Tensions related to exploitation and exploration

Organizational ambidexterity literature has quite a consistent understanding that balancing exploration and exploitation leads to tensions (Lubatkin et al., 2006; Andriopoulos & Lewis, 2009; Gibson & Birkinshaw, 2004; Smith & Tushman, 2005) that are difficult to resolve (Zimmermann et al. 2018). Managers experience tensions as a dilemma when they balance exploration and exploitation activities without being able to choose between competing and conflicting activities. Managers are usually unable to see both exploration and exploitation as a possibility (Smith & Lewis, 2011; Lüscher & Lewis, 2008). Andriopoulos and Lewis (2009) studied five ambidextrous firms in the product design industry and found overarching patterns. Their research supports previous research (March, 1991; Smith & Tushman, 2005) arguing that exploitation-exploration conflicts have an effect on multiple levels on

organization and also on personal level, and that managing tensions requires efforts on multiple levels by management. Tensions arise among employees when they explore new uncertainty and are not aware of the next phases or how they should adapt to the situation (Andriopoulos & Lewis, 2009). Simsek (2009) states that a firm or its units have to shift structures to explore new opportunities and execute innovation. Tensions follow this shift also because the structures needed for exploration and exploitation are distinctive. Tensions intensify under conditions of resource scarcity (Miron-Spektor et al., 2018). He and Wong (2004) argue that the inherent tension may become impossible to manage when exploration and exploitation are pushed too far. Tensions occur when there is dependency between both radical and incremental innovation at the project (Smith & Lewis, 2011). Zimmermann (2018) states that most of the previous literature has addressed tensions as stable; however, they found in their empirical research that tensions on the frontline evolve across domains.

Andriopoulos and Lewis (2009) divide tensions into three categories: strategic intent, customer orientation, and personal drivers. Raisch et al. (2009) identify four tensions related to ambidexterity. The first tension is related to differentiation and integration. The conflict between differentiation and integration is in deciding whether to have different organizational units focusing on exploitation and exploration rather than integrating capabilities and resources within the same unit (Gibson & Birkinshaw, 2004). The second tension is based on whether ambidexterity manifests itself at the individual or organizational level. To enable ambidexterity at the individual level, organizational mechanisms may be required. The third tension relates to the static versus dynamic perspective. Some research suggests that sequential attention is needed on exploitation and exploration, although the majority of previous organizational ambidexterity research suggests organizations simultaneously pursue exploitation and exploration. The fourth tension relates to internal versus external perspectives on ambidexterity (e.g., how organizations address exploitation and exploration internally and the importance of the external acquisition of new knowledge for exploration). Previous research on organizational ambidexterity has focused on companies’ internal aspects of exploitation and exploration.

2.2.1 The paradox approach turns tensions beneficial

The paradox approach has lately received growing attention among researchers (Schad et al., 2019), and it has been used in recent research as a lens to examine ambidexterity—

performing exploitation and exploration simultaneously (Gibson & Birkinshaw, 2004;

O’Reilly & Tushman, 2008; Raish & Birkinshaw, 2008; Smith & Lewis, 2011). McMullen and Bergman (2017) state that paradox theory is ideal for examining organizational tensions.

Paradox theory was originally aimed at the organization level, but it can be applied at various other levels, including individuals, teams, and organizational and interorganizational levels (Miron-Spektor et al., 2018; Ocasio & Radoynovska, 2016; Schad et al., 2016). Paradox illustrates two elements that are true and exist simultaneously in the same place, at the same time (Lewis, 2000). Paradox scholars see tensions as double-edged swords, potentially as sources for innovations and enhanced performance, but also raising anxiety (Lewis, 2000).

Fairhurst et al. (2002) and Stohl and Cheney (2001) define paradoxical tensions as a clash of ideas, principles, and actions, as well as any subsequent feelings of discomfort. Smith and Lewis (2011) state that the paradox perspective assumes that tensions persist within complex and dynamic systems, and tensions can be beneficial and powerful. Smith and Jarzabkowski et al. (2013) note that managers’ shift from defensive responses to active responses leads to a paradox. The paradox perspective explores tensions across phenomena and levels. Based on previous literature, Jarzabkowski (2013) describes that paradox is quite common among teams or groups because there is separation between different values, beliefs, and identities.

As people from different groups communicate with each other, they also have to match the values of their own group with those of other groups.

Schad et al. (2016) state that tensions arise from four paradoxes, including learning paradoxes which arise from the old and new stability and change (e.g., Smith & Tushman, 2005; Raisch & Birkinshaw, 2008; Andriopoulos & Lewis, 2009). Learning paradoxes appears as dynamic systems change, renew, and innovate. Tensions arise between radical and incremental innovation or episodic and continuous change. Jarzabkowski (2013) states that during change, all actors and organizations struggle, but also learn as new procedures are approached (Clegg et al., 2002). Organizing paradoxes describe how firms create processes and designs to achieve their goals (Gibson & Birkinshaw, 2004; Smith &

Tushman, 2005). Organizing paradoxes are common where complex systems lead to competing designs and processes. Tensions arise between collaboration and competition as well as between routine and change. Tensions are present especially while restructuring because change induces tensions between old and new structures (Lüscher & Lewis, 2008;

Smith & Lewis, 2011). Belonging paradoxes describing competing identities and tensions between the individual and the collective. Performing paradoxes arise because of different

demands from inside and outside the company, e.g., if there are competing strategies or goals between different stakeholders. It is natural for performing paradoxes to arise during restructuring, and there is also the possibility that during the major restructuring, managers do not have the blueprints to follow (Jarzabkowski, 2013; Jarzabkowski, 2012).