Having it both ways: a coherence view of structural ambidexterity

Purpose This study − theoretically and empirically − advances a concept of coherence to explain the internal structure responsible for a firm’s structural ambidexterity. Coherence appeals to an orthogonal view that exploitation and exploration are not conflicting learning processes, but instead are mutually related. This coherence offers a network structure in which strong and weak ties are related in complementary ways. These complementarities enable a firm’s coherence to jointly leverage the exploitive and explorative properties of these strong and weak tie networks and thus offer an orthogonal explanation of a firm’s structural separation. Design/methodology/approach By drawing on Teece’s (1994) corporate concept of coherence and Granovetter’s (1973, 1983) strength of tie arguments, the orgothonal properties of coherence are examined. In addition, as coherence emphasizes the differentiation or specialization of a firm’s experiences, a firm’s diversity of knowledge expertise offer benefits of structural ambidexterity. Hypotheses were developed to examine the performance implications of this structural ambidexterity arguments. In using an Arellano-Bond (1991) and Feasible Generalized Least Squares (FGLS) estimation approach, panel estimations of the U.S. biotechnology industry were used to examine these hypotheses. Findings This study’s panel estimations find that coherence and diversity have a positive and negative moderating influence on a firm’s performance. Research limitations/implications This study’s concept of coherence offers a balance where exploitation and exploration mutually reinforces a firm’s ability to adapt to dynamic markets. This offers an 'orchestration of skills’ that advances a firm’s higher order dynamic capabilities. As a result, coherence not only advances dynamic capabilities research, but it also addresses calls for more dynamic explanations of the structural ambidexterity concept. Practical implications This study suggests that when managers institute their firm’s diversity policies, the social demands for diversity may need to be weighed against the integration benefits of a firm’s coherence. Originality/value A key contribution of this study is that coherence offers an orthogonal view that resolves the conflicts in a firm’s exploitation and exploration and thus offering an important source of structural ambidexterity.