Structural vs. Contextual Ambidexterity

Since March’s (1991) influential study of exploration and exploitation in organizational learning, organizational ambidexterity, which recognizes the need for simultaneous pursuit of exploration and exploitation, has earned much attention. In the current literature, two dominant modes of resolving the contradictory needs are generally recognized: one structural and the other contextual. However, these two modes of dealing with the contradiction have been developed in a rather separate, compartmentalized way obstructing further development of the field. Furthermore, there has been no attempt to put the two modes under the scrutiny of a welldesigned crucial test. In this paper, we try to contribute to the literature by examining the theoretical intricacies of the two solutions, and by empirically testing the two competing logics under a single study. For doing so, our study proceeds by the following steps. First, we will identify the fundamental logics and assumptions of the two solutions with regard to human behavior and the nature of organizations. Specifically, we will show that underlying the structural solution is James G. March’s classical behavioral decision theory, whereas the contextual solution is founded on the notion of paradox management. Second, we will derive a set of competing research hypotheses from the two theoretical perspectives respectively, which will be tested with the data collected from 76 Korean firms. In general, the data showed that the contextual solution is more conducive to organizational ambidexterity. The paper concludes by examining the implications of organizational ambidexterity on short-term and long-term financial performance of the sample firms.