1) What are the authors\' theoretical proposition 2 (P2)? 2) What are the author
ID: 396606 • Letter: 1
Question
1) What are the authors' theoretical proposition 2 (P2)?
2) What are the authors' theoretical proposition 3 (P3)?
3) What were the authors' conclusions?
Please help and thank you very much =)
"Organizational capacity for change and strategic ambidexterity Flying the plane while rewiring it"
by, William Q. Judge
P2. The relationship between an organization’s capacity for change and strategic
ambidexterity will strengthen during periods of high environmental
uncertainty and weaken during periods of low environmental uncertainty.
Moderating impact of organizational slack
One of the keys to organization effectiveness is an organization’s capacity to absorb
environmental variation (Thompson, 1967). This ability to adapt to dramatic shifts in
the environment is frequently called organization slack (Bourgeois, 1981). Cyert and
March (1963) considered all organizations as coalitions of individuals, and these
individual’s and coalition’s behaviors are highly influenced by the presence or absence
of organizational slack.
Organization slack has been shown to be empirically related to a wide variety of
organizational processes and outcomes. With respect to processes, slack has been
found to be negatively associated with political behavior within top management
teams (Bourgeois and Singh, 1983), positively related to organizational responsiveness
to the environment (Cheng and Kesner, 1997), and curvilinearly related with organizational innovation (Nohria and Gulati, 1996). Also, slack has been found to both facilitate and inhibit firm growth (Mishina et al., 2004), as well as influence firm risk and return (Wiseman and Bromiley, 1996). A relentless pressure has been imposed on all organizations over the last two decades to become more efficient by eliminating all waste. Consequently, many organizations are quite “lean” compared to organizations of the past. One of
unanticipated outcomes of this lean state is the elimination of slack resources necessary to cope with environmental change and innovate for the future. Thus, organizations often lack the time to think and the discretionary financial and human resources to experiment (Lawson, 2001).
This theory and research suggests that organizational slack might be an important
moderator of the relationship between an organization’s capacity for change and its
strategic ambidexterity. For example, in high slack conditions, it might be easier to
engage the organization in the pursuit of both the exploitation and exploration of
existing and new product-markets even during a recession, as recent research by
Srinivasan et al. (2005) suggests. In sum, slack resources might provide the
wherewithal by which political behavior is minimized, training is provided to
employees to learn new skills, trust is more freely given to organizational leaders, high
performers are rewarded for taking risks and going the extra mile, and the subtle but
important system interdependencies are all addressed adequately. This suggests our
third and final theoretical proposition:
P3. The relationship between an organization’s capacity for change and strategic
ambidexterity will be stronger for relatively high levels of organizational
slack, and weaker for relatively low levels of organizational slack.
Discussion and conclusions
Barney and associates (2001, p. 631) suggest that “to the extent some firms in a rapidly
changing environment are more nimble, more able to change quickly, and more alert to
changes in their competitive environment, they will be able to adapt to changing
market conditions more rapidly than competitors, and thus can gain competitive
advantage”. Capturing the dimensions that allow firms to approach this goal is what
the OCC dynamic capability endeavors to provide. Yet, research in this regard is in its
infancy, and there is much work to do to understand how firms might go through rapid
and effective change to keep up with dynamic markets.
This study offers at least three contributions to the strategic marketing literature.
First, it represents a unique perspective on how to resolve the dilemma to both exploit
existing markets while simultaneously exploring new markets. As such, we build on
the emerging concept of “strategic ambidexterity” to capture this approach.
Second, we argue that the key means by which an organization becomes
strategically ambidextrous is by cultivating organizational capacity for change. This
new construct allows a firm to transcend the many dualities that it confronts (Graetz
and Smith, 2005). While it may be possible to sequentially pursue these conflicting
strategic imperatives, as suggested by the simulation study by Siggelkow and
Levinthal (2003), we think that simultaneous pursuit of these diametrically different
strategic imperatives will prove more effective. As such, we build upon the dynamic
capabilities perspective and couple it with Ashby’s (1963) law of requisite variety to
advance three novel, empirically-testable, and managerially-useful propositions.
Finally, we discuss some potential moderating conditions external to and internal
to the organization which may influence the capacity for change-strategic
ambidexterity relationship. All of this theory is advanced by considering and
integrating literature from the marketing, strategic management, and organization
theory perspectives. It is said that “the ability to hold two competing thoughts in one’s mind and still be
able to function is the mark of a superior mind” (Fitzgerald, 1956). We believe that this
ability for organizations to manage seemingly contradictory polarities in a productive
fashion is the hallmark of good marketing and strategic management, and the key to
sustained competitive advantages in the 21st century. This study offers new insights
into how those organizational polarities might be managed and what contextual
factors might affect the situation. We encourage other scholars to empirically test our
ideas so that these ideas can be refined and extended.
Explanation / Answer
1) What are the authors' theoretical proposition 2 (P2)?
P2-
“The relationship between an organization’s capacity for change and strategic ambidexterity will strengthen during periods of high environmental uncertainty and weaken during periods of low environmental uncertainty”
Dynamic capabilities help a firm to new forms of competitive advantage in the changing environment. This helps to switch between exploratory (seeking new products and markets) and exploitive strategies (satisfying current consumers)
Organisational changing Capacity is a dynamic organizational capability. It helps firms to adapt old capabilities to new threats and opportunities as well as create new capabilities. Strategic ambidexterity is the firm’s ability to simultaneously pursue exploitation and exploratory strategies.
There is a positive relationship between changing Capacity and Strategic ambidexterity. Proposition 2 says the strength of this relationship increase during times of uncertainty
This relationship between change capacity and ability to simultaneously both opportunities(exploitive and exploitative) is less exhibited during normal times- with more environmental certainty. An organization which has high change capacity and an organization with low change capacity- Both may exhibit equal exploitive and explorative actions during normal times
But During periods of high tension or environmental uncertainty, the relationship is clearly seen and is stronger. Firms do not have change capacity, they will pursue one at the expense of other i.e. they will usually pursue short-term performance needs via exploitive strategies. They may fail to explore new opportunities. Organizations with relatively high levels of change capacity might be able to respond to pressure for an exploitive strategy as wells as explore new product and markets
2) What are the authors' theoretical proposition 3 (P3)?
P2-
“The relationship between an organization’s capacity for change and strategic ambidexterity will be stronger for relatively high levels of organizational slack, and weaker for relatively low levels of organizational slack.”
The firm’s capacity to absorb environmental variation and react to shifts is called organization slack. In this context, the author primarily refers to slack resources in an organization. Slack resources minimize politics in top management, increase responsiveness and innovation. Slack moderates the relationship between changing capacity and Strategic ambidexterity
During periods of uncertainty, Slack resources act as a buffer. Training can be provided to employees to acquire new skills and competencies. Trust on managers and regarding risk takers increase during slack. Organisations with high slack can easily engage in both the exploitation and exploration even during a recession,
,
3) What were the authors' conclusions?
Firms in a rapidly changing environment are more responsive and dynamic to external changes
The author offers a view on strategic ambidexterity and concludes that a firm can simultaneously perform both exploit sting markets and exploring new markets. Previously this was considered difficult since the two strategies require different approaches and cannot be pursued together. The author belives simultaneous pursuit of these two polarized imperatives will be more effective.
The second point, the author puts forth, is a firm develops strategically ambidexterity by improving its organizational capacity for change. The author also provides three theoretical propositions
The author also says it is important to have slack resources to have better strategic ambidexterity. The author believes that strategic ambidexterity is the hallmark of good marketing and strategy. He also lays out that ambidexterity is essential for a sustainable competitive advantages in the 21st century
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