Free The impact of organizational ambidexterity on performance of distributors in the telecommunication industry Dissertation Example
The impactof organizational ambidexterity on performance of distributors in the telecommunication industry
I declare that the material contained in this project is the end result of my own work and the due acknowledgement has been given in the bibliography and references to all sources be they printed, electronic or personal.
The Word Count of this Project is 15,262.00
Maryam Nasseri, 11th September
List oft he tables:
TOC o “1-3” Introduction PAGEREF _Toc521831774 h 1
1.1 Research objective PAGEREF _Toc521831775 h 3
1.2 Research relevance PAGEREF _Toc521831776 h 3
Distribution Channels PAGEREF _Toc521831777 h 6
2.1 Distributors channels PAGEREF _Toc521831778 h 6
2.2 Distributor channel definition and classification PAGEREF _Toc521831779 h 6
2.3 Distributor channel structure PAGEREF _Toc521831780 h 7
2.4 Physical distribution PAGEREF _Toc521831781 h 8
2.5 Distribution channel and firm performance PAGEREF _Toc521831782 h 8
2.6 Innovation and firm performance PAGEREF _Toc521831783 h 12
2.7 Marketing and distribution as a post-production process PAGEREF _Toc521831784 h 13
2.8 Innovation in distribution PAGEREF _Toc521831785 h 14
Chapter 3 PAGEREF _Toc521831786 h 16
Thesis of Innovation PAGEREF _Toc521831787 h 16
3.1 Organisational ambidexterity PAGEREF _Toc521831788 h 16
3.2 Theories of innovation PAGEREF _Toc521831789 h 17
3.3 Exploitation and exploration PAGEREF _Toc521831790 h 18
3.4 Exploitation, exploration, and organizational performance PAGEREF _Toc521831791 h 18
3.5 Structural vs. contextual ambidexterity PAGEREF _Toc521831792 h 19
3.6 Organisational ambidexterity and the emerging tensions PAGEREF _Toc521831793 h 22
3.7 Moderating the ambidexterity-performance relationship PAGEREF _Toc521831794 h 25
Chapter 4 PAGEREF _Toc521831795 h 27
Methodology PAGEREF _Toc521831796 h 27
4.1 Methodological approach PAGEREF _Toc521831797 h 27
4.2 Participants and target population PAGEREF _Toc521831798 h 27
4.3 Objectives and hypothesis PAGEREF _Toc521831799 h 28
4.4 Research design and strategy PAGEREF _Toc521831800 h 28
4.5 Data collection PAGEREF _Toc521831801 h 29
4.5.1 Primary Data PAGEREF _Toc521831802 h 30
4.5.2 Secondary Data PAGEREF _Toc521831803 h 30
4.6 Variables/key perspectives PAGEREF _Toc521831804 h 30
4.7 Format of interviews PAGEREF _Toc521831805 h 31
4.8 Limitation of Methodology Criteria PAGEREF _Toc521831806 h 31
4.9 Sampling criteria PAGEREF _Toc521831807 h 31
4.10 Validity and reliability PAGEREF _Toc521831808 h 32
Finding and Discussion PAGEREF _Toc521831809 h 33
5.1 Longitudinal responses PAGEREF _Toc521831810 h 33
5.2 Manufacturer-to-distributor knowledge transfer PAGEREF _Toc521831811 h 34
5.3 Company specific factors PAGEREF _Toc521831812 h 36
5.4 Individual companies’ responses PAGEREF _Toc521831813 h 37
5.4.1 Nokia PAGEREF _Toc521831814 h 37
5.4.2 Apple PAGEREF _Toc521831815 h 40
5.4.3 IBM PAGEREF _Toc521831816 h 42
5.5 Recommendations for surviving a disruptive innovation PAGEREF _Toc521831817 h 44
5.5.1. Closure PAGEREF _Toc521831818 h 44
Conclusion PAGEREF _Toc521831819 h 46
List of Tables:
TOC f T h z t “Heading 5,Tables” c Table 2.1: Product distribution channel PAGEREF _Toc521799889 h 10Table 3.1: Sorts of Ambidexterity PAGEREF _Toc521799890 h 21Table 5.1: Longitudinal responses on distribution PAGEREF _Toc521799891 h 33Table 5.2: Ambidexterity responses by participants PAGEREF _Toc521799892 h 35Table 5.3: Company-Specific Factors That Affect Distribution PAGEREF _Toc521799893 h 36Table 5.4: Nokia’s Views on Distribution Ambidexterity PAGEREF _Toc521799895 h 39Table 5.5: Apple’s response to distribution ambidexterity PAGEREF _Toc521799896 h 41Table 5.6: IBM response to distribution ambidexterity PAGEREF _Toc521799897 h 42
List of Figures:
TOC h z t “Figures” c Figure 1.1: Conceptual Model PAGEREF _Toc521799898 h 4Figure 3.4: Hypotheses 1 and 2 PAGEREF _Toc521799900 h 19
AbstractTechnological innovations have graced the telecommunication industry, leading to emergence of products and services that satisfy fast evolving customer demands. Some are occurring gradually while some are spontaneous and disruptive. The result is flattening of the innovation S-Curve. The world is also witnessing concomitant changes in business strategies and models that have a resounding impact on the consumption of products. Due to the fluid nature of global mobile telecommunications technology, the players can only differentiate themselves by being innovative in order to remain competitive. Several global mobile telecommunication giants have faded into oblivion because they underestimated the power of innovation by new entrants, e.g., Nokia and Blackberry. On the other hand, Apple, Google, and IBM have been receptive to change and proactive in innovation. Innovation not only influences the company and end consumers but also has an immense effect on other intermediaries in the value chain: Distributors and distribution channels are largely affected by it. Central to dynamic capabilities of enterprises is ambidexterity, which is the ability to strike the delicate balance of resource allocation between explorative and exploitative innovation. The present study explored the company and market-specific factors that influence the overall ambidexterity or its subcomponents such as exploitive and explorative innovation on a standalone basis only. The study further explored whether the overall ambidexterity or its subcomponents such as exploitive and explorative innovation influenced the performance of distributors of the different global telecom brands in Germany. Finally, the study also explored whether each distributor of the different global telecom brands in Germany operates differently from each other.
IntroductionThe question of change has been the center of debate for scholars due to its impact on survival of firms. Some enterprises have seen their relevance fade away with time due to their inability to adapt to change, while others have not only adapted to change and gained a competitive advantage but also have produced innovations that have spurred massive disruption. Firms usually seek to enhance efficiency by continuously improving their internal processes. They also create new methods and teams to respond to change and increase competitiveness. However, current discourse on change emphasizes the role of the external environment in shaping corporate decisions for innovation. The result is a delicate process of attempting to improve existing processes and products while striving to innovate around new products and services that meet changing market demands CITATION Mar91 l 1031 (March James, 1991). These changes present a difficulty for managers in allocating resources between leveraging current strengths and opportunities and generating new products and services to fit the dynamic expectations. The tradeoffs are difficult to determine and often involve rigorous processes of research. A long-term view of a company’s survival has been seen to ensue when such a balance is achieved. Ambidexterity is the ability of an enterprise to produce exploitative innovation along with explorative innovation in a way that is beneficial for the organization’s relevance in the context of fast-changing environments.
By leveraging on resource reallocation and restructuring of an organization for exploitation and exploration, organizational performance is enhanced. Numerous scholars posit that ambidexterity is more potent in enhancing organizational performance than exploitative innovation or exploratory innovation singly. Exploitation supports a firm in maintaining and improving efficiency. Exploitation remains pertinent in retaining a firm’s original strengths and enhancing them for better performance. Exploration, on the other hand, is pertinent for a firm’s longevity since it makes the firm adapt to changing environments by producing products and services that are concomitant to evolving customer needs. Exploitation and exploration can be ingrained in corporate strategic planning, strategy implementation, process improvement, and capabilities. Ambidexterity, therefore, is not necessarily domiciled in products themselves but in various elements of a value chain. For this reason, distribution channels are subjects of a firm’s ambidexterity: How a firm innovates in its current state and in response to environmental changes could have a resounding impact on distribution channels. As earlier mentioned, organizational learning is a significant prerequisite for explorative and exploitative innovation. Learning occurs internally and externally. External learning largely manifests itself in the form of customer feedback, market research, and market intelligence based on competitors’ behavior. The knowledge thus acquired is applied to identify innovative products and means of production. Of key importance is the touch-point between the firm and the market, which in numerous cases is the distribution channel. Physical distribution channels, such as authorized dealers, are in perpetual contact with customers. Supplementary to the firm’s research and development (R&D) efforts is customer feedback that predominantly occurs at the point of distribution, for instance, electronic distribution channels CITATION Bom07 l 1031 (Kang & Brewer, 2007) and blogs, chats, or online surveys from customers. Competition among distributors of different products could also signal a change in trends, which distributors respond by seeking distributorship of superior products or communicating the trends to the manufacturer. Whatever the means through which learning occurs, knowledge transfer spurs exploitative and explorative innovation. However, not all managers are able to make the tradeoffs between the two modes of innovation, which has profound implications for distributors.
