Performance implications of organizational ambidexterity versus specialization in exploitation or exploration: The role of absorptive capacity

Although ambidexterity is usually cited as a mean to achieve above average sustainable performance, theory indicates that due to trade-offs between exploitation and exploration at an organizational level, sometimes ambidexterity may be beyond reach, or ineffective, making specialization in exploitation or exploration, the more advisable course of action. However, there is no empirical research comparing the performance implications of ambidexterity and specialization in exploitation- or exploration-based types of innovations and the factors that may make each strategy more favorable. To fill this gap, we empirically test that absorptive capacity moderates the effects of ambidexterity and specialization in exploitation or exploration on firm performance. Using a sample of 281 manufacturing companies, results indicate that ambidexterity has a greater effect on performance at high levels of absorptive capacity, while specialization in exploitation or exploration is more effective at low levels of absorptive capacity.