Hybrid Strategy and Firm Performance: The Moderating Role of Individual and Technological Ambidexterity

Abstract:     
It is discussed whether hybrid strategies are beneficial or detrimental to a firm’s performance, because hybrid strategies lead to organizational tensions that arise from the simultaneous pursuit of distinct strategic activities. However, existing studies on the relationship between hybrid strategy and firm performance have largely neglected the role of the organizational architecture. This study tests the hypothesis that an ambidextrous organizational architecture positively moderates the relationship between a hybrid strategy and firm performance. Particularly, the roles of specific organization structures and HRM practices (individual ambidexterity) and information and communication technologies (technological ambidexterity) are assessed. Further, a hybrid strategy’s performance impact is defined in two distinct ways and measured relative to three different comparison groups, that is, the entire sample, no-emphasis strategies, and pure strategies. A novel multi-source dataset on German and Polish manufacturing firms is constructed from three independent sources, including a dataset on objective firm performance indicators. Evidence is found that a hybrid strategy positively impacts firm performance in the presence of organizational ambidexterity, but negatively impacts firm performance in the absence of organizational ambidexterity. These findings are robust across two types of organizational ambidexterity, three different comparison groups, and further robustness tests.

Number of Pages in PDF File: 41

Keywords: exploration, exploitation, ambidexterity, hybrid strategy, organizational architecture, firm performance

JEL Classification: M12, M15, M50, L10, L22, L25

working papers series