The telecommunication industry is witnessing rapid environmental change due to quick evolution of technology. Technological changes are sometimes quite disruptive and may lead to unique products as outputs of the process. Telecommunication companies can therefore not rely on exploiting their formative strengths but must instead allocate sufficient resources for innovation around the development of new products or services, new processes, and new customs of corporate governance. For instance, IT and telecommunication firms have shifted from traditional axiomatic bureaucracies towards self-governing independent but collaborating teams. The work of distributors has also shifted from being merely network providers and/or device resellers to becoming service providers and customer service agents. Apple Inc. is renowned for the revolutionary app on device technology, as well as the App Store. The idea produced disruption that not only affected its competition significantly but almost toppled the demand for Apple products when Google introduced the Android OS and apps. It took more investment in new processes and services for Apple to regain its market space. Contrarily, Nokia’s performance was largely debilitated when it failed to reinvent its exploratory strategies in the wake of the revolution in the early 2000s. Its sales declined dramatically until it settled for distribution partnerships with exploitative innovation (the case of Zycko) and exploratory innovation (the G.Fast partnership). Therefore, there is no doubt that ambidexterity of telecommunication companies has far-reaching implications on the role and structure of telecommunication distributor channels.
1.1 Research objectiveAlthough the majority of the ambidexterity literature has concentrated on the organizational proficiency to practice exploration and exploitation internally, current literature has emphasized discussing different approaches to achieve the two innovation streams externally. Organizations are carrying out their exploration and exploitation actions more extensively in open innovation environments.
The purpose of this research is to examine if ambidexterity points to higher organizational performance in a real-life setting than the pure pursuit of exploitation or exploration. This research intends to offer to the current perception of ambidexterity by extending insights to the telecommunication industry, which is regarded as the leading industry prone to innovation and change.
Furthermore, this study will contribute to the discussion on open innovation environments. Raisch, Birkinshaw, Probst, and Tushman (2009) have differentiated between internal versus external achievement of ambidexterity. An organization’s ability to continuously import information from outside the organization’s boundaries, incorporate it internally, and restructure it to two innovation streams of exploration and exploitation is at the core of dynamic skills. It is strongly stressed by Tushman and O’Reilly (2008) who explain that “In organizational terms, dynamic capabilities are at the heart of the ability of a business to be ambidextrous – to compete simultaneously in both mature and emerging markets – to explore and exploit.”
Moreover, this research strives towards extracting first-hand practical implication by collecting data from operating distributor companies. The insights to be learned from this study will be of strategic importance for practitioners and participants in the broader telecommunication landscape.
The present study explored the company and market-specific factors that influence the overall ambidexterity or its subcomponents such as exploitive and explorative innovation on a standalone basis only. The study further explored whether the overall ambidexterity or its subcomponents such as exploitive and explorative innovation influenced the performance of distributors of the different global telecom brands n Germany. Finally, the study also explored whether each distributor of the different global telecom brands n Germany operates differently from each other.
1.2 Research relevanceAs described earlier, participants across the value chain in the telecommunication industry find themselves in an environment where the sustainable competitive advantage is predominantly determined through continuous innovation of products and services.
The finite amount of resources availed on a manager force him or her to make decision trade-offs necessary to assign them towards innovation activities. The mentioned research aims to address this very problem by suggesting multiple approaches towards managing innovation rather than pure exploitation or exploration.
Based on the professional background of the author, this thesis makes a significant contribution, that is, it intends to generate firm-level data to investigate the effect of exploration, exploitation, and ambidexterity among distributors in the telecommunication industry. The theoretical foundation combined with the unique sample constellation in this context allows for novelty, rigor, and feasibility. Afterwards, the derived research question in the thesis at hand will be pointed:
How do exploitation, exploration, and organizational ambidexterity impact organizational performance among distributors in the telecommunication industry?
Figure 1.1: Conceptual Model
Distributors in telco industry
For the sake of an accurate investigation of the prepared research question, three sub-questions will be advanced. They will gently assign a result to the primary research question. These questions defined as following:
To what level does exploitative innovation impact distributor performance?
To what level does explorative innovation impact distributor performance?
To what level does organizational ambidexterity impact distributor performance?
Furthermore, the subsequent hypotheses will be taken from the sub-questions, which are as below:
H1: Exploitative innovation at distributor companies within the telecommunication industry is positively associated to the performance.
H2: Explorative innovation at distributor companies within the telecommunication industry is positively associated to the performance.
H3: Organisational ambidexterity is more positively associated to the performance at distributor companies within the telecommunication industry than exploitative innovation on a standalone basis.
H4: Organisational ambidexterity is more positively associated to the performance at distributor companies within the telecommunication industry than explorative innovation on a standalone basis.
Distribution Channels2.1Distributors channelsIn this chapter, literature on distribution channels and various theories underlying the topic is presented. The chapter also reviews previous literature on distribution channels and innovation. The chapter further explains how innovation occurs in an enterprise as well as its impact on the distributor channels. The hypothesis of the study is built from findings of other studies on distributor channels, which has been instrumental in achieving the study’s objectives. More findings from previous studies were explored to provide further evidence on organizational ambidexterity and its impact on distributor channels.
2.2Distributor channel definition and classificationDistribution is the allocation of goods and services in an economy. Therefore, any process in which economic power, assets, goods and services, and other value is distributed from one economic subject to another can be referred to as distribution. Thus, this means that fictitious goods and services are also included when describing their allocation in a societyCITATION www11 l 1031 (Wirtschaftslexikon24, 2011). According to Domschke and Schield (1994), therefore, distribution entails all activities and processes that enable manufacturers and other actors in the value chain to avail commodities to the next level, i.e., consumer or retailer. Distribution entails management of production of goods and services in a way that considers the demand and logistical planning, which therefore implies that distribution is not merely transportation: Rigorous planning and management are involved when creating a distribution channel CITATION Dom94 l 1031 (Domschke & Schild, 1994). Distribution channels are usually outside the manufacturer’s operations. There are also distribution channels that are internal, such as online distribution platforms and some retail centres. The primary functions of distribution channels include bulk breaking, service centres, marketing and promotion, financing, packaging, and grading, among others. Any separate unit performing the aforementioned functions can be referred to as a distribution channel member. It can be an individual or an organization. The channel members play a critical role in the supply chain CITATION Coo97 l 1031 (Cooper & Douglas M. Lambert, 1997).
There are two categories of distribution systems, namely, logistic, i.e., physical distribution system, and acquisition distribution system.
According to Specht (1988), acquisition distribution system management includes the planning of routes and other factors that affect distribution in the various channels. Manufacturers may need to break bulk, obtain temporary storage, and ensure that commodities reach their destinations in the right amounts at the right time. Such is the primary task of the logistics function.
Since the 1970s, the term “marketing channels” has replaced the term “logistic channels.” This is because logistics deal only with matters of distribution regarding transportation, storage, and timely access of commodities in the required quantities. On the other hand, marketing is more engaging since it deals with ownership of the product, promotion, and transmission of value from the place of production to consumption. As such, the term “marketing channels” is more popular since it addresses more than just the physical movement of the product, with the same institutions playing the two roles CITATION Tip93 l 1031 (Tipurić, 1993). Therefore, both distribution and marketing channels are units that collaborate and conspire to ensure that goods and services are available to the consumer. For this reason, it is not possible to plan for either distribution or marketing without due regard to each since marketing is a process that makes distribution possible. Distribution complements marketing by fulfilling the promise to deliver CITATION Ros04 l 1031 (Rosenbloom B. , 2004). Distribution channel is defined by Hill as any units, individuals, or corporate houses that assure the required run of goods and services from the producer to the user in a timely and convenient fashion CITATION Hil10 l 1031 (Hill, 2010). Channels are therefore the paths that the producers of the stocks or services use after their production so that they are obtained and utilized by end users. For this purpose, it can be demonstrated that marketing or distribution channels are the activities and paths that a finished good or service is subjected to before it arrives to the final consumer CITATION Kot08 l 1031 (Kotler & Keller, 2008).
