Healthy–Unhealthy Tensions Duality Model: Managing Conflict and the Exploration–Exploitation Paradox in Creative Firms

ABSTRACT We examine how senior managers in creative firms navigate the paradoxical tensions of exploration and exploitation—balancing artistic excellence with commercial viability—while managing conflict arising from these contradictions. Drawing on paradox theory and Mary Parker Follett's concept of constructive and non‐constructive conflict, we conducted in‐depth interviews with 37 senior managers from various creative firms. Our analysis reveals four key managerial mechanisms—integration, compromise, obliging and dominance—that managers employ to address conflict generated by paradoxical tensions. Our findings highlight that integration fosters constructive conflict and generates healthy tensions, characterised by moderate tension and synergy between exploration and exploitation. In contrast, compromise results in temporary resolutions, leading to non‐constructive conflict and little tension, while obliging and dominance lead to non‐constructive conflict and unhealthy tensions. Based on our findings, we develop a duality model illustrating the interplay between managerial interventions, conflict outcomes and tension dynamics. We contribute to paradox theory by explaining the connections between (non)constructive conflict and (un)healthy tensions and the pivotal role of managerial interventions. We provide practical insights for leaders in creative and other industries, emphasising the importance of integration to achieve a balance between competing demands.