Organizational Linkages for Surviving Technological Change: Complementary Assets, Middle Management, and Ambidexterity

Abstract

Technological innovation sometimes requires industry incumbents to shift to a completely new core technology. In order to successfully navigate a technological transition, firms often face the ambidextrous challenge of "exploiting" existing complementary assets in order to support the new "exploratory" core technology. We argue that an industry incumbent attempting to make a transition to a new technology requires linkages between organizational units responsible for developing the new technology and units in charge of complementary assets needed to commercialize the innovation. These linkages are critical but overlooked elements of organizational ambidexterity. This paper develops a conceptual framework in which the ability to build and leverage organizational linkages involving the new technology and its complementary assets is essential for a successful technological transition. The framework also highlights the importance of middle management in creating and maintaining these linkages, which are critical to dynamic capabilities in technological transitions. We identify four critical influences - economic, structural, social, and cognitive - on managerial linking activity that enable firms to transition to a new technology while utilizing valuable pre-existing capabilities. The technological transitions of IBM and NCR illustrate the importance of organizational linkages and managerial linking activity.

Keywords: ambidexterity, innovation, complementary assets, exploration and exploitation, cognition

JEL Classification: L2, L2, M1, O3