2.3Distributor channel structureThe discourse of marketing and distribution channels has rigorously explored the area of distributor channel structures. According to Mallen (1973), distributor channel structures can be perceived from the perspective of the functions that they perform. Arguably, the nature of the channel determines the mixes and proportions of the functions to be performed by various members in a particular distribution channel. Based on the current literature, some common elements of channel functions have been identified, which usually vary with the distribution channel. For instance, the number of channel levels involved could vary with the distributor, although at least one level exists for all. According to Rosenbloom (1987), distribution may involve a number of factors, e.g., types of intermediaries at each distribution level (retailers, distributors, wholesalers, etc.) and each level’s intensity (each level of distribution may involve a number of intermediaries). Macro issues of channel management involve the following factors: how distribution activities occur across businesses, the benefits and costs of using various distribution channels, and how various other influences on distribution channels are related to each other. However, the research only examined channel structure at a micro rather than a macro level.
2.4Physical distributionManufacturers may utilize distribution channels to ensure that goods reach their customers more efficiently. Distributors are entities that serve end users (B2C) or wholesalers and retailers (B2B) CITATION Den08 l 1031 (Dent, 2008). The idea is to enable the producing entity to focus on innovation, quality management, and product development while sharing responsibilities such as logistics, bulk breaking, product servicing, and order consolidation with distributors. Companies seeking to distribute their products and services face a host of challenges. Competition is one of the most debilitating problems for firms using distribution channels. The success of physical distribution channels depends on how effectively firms perform functions such as inventory management, transportation, production operations, and logistics network design CITATION Kil15 l 1031 (Kilic & Tuzkaya, 2015). Since production operations are a crucial determinant of the success of the physical distribution function, it is imperative that businesses define processes that ensure communication between distributed systems and production systems with a view of environmental scanning and rapid innovation to respond to market needs.
2.5Distribution channel and firm performanceDistribution has been identified as one of the critical elements in an economic system since it is the avenue through which expenditure and consumption, critical elements in the discourse of economics, are bridged CITATION Wil81 l 1031 (Williamson, 1981). Notably, it is the interface between firms and households that eventually actualizes competition between various players both in domestic and cross-border markets since it covers exporters, retailers and wholesalers, dealers, and other players in distribution channels CITATION Zou98 l 1031 (Zou & Stan, 1998). Regarding trade across country borders, many scholars have explored the role of distribution channels in improving export services.
Competition in distribution has been a subject of interest among numerous scholars CITATION Leo891 l 1031 (Leonidas, 1989), CITATION Moo91 l 1031 (Moore, 1991), CITATION Hei94 l 1031 (Heide, 1994)and CITATION Mor84 l 1031 (Morgan & Hunt, 1984). This is because of the influence it has on how goods are improved with respect to pricing, quality, and other such parts. The authors observe that firms that export commodities are expected to grow in terms of collaboration with various channel members involved, due to improved communication. The latter are agents such as wholesalers and retailers, manufacturers, and distributors. According to Anderson et al. CITATION And97 l 1031 (Anderson, Phan, & Fuselier, 1997), there is a positive effect on communication and coordination among various channel members for firms that use distribution channels. Rose and Shoham (2004) observed that effective struggle that occurred between channel actors would not collaborate effectively, while conversely, the effectiveness of the strategy used would be minimized, which then would negatively affect their performance. An empirical research directed on industrialized producers affirmed that the demand for dealers to sustain a positive channel connection in a business largely depended on the benefit of sellers provided by the producer CITATION Fra89 l 1031 (Frazier & Gill, 1989). Additionally, in terms of the segments of distribution channel combination, distribution and channel performance is enhanced by creation of integrated distribution channels. Mc Naughton (2002) reviewed the determination of fundamental channel integration among 2,000 Spanish export-oriented firms. It was observed that multiple distribution channels were established to serve markets abroad that not only maintained a good relationship with customers but also sustained the service quality and assets of the exporter. Additionally, Weigand (1991) also regarded that the purpose of unauthorized channels could support monopolistic actors in distribution channels to promote unfair practices in the market. Another investigation by Kim (2009) also established that in the case of Korean firms, the practical supply chain integration performed a significant role for the competitiveness of sustainable supply chain management (SCM).
The investigation by Ely, Paiva, and Marques (2009)on manufacturers in Thailand indicated that enterprises that have a global outlook ought to be continuously linked in modification in order to cope with different, unique and ever-evolving economic environments; the consequences of which is steady growth and more competitiveness. The scholars also observed that companies that have a global outlook to distribution were experiencing higher levels of export. Distribution channels are not as fluid as other organizational aspects since they are tough to change once built. Ramaseshan and Patton (1994)and Zdenko Segetlija (2011)claimed that the channel members’ position also took part in determining the performance. Rialp (2002)observed that export-oriented firms that establish linkages with importers overseas are able to increase their exports. This conclusion was based on a thought of export firms in Spain for firms that had structured distribution channels. Kumar (2000) also noticed that non-integrated channels were also approved. Brett A. Boyle (1995) also observed the critical role that information exchange among members plays. The finding was consistent with that of Wolff and Timpthy (2006) who observed that trust is a critical prerequisite in establishing the relationship between channel members. L. Jennifer andA. Nevins (2008)further established that channel members who were committed to each other and trustworthy had a positive impact on performance.
Table 2.1: Product distribution channelAuthors Topic Method Findings
Carlos M.P. Sousa,1,Francisco J. ,Martínez-López & Filipe Coelho (2008) Determinant factors of export performance Survey In addition to other factors that affect product marketing, e.g., price, product, and promotion, distribution was found to have a significant impact on performance of exports.
Leonidou (1989); Moore (1991); Heide (1994); Long(2003); Morgan & Hunt (1994) Relationship among distribution channel Survey The relationship between the exporter and an overseas importer had a positive influence on the success of the exporter.
Anderson, Day, & Rangan (1997) Coordination relationship of distribution channel Survey Effective collaboration among channel members has a positive impact on individual member’s performance.
Frazier, G .L.& Summers, O. J.(1984) Distribution channel relationship Survey The extent to which a dealer is willing to maintain a relationship with a seller’s market was largely influenced by the benefits from the manufacturer.
Weigand(1991) Structural arrangement of distribution channel Survey Where monopolies exist, informal channels could lead to unfair market practices.
McNaughton(2002) Structural arrangement of distribution channel Survey There are benefits of maintaining multiple distribution channels for export markets.
Wook Kim, S.(2009) Structural arrangement of channel members: Integration and non-integration Survey Efficient supply chain integration plays an important role in the supply chain. In addition, a close relationship between the level of supply chain practices and competition capability has a significant impact on competitiveness.
Dionysis Skarmeas & Matthew J. Robson(2008) Determinants of relationship quality in importer-exporter relationship Survey It was found that the role of performance, cultural sensitivity, and asset specificity are significant determinants of relationship quality in international distribution channels, and cultural sensitivity was a significant driver of role performance.
Keysuk Kim (2001) How supplier commitment and distributor commitment is affected by customer conditions in industrial distribution channels. Survey Both the internal and external environment of firms affected the behavior of distribution channel members.
B.Ramaseshan & Mark A. Patton(1994) Factors that affect international channels’ choice of small business exporters (Structural arrangement) Survey The attributes of the country, the product, and the size of the firm influenced the choice of exporters.
Ely Laureano Paiva & Luciana Marques Vieira(2009) International distribution operation orientation Survey When firms have a global orientation to distribution, their export business is likely to show stronger performance.
Rose& Shoham(2004) Channel members’ relationship Survey Performance by channel members is greatly hampered by the conflict that ensues from task or functional conflict among them
Source: Authors from literature review
2.6Innovation and firm performanceThe impact of innovation on organizational performance has been the focus of numerous studies for a long period of time. In general, implementation of innovative strategies has been observed to yield high impact positive results on organizational performance. According to Edosomwan (1989), creating new concepts enables enterprises to enhance productivity that, then, leads to greater organizational performance. The author also emphasized that firms that enhance their organizational climate in support of new ideas usually gain competitive advantages with numerous other benefits. The latter observation contradicts other studies in the past that found a minimal impact of innovation on organizational performance. Geroski, Machin, and Reenen (1993) highlighted that a firm’s productivity is influenced by the final product itself, as well as the production process. Therefore, innovation impacts the product in terms of its production processes, its qualities, as well as its promotion strategies. Hirsch and Bijaoui (1985), in Israel, additionally observed that firms employed in export had a greater scale of innovation than their counterparts involved in the import trade. The finding was consistent with that of Roper and Love (2002) who observed that export firms in Europe (Germany and the UK) had a greater performance due to increased innovation. Although both countries innovated, Germany demonstrated a higher scale of innovation than the UK, which translated to higher volumes of exportation for Germany. Harris and Li (2006), among other scholars, highlighted that innovation had a critical role in increasing the volume of international trade. According to Taymaz and Özcelik (2004), Turkey demonstrated that innovation in production process and the product has a high impact on export volumes. Similar findings that product innovations have a positive effect on export intensity in manufacturing firms in Europe have been attested by other authors CITATION Lov01 l 1031 (Love, 2001).Basile (2001)also observed that export trade is largely affected by innovation in the production process as well as the product attributes. On the contrary, numerous scholars’ studies are inconsistent with the process and product innovation influences on the profitability of organizations with those earlier explored. Previously, a study by Kongmanila et al. (2009) found that product innovation has a positive effect on profitability. However, the author deduced that production process did not have a positive effect on the organization’s financial performance. The study indicated that the negative signs of the path coefficient were found among production process innovations. As a result, the authors posit that non-production process innovators tended to have higher profitability than production process innovators. Geroski, Machin, and Reenen(1993)had similar findings.
