, the need for communication and shared vision in the company is necessary for achieving ambidexterity and lowering tensions. While focusing on exploitation, it is necessary to communicate why there is a constant and continuous need to improve current capabilities. While focusing on exploration,

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