The dual role of flexibility in driving innovation ambidexterity and firm performance

• Flexibility can be a double-edged sword shaped by its tension with innovation ambidexterity. • Product, mix, and volume flexibilities enhance performance by fostering ambidexterity. • Product flexibility strengthens the performance impact of innovation ambidexterity. • Mix and volume flexibilities diminish the positive effect of innovation ambidexterity. Extant research on the impact of flexibility on firm performance has yielded conflicting results, limiting scholarly and practical advancements on the topic. Drawing on the Dynamic Capability View and Flexibility Paradox, we explore how three distinct dynamic flexibilities – product, mix, and volume flexibility – influence firm performance through innovation ambidexterity. We test our model using survey data and lagged archival financial performance data from 209 companies operating in France, collected at multiple time points. Our results reveal a dual role for these dynamic flexibilities in shaping performance outcomes. Specifically, all three dynamic flexibilities enable performance gains through innovation ambidexterity. At the same time, they exert distinct moderating effects on the link between innovation ambidexterity and firm performance. Only product flexibility amplifies the positive effect of innovation ambidexterity on performance outcomes while, paradoxically, mix and volume flexibility weaken this effect. Our study advances theoretical knowledge and provides valuable managerial implications.