2.7 Marketing and distribution as a post-production processThe observations by Geroski and Machin (1993)and Kongmanila and Takahashi (2009)indicate that innovation in production processes did not lead to improved financial performance. The observation therefore raises the question of whether distribution is a production process. According to Bengu and Kara (2010),marketing and distribution are post-production stages. Therefore, the argument that innovation in production processes do not necessarily lead to higher financial performance does not apply to marketing and distribution processes. The studies of Adler, Goldoftas, and Levine (1999)on NUMMI-Toyota and Comms Dealer (2006) – UK’s magazine for the comms in ITC industry – on Nokia have shown that there are significant performance benefits in innovating in marketing and distribution. Therefore, scholarly evidence explored so far shows little discord, if any, that marketing and distribution do result in improved financial performance when innovation is enhanced.
2.8 Innovation in distributionIt is important to note that distributor channels may not necessarily be separate business entities. For instance, the hotel industry and the telecommunications industry have fast shifted to electronic distribution channels CITATION Bom07 l 1031 (Kang & Brewer, 2007). The idea of a telecommunications company contracting distributors or taking up the distribution of their own is geared towards operational efficiency. On the other hand, using electronic distribution represents the same end with different means that can lead to internal completion. According to the authors, it may result into lower profits for the channels. Arguably, the departure from third-party channels by telecommunication companies towards electronic channels can be perceived as a revolutionary element of ambidexterity, with retention and refinement of legacy channels representing exploitative innovation and the creation of electronic channels representing explorative innovation. Ambidexterity is a dynamic capability: It represents a business’s ability to benefit from current strengths, while continuously creating new products and services in tandem with changes in the business environment CITATION ORe08 l 1031 (Tushman & O’Reilly, 2008). In a study of 275 manufacturers, Aslam and Azhar (2018)found that supply chain learning (SCL) strongly influences supply chain capabilities. Their explanation is that when supply chain personnel place themselves in a learning mode, they interact with other actors in the supply chain system and acquire new knowledge on market needs and customer preferences. The study has far reaching implications on the ambidexterity in distribution channels. As earlier mentioned, distribution channels provide an interaction between the firm and the consumer. When management inculcates learning by employees across the supply chain, information on the market environment finds its way into the faculties of an organization involved with innovation and strategy. The big question, therefore, is how an organization integrates the learning with innovation, and eventually, production. Toyota’s New United Motor Manufacturing, Inc. (NUMMI) is a subsidiary that exemplifies how to strike a delicate balance between routine work that ensures efficiency and non-routine work that stimulates explorative innovation CITATION Pac99 l 1031 (Packan, 1999). The ultimate result of this balance is ambidexterity, where the company improves its current operations by incorporating the feedback while, at the same time, creates innovative offerings to meet the market demands. Meta-routines are created to establish how non-routine functions are handled. The employees who work in routine functions also contribute to the non-routine functions since they are the agents of the learning. This is accomplished by temporarily separating routine and non-routine tasks, e.g., by launching projects that employees alternate with the routine tasks. Eventually, the company has permanently separate units of routine and non routine work. Upon examining NUMMI, the general impression is that explorative innovation is rolled out in a gradual fashion while retaining key resources in ongoing routine processes. Since both routine and non-routine units have the new knowledge, improvement of routine functions is undertaken without necessarily loosing the initial routine work. In this case, already existing processes are also improved by the learning, thereby creating exploitative innovation.
Chapter 3Thesis of Innovation3.1 Organisational ambidexterityThe discourse of adaptability of organizations in the face of change has elicited rich debate. Some schools of thought have observed rampant failure across organizations due to perceived inertia. Others have observed adaptability by other corporates as a result of dynamic capabilities CITATION ORe08 l 1031 (Tushman & O’Reilly, 2008). The authors posit that one of the ways in which organizations can build dynamic capabilities is through exploitation of current strenghts and opportunities along with exploration of more opportunities presented by the changes in the environment. Ambidexterity of organizations, therefore, is the ability of an organization to survive and remain relevant in the context of change by exploiting its current strengths and opportunities and exploring more opportunities that may occur in the face of the change. According to Chermack and Bodwell (2010), the effectiveness of team performanceis an instrumental means for improving organizational ambidexterity. Therefore, ambidexterity may occur through a process entailing organizational learning, replanning, and reallocation of tasks. This study accepts the notion of ambidexterity described as the synchronous chase of exploration and exploitation within an organization(Gupta Anil, 2006;Birkinshaw Julian, 2000; CITATION Tus09 l 1031 (Tushman, O’Reilly III, & Harreld, 2009) Michael O. C., 1996). Scholars estimate that it is an organization’s ability to simultaneously pursue both incremental and discontinuous innovation and change CITATION Tus96 l 1031 (Tushman M, 1996). Earlier studies observed ambidexterity as occurring through the implementation deployment of two separate teams within an institution, one dedicated to the exploration and the other to exploitation. Taylor Alva, (2006), Bechman Christine M. (2006), Adler, Goldoftas, & Levine(1999), also observed ambidexterity within teams and referred to it as “task partitioning” where exploration and exploitation are identified through two task teams internally. Existing studies on innovation and learning processes emphasize the function of external attainment of information and knowledge for fruitful exploration. They are representing interrelations among internal and external knowledge processes, performing a crucial role in corporate revitalization. Task partitioning happens in the same business unit of an organization and describes the formation of separate groups or teams for each activity whereby each team is designated their resources and tasks. They embody different systems and strategies about their exploration and exploitation endeavours. This research adopts the notion that ambidexterity occurs through task partitioning CITATION Adl99 l 1031 (Goldoftas, Levine, & Adler, 1999). This research adopts the abovementioned constructs to examine ambidexterity among distributors within the telecommunication industry. Distributor companies in the telecommunication industry are subject to adopting their sourcing strategy to establish a competitive advantage. Furthermore, this thesis adopts Dooley and Van De Ven’s (1999) logic, which indicates that the two innovation streams make up the whole innovation system in an organization. Organizations that are dependent on information technology infrastructure, such as the telecommunication industry, will need to engage in both exploitation and exploration. Regarding distributors, exploitation refers to sourcing of products that only display gradual improvement in features and functionality to the predecessor product (i.e., Samsung Galaxy S3 vs. Samsung Galaxy S4), whereas exploration refers to breaking into new technologies, such as smart home technology, wearable devices, and artificial intelligence.
3.2 Theories of innovationDrawing from the field of architecture, innovation is described as a novel product placed into a market. Peter Drucker (2013) provides a classification of innovation, highlighting the applications to create efforts and focus on development to unleash an enterprise’s economic or social potential. His definition of innovation applies to products and has further been accepted in the context of processes and methods.
Moreover, Popadiuk (2006) describes innovation as a scheme with the intention of commercializing products, services, and processes. This research adopts the notion of innovation from McDermott C. (2002), describing it as a combination of technologies offering substantial perceived benefits to their users.
The Oslo Manual (2005) : The Measurement of Scientific and Technological Activities specifies the required aspects of innovation, such as product and process, which have to be advanced to the organization and also the market. Based on the above definitions, it can be concluded that innovation is being considered from two distinguishing perspectives. The first one relates to the processes and activities of innovation, whereas the second is aimed at the result efforts such as ideas, products, services, processes, methods, and technologies.
3.3 Exploitation and explorationExisting scholarly literature in the area of organizational knowledge explains the need for organizations to regularly engage in learning as to achieve in the competitive prospects. Thus, knowledge has been linked to organizational outcomes. March James (1991) distinguishes two methods of studying. The first one is the exploration of new experiences and abilities, whereas the second refers to the exploitation of existing experiences and abilities. Exploitation describes the condition of an organization making contemporary decisions based on previous experiences and processes in the past. Further, exploitation integrates processing, choice, production, efficiency, selection, implementation, and execution CITATION Mar91 l 1031 (March James, 1991). Conversely, exploration is related to notions like difference, risk-taking, experiment, compliance, detection, and innovation. Previous research explains that organizations employ exploitation rather than exploration due to organizational inertia CITATION Han93 l 1031 (Hannan Michael F. J., 1993). The perceptions of exploitation and exploration oppose each other and, thus, because of heterogeneous functions, they require different architecture, processes, and skills. Scientists suggest that the organization makes trade-off between exploiting existing competencies and exploring new ones CITATION Deb09 l 1031 (Ancona Deborah, 2009).
