CEO Construal Level, Cognitive Flexibility, and Firm Ambidexterity

We examine how two cognitive characteristics of chief executive officers (CEOs)—their construal level and cognitive flexibility—influence a firm’s ambidexterity (i.e., the firm’s ability to pursue exploration and exploitation simultaneously). Drawing on construal level theory, we argue that CEOs who think at more abstract levels are better able to adapt to the changing conditions of exploration and exploitation flexibly, and are thus more effective at achieving ambidexterity. We examined these proposed hypotheses in a sample of 344 Korean small- and medium-sized enterprises, using surveys of matched CEOs and executives at two points in time with a one-year lag. We find that higher CEO construal levels are associated with greater CEO cognitive flexibility, which in turn positively influence firm ambidexterity. Additionally, findings from a post hoc analysis indicate that the effects of CEO construal levels and cognitive flexibility differ depending on the firm’s size. This study provides new insights on managerial cognition and the microfoundations of ambidexterity.