3.4 Exploitation, exploration, and organizational performanceAccording to James March (1963), in the study on organizational performance, exploiting existing knowledge supports a decrease of transaction cost, which influences managerial decision-making and efficiency. Therefore, it results in increased performance. According to Gençtürk and Özsomer (2003),exploitation allows for greater efficiency. It helps to profit the organization’s short-term performance.
Michael Tushman (2003a)estimated that radical innovation is linked with exploration, which fosters the development of new technologies and is thus considered as a method of knowledge development. Uncertainty about the achievement of explorative activities finds its roots effectively in explorative innovations being vaguer and away in time relative to exploitations CITATION Mar91 l 1031 (March James, 1991). Contrary to exploitation, exploration exhibits a decisive effect on the long-term performance of an organization CITATION Ayş03 l 1031 (Gençtürk & Özsomer, 2003).
P. Drucker (1999)suggests shift of thinking from a perspective of managing the work of other people to managing the performance. To achieve effectiveness, customers’ value needs to be defined in managerial decision-making with respect to their income distribution. Executives must organize and evaluate the entire operational process, focusing on results and performance. Moreover, a traditional approach is the categorization of performance into financial and non-financial performance metrics CITATION THo121 l 1031 (Bhimani Alnoor, 2012). Such financial performance metrics include, among others, sales growth, return on equity (ROE), earnings before interest and taxes (EBIT), and return on investment (ROI) CITATION Eld11 l 1031 (Eldenburg Leslie, 2011).
Figure 3.4: Hypotheses 1 and 2ExplorativeInnovation
Distributors in telco industry
3.5 Structural vs. contextual ambidexterityIn their study, Birkinshaw and Gibson (2004) clarified the difference between contextual and structural ambidexterity. Structural ambidexterity is widely explored in the existing literature since it is perceived as the dominant approach to organizational ambidexterity. According to Han (2007), structural ambidexterity occurs when a firm pursues paradoxical strategies. Paradoxical strategies refer to the tendency of organizations to create structures that actualize alternate ideas CITATION Bro97 l 1031 (Brown & Eisenhardt, 1997) and organizational structures that have both mechanistic and organic features CITATION Ald96 l 1031 (Alder & Borys, 1996); CITATION She00 l 1031 (Sheremata, 2000). According to Michael O. C.Tushman (1996), the main focus of structural ambidexterity is the integration and disconnection of strategic options. Separation is implemented across space when specific units are engaged in exploitation while other distinct units perform exploration CITATION Dun76 l 1031 (Duncan, 1976). Spatial separation warrants that every unit is organized in a manner that it performs specific tasks based on its environment CITATION Law76 l 1031 (Lawrence & Lorsch, 1967).
Some scholars feel that structural ambidexterity still has its shortcoming in spite of its prominence in literature. A research attempted by Duncan (1976)to resolve exploitation and exploration in regard to structural ambidexterity states that an organization to define different structures for different purposes, which are referred as dual structures for implementing ambidexterity. For instance, the mainstream business units play the role of aligning business with the current commodities and markets, while research and development and other business creation units solicit for new markets and innovate by creating new technologies that help the organization stay abreast with industry trends and, even more favourably, to be the technology leaders by introducing latest products and product technologies, respectively. Duncan (1976),therefore, claims the need for structural separation due to the conflicting essence of the exploitation and exploration that make them difficult to coexist. Structural ambidexterity can cause organizational units to operate as silos: Their separation in time, physical location, and tasks could create rifts between them. As a consequence, explorative efforts may fail to gain acceptance by the other units of the business. Furthermore, dividing structures could lead to formation of top-down management as the business leaders are forced to make decisions of how to allocate resources and divide personnel within the organizational structure CITATION Gib04 l 1031 (Gibson & Birkshaw, 2004). Consequently, current literature recommends that businesses encourage a culture that supports business units than simply rearranging structures within the organization CITATION Gib04 l 1031 (Gibson & Birkshaw, 2004); CITATION Gup l 1031 (Gupta A, 2006); CITATION Jen06 l 1031 (Jensen, Van Den Bosch, & Volberda, 2006); CITATION Lew00 l 1031 (Lewis, 2000); CITATION Smi05 l 1031 (Smith & Tushman, 2005). Therefore, Gibson and Birkinshaw have come up with the idea of conceptual ambidexterity that explores the organization’s behavioural potential to exhibit explorative and exploitative abilities across the entire business. The idea is to have every individual in the organization embrace both alignment to current processes and adaptability to changing environmental demands, as opposed to creating separate dichotomies of structures within the organization. Bartlett and Ghoshal (1994),therefore, explain context in ambidexterity as a system of beliefs and processes that influence the behaviour of employees within an enterprise. Contextual ambidexterity, therefore, implies that operators are empowered to make choices between adapting to diversity, as well as aligning to current processes within the organization in their areas of operation. In such a scenario, the top-down aspect is inverted: Employees, rather than managers, decide when to perform exploitative activities and explorative activities in their specific areas of work. Thus, they designate their time among the two models of actions through a bottom-up approach. Contextual ambidexterity in some companies entails creation of meta-routines and changes in the employee’s job expectations. Adler, Goldoftas, and Levine (1999)discuss the appointment of leaders with complex behavioural attributes CITATION Den95 l 1031 (Denison, Hooijberg, & Quinn, 1995); CITATION Lew00 l 1031 (Lewis, 2000)and sharing of concept with employees CITATION Bar89 l 1031 (Bartlett & Ghoshal, 1989). The latter arguments are, however, not sufficient for addressing contextual ambidexterity. Therefore, Gibson and Birkshaw (2004) base the argument of ambidexterity as being supported by the organizational context. Bartlett and Ghoshal (1994) claimed that a mix of discipline, stretch, support, and trust is most appropriate for promoting contextual ambidexterity. Additionally, they claim that successful organizations are those that successfully strike the delicate balance of rigor and discipline (hard elements) with the softer elements of trust and support. In spite of the differences between structural and organizational ambidexterity, they are evidently necessary when applied in a complementary fashion CITATION Bir04 l 1031 (Birkinshaw & Gibson, 2004); CITATION Rai081 l 1031 (Raisch & Birkinshaw, Organizational ambidexterity: Antecedents outcomes and moderators, 2008). HP, Intel, and numerous other companies have seen success by applying both types of ambidexterity in a complementary manner CITATION Bir04 l 1031 (Birkinshaw & Gibson, 2004).
Table3.1: Sorts of AmbidexterityStructural Ambidexterity Contextual Ambidexterity
How firms achieve ambidexterity. Alignment-focused activities and adaptability-focused activities are the responsibilities of different business units Alignment-focused activities and adaptability-focused activities the responsibility of the same employees
Who makes decisions for splitting responsibilities between alignment and adaptability? The organizational top leadership By individuals directly involved with the work such as supervisors, office managers, marketing executives, etc
Role of top management Creation of the structures and establishing the trade-offs between the two ambidexterity types Creation of the organisational context in which employees operate
Nature of roles Relatively clear defined Relatively flexible
Skills of employees More specialist More generalist
Source: Birkinshaw and Gibson (2004)
3.6 Organisational ambidexterity and the emerging tensionsAmbidexterity has, over time, gained high attention from scholars due to its growing popularity in the field of business, which is evident by the huge number of books and academic journals explaining the concept. According to Raisch, Birkinshaw, Probst, and Tushman (2009), there were only four in the year 2004. By 2009, the number had increased to 80 cumulative publications that contributed to more elaboration and exploration of the ambidexterity concept. Successful implementation and sustenance of ambidexterity by organizations necessitates that they learn the tensions that ambidexterity entails. Consequently, Raisch et al. suggest four central tensions of ambidexterity whose examination and resolution could lead to significant refinement of ambidexterity as a concept.
First, differentiation and integration of ambidexterity represent either distinctive or complementary approaches to ambidexterity. Differentiation refers to the segregation of units involved in exploitation from those involved in exploration. Integration refers to the ability of enterprises to perform exploitative functions and explorative functions within the same unit. Differentiation is usually perceived as not possible to implement in the same setup with integration: According to Lawrence and Lorsch (1967),organizations could attain positive outcomes if they simultaneously implemented differentiation and integration in a complementary fashion. Scholars of differentiation argue that business units that are tasked with the role of exploration are smaller, decentralized, and more flexible than the units that focus on differentiation CITATION Ben031 l 1031 (Benner & Tushman, 2003); CITATION Chr98 l 1031 (Christensen, 1998). The dichotomy is perceived as essential for ensuring that the business addresses challenges that arise from new and emerging trends, as well as leveraging on already existing business opportunities CITATION Gil05 l 1031 (Gilbert C. G., 2005). Scholars who investigated integration looked at organizational features that ensure that business inculcate behavioural aspects that support exploitation and exploration within the same business unit. Therefore, exploitation and exploration were found to be supported through organizational unit context and behavioural integration of top management teams CITATION Gib04 l 1031 (Gibson & Birkshaw, 2004); CITATION Lub06 l 1031 (Lubatkin & Ling, 2006). There is a school of thought that cites possibilities of shortcomings if integration and differentiation are pursued in separation. Exploitation and exploration need to be reunified in order to ensure success, for purposes of accurate differentiation CITATION Eis00 l 1031 (Eisenhardt & Martin, 2000); CITATION ORe04 l 1031 (O’Reilly & Tushman, 2004); CITATION Tee07 l 1031 (Teece, 2007); that is, organizational ambidexterity cannot be achieved by simply ensuring differentiated units that respectively perform exploitative and explorative ambidexterity functions CITATION Gil06 l 1031 (Gilbert C. , 2006). In the same breath, integration alone is not sufficient for achieving organizational ambidexterity when performed in a unilateral fashion. Therefore, leadership in organization needs to integrate differentiation of functions across units CITATION Tus96 l 1031 (Tushman M, 1996); CITATION Smi05 l 1031 (Smith & Tushman, 2005).When integration across differentiated units occurs, the learning curve is enhanced since knowledge transfer occurs in such a context CITATION Rai081 l 1031 (Raisch & Birkinshaw, Organizational ambidexterity: Antecedents outcomes and moderators, 2008). There are arguments by scholars that integrative contexts have their shortcomings since the same individuals that perform ambidextrous tasks operate from similar experiences that fail to account for the different knowledge bases that are unique to exploitation and exploration CITATION Bus91 l 1031 (Bushe & Shani., 1991); CITATION Ink l 1031 (Inkpen & Tsang, 2005); CITATION Mar91 l 1031 (March James, 1991). With respect to the latter argument, integration and differentiation should be implemented with a view of having them complement each other rather than as alternatives or substitutes. Additionally, the equilibrium between integration and differentiation could be shifted as appropriate by the various tasks being performed. Moreover, it takes proper leadership to monitor the ambidexterity efforts so as to moderate the tensions between differentiation and integration.
The second tension regards to the level at which ambidexterity is observed, whether at the individual or the organizational level. According to Gibson and Birkshaw (2004),scholars of organizational ambidexterity, ambidexterity is domiciled in an individual, and an organization can only experience it if the individual exploits it. Similarly, Mom, Van den Bosch, and Volberda (2007) elaborate that some managers engage in exploitation and exploration at the same time. As such, organizational ambidexterity has a high dependency on an individual. In order to be ambidextrous, employees need to be capable of paradoxical thinking CITATION Gib04 l 1031 (Gibson & Birkshaw, 2004), play numerous roles CITATION Flo00 l 1031 (Lane & Floyd, 2000), and be capable of resolving contradictions and goal conflicts CITATION Smi05 l 1031 (Smith & Tushman, 2005). There is an assumption that exploration-oriented individuals have personality differences with those that focus on exploitation CITATION Ama96 l 1031 (Amabile, 1996). Consequently, it becomes inherently difficult, if not impossible for an individual to exhibit both traits CITATION Gup l 1031 (Gupta A, 2006). There is a disconnect in the observation by earlier studies that managers are able to perform contradictory roles since there is no explanation why other employees are unable to do so. According to Levinthal and Wesley (1990), novel knowledge can only be applied when a person prioritizes related knowledge. In addition to personal traits, a person’s ambidextrous capabilities are, among others, a function of organizational factors. According to Ghoshal and Bartlett (1997), the ability of an individual to be ambidextrous has a bearing on socialization, team interactions, and other interpersonal relationships that may occur within an organization. The occurrence of different events can lead managers to allocate time between exploitative and explorative activities. Therefore, based on the earlier mentioned studies, organizational factors need to be considered in addition to individual factors to ensure individual ambidexterity. Most outstanding is the fact that individual and organizational factors have a close relationship. Therefore, ambidexterity becomes a function of strongly correlated individual and organizational factors.
The third tension is on static and dynamic perspectives of ambidexterity. There are various schools of thoughts that claim that exploitative and explorative ambidexterity should be applied in sequences CITATION Nic02 l 1031 (Nickerson & Zenger, 2002). According to Siggelkow and Levinthal (2003),organizational units can avoid being static as a result of competency traps, associated with overexploitation, and failure traps as a result of over-exploring, through application of sequential exploitation and exploration. The adoption of sequences comes with manifestations of static organizational behaviour since the organization attains ambidexterity by adopting specific configurations CITATION Gib04 l 1031 (Gibson & Birkshaw, 2004); CITATION Tus96 l 1031 (Tushman M, 1996). The traditional contingency theory appears to correlate with the static view of organizational ambidexterity, and the tendency of the organization towards an ideal state CITATION Ven86 l 1031 (Venkatraman & Ramanujam, 1986); CITATION Mil84 l 1031 (Miller & Friesen, 1984). However, according to modern contingency theory, alignment is more dynamic than static as would be posited by the sequential paradigms of exploration and exploitation CITATION Ket93 l 1031 (Ketchen, B., & Snow, 1993); CITATION Zaj00 l 1031 (Zajac, Kraatz, & Bresser, 2000), which implies that organisations need to be in a perpetual state of reconfiguring their processes and activities in order to cope with the dynamic nature of their operating environments CITATION Web99 l 1031 (Webb & Pettigrew, 1999). Therefore, it is not conclusive that static organizational configurations are sufficient to provide the necessary support to deal with all demands occasioned by environmental changes that occur in the context of the organization, as well as its boundary conditions CITATION Rai081 l 1031 (Raisch & Birkinshaw, Organizational ambidexterity: Antecedents outcomes and moderators, 2008).Venkatraman and Lee (2007) explain that “sequential ambidexterity” within the static view is a consequence of time-bound and changing processes for exploitative and explorative organizational strategies. Theories that combine static ideas and dynamic views of ambidexterity become necessary. The management of an enterprise needs to take a more proactive approach to managing resources if ambidexterity is to translate to dynamic capabilities CITATION ORe08 l 1031 (Tushman & O’Reilly, 2008). Schreyögg and Kliesch-Eberl (2007)highlight that dynamic capability is usually a result of interactions between exploitative and explorative aspects of an organization, which are respectively static and dynamic. On the other hand, Westerman, McFarlan, and Iansiti (2006)claim that any pursuit of exploratory and exploitative innovation in a simultaneous fashion culminates to the pursuit of dynamic capabilities.
Lastly, the fourth tension has to do with internal versus external ideations of ambidexterity. Internal focus refers to the discourse of how ambidexterity is managed from within the organization. Externalization of exploitation and exploration is made difficult by the realization of strategic integration across different organizations, which therefore, warrants an internal focus CITATION Rai09 l 1031 (Raisch, Birkinshaw, Probst, & Tushman, 2009). On the other hand, exploration requires that research focuses on the role of the external environment in the acquisition of new knowledge. Thinking within the organization is risky; it may make its ideas obsolete since the rationality is bounded, and knowledge sealed within a silo CITATION Eis00 l 1031 (Eisenhardt & Martin, 2000). There are numerous scholars that affirm the supremacy of external research in promoting explorative innovation over internal inquiry CITATION Ros01 l 1031 (Rosenkopf & Nerkar, 2001). Therefore, identifying strategic partners or outsourcing services and commodities is a potent idea in promoting exploration CITATION Hol04 l 1031 (Holmqvist, 2004).
With the above knowledge, it is important to integrate external learning processes with internal ones in order to fully realize the benefit of organizational ambidexterity. Adler and Kwon (2002)suggest that external knowledge is accessed when firms create relational contexts of numerous resource types from other business entities as well as the cultural elements utilized by the latter entities. The organizational leaders therefore assume what Hargadon (2002)refers to as a brokerage role in which they gather resources across the entire organization as well as from beyond the organization. Additionally, there is need to consider the difficulty associated with integration of external organizational knowledge and its acquisition as presented by various scholars: According to Zahra and George (2002),in their study on absorptive capacity, there is need to strike the balance between the acquisition of external knowledge by the organization, as well as integration of its internal knowledge. Both knowledge types are equally important; preference or overuse of one could render the mix useless. In conclusion, it can be argued that ambidexterity requires the managers to cultivate the uncanny ability to balance internal knowledge with acquisition of external knowledge, which are respectively critical for exploitative and explorative capabilities.
3.7 Moderating the ambidexterity-performance relationshipScholars have made numerous attempts to define the point at which ambidexterity enhances organizational performance. For this reason, it has been established that the business environment as well as numerous other factors impact how organizational ambidexterity influences organizational performance. Exploration, performance, and exploitation are therefore functions of dynamic environments and the competitiveness of an organization CITATION Lev93 l 1031 (Levinthal Daniel A., 1993); CITATION Lew99 l 1031 (Lewin, Long, & Carroll, 1999). Research has shown that dynamic environments support exploitative innovation CITATION Jan06 l 1031 (Jansen, Van Den Bosch, & Volberda, 2006), with competitiveness and strong financial performance being largely influenced by explorative innovation. Different conditions may determine the nature of explorative and exploitative activities of an enterprise CITATION Rai l 1031 (Raisch, Shaping the context for learning: Corporate alignment initiatives, environmental munificence and firm performance, 2008). As a result, the industry’s dynamism and opportunities are influenced by what is referred to as “environmental munificence” construct CITATION Zah93 l 1031 (Zahra S. , 1993). According to the authors, a balanced orientation (simultaneous involvement of explorative and exploitative activities) has a low impact on organizational performance in the context of environmental munificence. Additionally, they discovered that times of high environmental munificence had a relationship with exploration by organizations. In addition, market orientation, as highlighted by CITATION Kyr04 l 1031 (Kyriakopoulos & Moorman, 2004) in their empirical study, has a positive impact on the performance of new products and marketing strategies. Market orientation was defined by Kyriakopoulos and Moorman (2004) as the ability to generate, disseminate, and respond to intelligence with regard to the current and future market opportunities. Therefore, when organizations pursue ambidexterity without an orientation towards a strong market, remarkable decimation of the new product’s financial performance is observed. Additionally, the relationship between ambidexterity and organizational performance has also been observed to be a function of the organization’s resources CITATION Ven07 l 1031 (Venkatraman & Lee, 2007). Ambidexterity has been observed to succeed where businesses have vast resources, and it has been unsuccessful when resources are limited.
Chapter 4MethodologyThe objective of this study was to explore the influence of organizational ambidexterity along with its subcomponents such as explorative and exploitive innovation on the performance of different distributor companies across the telecommunication industry. The study would further explore the company-specific and market-specific factors that defined and prompted the domain of operational ambidexterity within these companies. The organizational ambidexterity of the different companies and their influence on the performance metrics of the respective companies would be explored for two periods; pre-I-phone era and post-I-phone era. The ambidexterity and their influence on the performance metrics would be compared among different companies and in a specific company as well during the referred timeframe. One of the major goals of this study was to explore the factors that prompted organizational ambidexterity along with its subcomponents such as explorative and exploitive innovation across different global telecom companies. Another goal of this study was to explore the response of different global telecom companies after the introduction of the iPhone revolution. Finally, the study will assess whether market pull, or technological push influenced the ambidexterity of different global telecom companies.
To address the objective of this study different research questions would be framed and would be subjected to appropriate hypothesis testing. The conceptual hypothesis for the present study was derived from previous studies conducted in telecom and allied sectors. The present thesis deployed a mixed-methodology approach that involved quantitative and qualitative data in critiquing the research questions. Guha and Lincoln (2004) endorsed the role of explorative approach as a positivist search paradigm while undertaking research. On the other hand, mixed-methodology studies provide both explorative and comprehensive approach in addressing research questions or a set of research questions. Such approaches can ensure the inherent value of research by portraying its objectivity, tangibility, quantification, and error variances. Moreover, a mixed-methodology approach can help to ensure the outcome quality of research by ensuring its objectivity, validity, and reliability. This chapter portrays the methodological operability of the present study. The methodological operability of this study involved two central themes. The first focused on the methodological approach and the unit of analysis that would be undertaken in the present study. The second theme centered on describing the research setting and procedures of data collection. The third theme pivoted around the description of the variables and the end-points of the study.
4.1 Methodological approachThe methodology section explored the exploration and exploitation of the telecom distribution companies for overcoming competition in the German telecommunication industry. The study a reconfigures the distribution approach to imply a firm’s capacity to translate conflicting demands into measures that assist to overcome the marketing and sales dilemmas in the target consumer market. The focus is on how distributing companies depend on structural and temporal approaches to address the challenges of distribution related to telecom products and services in Germany. The term ‘ambidexterity’ in this case illustrates how each company used both exploitative and exploratory strategy to market telecom products or services. Structural, behavioral, and realized ambidexterity defines organizational ambidexterity. The chapter employs a mixed-methodology approach for collecting, processing, and interpretation of data. The mixed-methodology approach involved collection of subjective responses that formed the qualitative data of the study, while data analysis for the end-points formed the quantitative aspect of the study.
The hypotheses derived from literature and previous studies reflect that a deductive reasoning approach will help to address the research questions in this study. Studies of this nature are subjected to empirical testing because they involve a large sample that appropriately represents the study population. In brief, this section discussed the research design and methodology that was used in the study. It begins by discussing the research design and then discusses the participants, the steps of a survey, and the sampling criteria. In the next step, the variables and the rationale for their consideration in the study are elucidated. Next, the validity and reliability of the variables are explored. The chapter further reflected the process of data collection and defined the sample characteristics. Finally, the chapter reflected the statistical approaches that were undertaken to interpret the findings of this study.
4.2. Research design and strategyTo evaluate the relationship between the exploitative and explorative approach over time, the study sought an empirical study whereby there were not less than two external discontinuities encompassing more than one market and technology discontinuities. The study also had to observe and evaluate various organizational responses that surrounded both exploitation and exploration. Lastly, the study examined specific focal distributor companies that had strong landing and were capable of providing longitudinal cases. In terms of observation for company responses regarding exploitation and exploration, existing interviews and questionnaires were examined that evaluated the company on various dimensions. The setting was drawn from the telecommunication distribution industry in Deutschland. The choice of this industry was because of its remarkable history of more than two decades of frequent market‐and technology‐side discontinuities CITATION Ghe15 l 1031 (Ghezzi, Cortimiglia, & Frank, 2015). The global telecom distribution industry experienced significant technological and market‐side transformations during the past two decades. Examples include the development of mobile phones, liberalization of the monopoly market, the advent of the internet bubble, and the introduction of smartphones in the German telecom sector. Such a rich history laid the foundation for the research that was undertaken in this study.
For the past three decades, most firms (including telecom distributors) have shifted their marketing strategies to address the needs of domestic and global markets. The marketing strategies of the respective companies were mainly influenced by the new competitors rather than their existing counterparts. The new entrants that posed a threat were over‐the‐top players (or OTTs). This study explored longitudinal case studies to monitor the progress or changes in the operational strategies of the referred telecom distribution companies over the long term CITATION Car15 l 1031 (Caruana, Roman, Hernández-Sánchez, & Solli, 2015). Since the primary object of this report was to examine how distributor firms used exploitation, exploration, or a mix of ambidexterity approaches to survive and develop when confronted with strategic challenges, the report called for an adequate variance for both external issues and responses. The study employed the three stages of disruptions as the case studies herein further allowed for variance and the analysis comparing the findings. Descriptive research of this nature is subject to empirical analysis by investing a representative sample. Hence, quantitative data analysis is performed to address the derived hypotheses. Particularly, the link between organizational ambidexterity and organizational performance is examined.
4.3. Unit of Analysis: Participants and target population
The unit of analysis for the present study includes distributor companies of different telecom brands such as Apple, Nokia, and IBM who are responsible for channelizing their distribution and sales in Germany. The target population for the present study is considered to be operationally distinct from their global counterparts who are based in different countries. The unit of analysis includes both subjective and objective measures of organizational performance of the respective stakeholders along with the measures of exploitive and explorative innovation and their interaction that was undertaken by them. The objective measures included quantitative data and were obtained from different business websites and industry white papers. On the other hand, semi-structured interview across these organizations formed the basis of qualitative data for this study.
4.4. Objectives and hypothesisThe hypotheses in this research were deducted from established academic literature and apply deductive reasoning approach. These hypotheses that were undertaken in this study include:
(H1). Exploitative innovation in telecom distributor companies within the telecommunication industry in Germany is positively associated with their business performance.
(H2). Explorative innovation in telecom distributor companies within the telecommunication Industry is positively associated with their business performance.
(H3). Organisational ambidexterity is more positively associated with the performance at distributor companies within the telecommunication industry in Germany than exploitative innovation on a stand-alone basis.
(H4). Organisational ambidexterity is more positively associated with the performance at distributor companies within the telecommunication industry in Germany than explorative innovation on a stand-alone basis.
(H5). Market or company-related factors significantly influence the organizational ambidexterity or its subcomponents (exploitive and explorative innovation) of different telecom distributor companies in Deutschland.
4.5. Variables Considered for the Study
i. Dependent variables: One of the key variables that is considered in this study was the organizational performance of the telecommunication distribution companies in Deutschland. In fact, organizational performance was considered as the dependent variable for the first regression model. Organizational performance for this study was not a single entity; rather it represented a set of performance metrics that were both tangible and quantifiable. The set of performance metrics that were considered for the different telecommunication distribution companies in Deutschland in this study include market share, net sales, revenue from export, net profitability, income before allocation, share price, organizational growth on a YTD basis, net asset value, and operational costs (such as salaries, bad debts, and transportation). Although subjective measures such as structured interviews can provide estimates of company performance, studies suggest that firm performance should be verified holistically through financial and non-financial perspectives. Hence, secondary sources of business performance would be considered along with the subjective measures. The subjective measures of performance were verified from secondary sources.
ii. Independent variables: the independent variables for this study include different subjective and objective measurements of explorative and exploitive innovation and overall organizational ambidexterity. These factors were primarily recognized and explored from the:
Longitudinal case studies;
Distributor-to-Manufacturer exchange of information;
Individual Company-responses; and
Marketing Strategy (Manager responsible for a new business).
The study findings were mapped with interviews and questionnaires with several independent industry professionals to affirm the significant industry disruptions. The industry disruptions and the reaction of the telecom distribution companies to such disruptions were broadly considered as the independent variables. It was also used to corroborate company responses from a third party to obtain an unbiased view. The third party in this case study include company reports, white papers, and corporate communications. Moreover, twelve participants were primary informants who provided their interviews to build the case descriptions.
4.6. Data Collection and its Rationale
This dissertation used data constructed majorly on primary data collection, based on a survey and the sample aggregates of distributor companies researched, (IBM, Nokia, Blackberry, and Apple). The target survey is managers in charge of marketing strategy and distribution as well as general who play a role to for a reordered information input. Furthermore, the language of instruction is English, and it is self-administered. The managers were requested to fill out the questionnaire online through their web browser. The survey questions were verified in preceding researches and had been used for former research. They also have been extensively used by academia to measure the intended dependent and independent variables. The details of primary and secondary data were as follows:
4.6.1 Primary DataThe study resources were gathered by various means, like interviews with internal respondents in distributor companies, such as Nokia, IBM, Apple, and Blackberry. Respondents were employees with high rankings from a wide range of time. Also, interviews were carried out with external professionals.
4.6.2 Secondary DataThe study’s secondary data comprised annual reports, newspaper articles, and industry white papers. Besides, sources such as internal presentations and corporate training material were also used. Among these sources, corporate training was the most important because it reflected the challenges the firm desired to communicate to its workers since training and development in distributing companies were perceived as a component of a change process rather than personal development. Moreover, the content of the major training sessions exposed a lot of challenges, albeit, this material covered a limited scope, containing data from 2006–2017. The primary and secondary data was sorted for considering the objective and subjective measures for the study. The subjective and objective measures that were considered for the study include:
The organizational performance of the different global and local telecom distributors in Germany would be obtained from their official company websites and industry reports. The industry white papers would be used to explore accolades, mergers, and disputes that are related to the referred distributor. Such issues would be considered as the stimulus for organizational ambidexterity for the respective companies. For example, the performance of Apple Distribution international and Apple Retail Germany B.V. & Co.KG would be obtained from the webpage https://www.bloomberg.com/research/stocks/private/snapshot.asp? The webpage not only reflects the stock price of Apple Retail Germany B.V. & Co.KG, but it also reflected that ParkerVision GmBH had filed complaints against Apple Distribution international and Apple Retail Germany B.V. & Co.KG for the violation of the German part of the European patent 1,206,831. The complaint demanded injunctive relief and declaration of liability for the infringing devices those were introduced by the respective distributor in Germany. The products against which the complaints were filed include Apple iPhone 6, iPad Air 2, and iPhone 6s. It can be contended that such issues could prompt Apple Distribution international and Apple Retail Germany B.V. & Co.KG to respond to the complaint by implementing exploitive innovation or explorative innovation or both. In other words, dispute and complaints raised by consumers might promote organizational ambidexterity. The data on disputes or appreciation would be denoted as dummy variables (where “-1” would denote that the referred organization has been defamed in the consumer market, “0” would denote that the distributor company has neither been disputed nor been appreciated in the consumer market, and “+1” would indicate that the distributor company has been appreciated in the consumer market.This dissertation used data constructed majorly on secondary data collection, based on a survey and the sample aggregates of distributor companies for IBM, Nokia, and Apple. The study’s secondary data comprised annual reports, newspaper articles, and industry white papers. Besides, sources such as internal presentations and corporate training material were also used. Among these sources, corporate training was the most important because it reflected the challenges the firm desired to communicate to its workers since training and development in distributing companies were perceived as a component of a change process rather than personal development. Moreover, the content of the major training sessions exposed a lot of challenges, albeit, this material covered a limited scope, containing data from 2006–2017. Apart from the corporate websites, case reports regarding the respective distributor companies were evaluated for the period from 1991–2017. The selection of the period was based on the distribution of time series data into two phases; the pre-I phone era and post-I phone era. The case reports were explored for negative or positive responses against or the referred telecom distributors respectively. This took the form of critical events, following the recommendation by Caruana, Roman, Hernández-Sánchez, and Solli (2015) on longitudinal case studies. Exploratory transformations were examined without explaining the whole exploratory approach thoroughly for every stage. The positive or negative exploratory findings from the case studies were also assigned dummy scores of “-1” or “1” respectively. On the other hand, a dummy score of “0” signified that there were no cases against or for the respective distributor companies.
The subjective measures for the present study were based on the semi-structured interviews. Four participants provided complementary information when the case was being developed to elaborate on specific details that would appear ambiguous. The primary interviews, for distributor companies and the industry professionals, adhered to a semi‐structured format. Interviews started with background questions and then moved on to questions about the organisational response taken by each company. Interview background questions aimed at triangulating the bounds of the “knowledge sphere” of each participant and covered the participant’s professional experience and tenure-related to the telecommunication industry. Such questions examined their business areas, positions, technological expertise, and the length of time they have been working in the industry and the specific company. Interview questions on the organisational background were open-ended questions. The participants were requested to demarcate using special inferences from the first time they started to work in that company up to the present day. They were to give views on special events that happened regarding change in the company. Such an approach is almost similar to the critical incident approach whereby participants are requested to re-evaluate critical events (Islam, 2014, 249–261). In a critical incident, recalling participants is regarded as a reliable approach in data collection. Sometimes the participants recollect significant and emotionally interacting events, which assist them to recapture events in better.
4.7. Data Analysis
Different statistical measures were considered for reporting and interpreting the end-points in this study. The statistical measures that were used were broadly categorized into descriptive and inferential statistics. The descriptive statistics such as the mean, median, mode, standard deviation, skewness and kurtosis coefficients were used to summarize and describe the raw data that was used in this study. The tests of comparison were implemented to compare between two or more groups. The inferential statistics (tests of comparison) that were considered in this study include ANOVA, t-tests, Kruskal-Wallis, Chi-square tests. The ANOVA and t-tests were used to compare an observation between two or more experimental groups (that featured quantitative or dummy variables) respectively. Likewise, the Kruskal-Wallis, and Chi-square tests were used to compare an observation between two or more experimental groups (that featured qualitative variables only) respectively. The inferential statistics (correlation and regression analysis) that were considered in this study include the estimation of the Spearman’s correlation coefficient. Spearman’s correlation was used to measure the direction of relation between the qualitative variables, dummy and quantitative variables. The correlation coefficients were estimated to explore the relationship between the dependent and independent variables that were constructed for the different regression models. In this study, ordinary logistic regression was implemented to explore the cause-and-effect relationship between the independent and dependent variables.
The regression models were analyzed based on the coefficient of determination and p-value of ANOVA for the regression. The first regression model considered the performance of the global and local telecom distributors in Deutschland as the dependant variable. On the other hand, the independent variables for the same regression model include the measures of exploitive and explorative innovation and their interaction. The interaction between the exploitive and explorative innovation denoted organizational ambidexterity. The first regression model was constructed based on the principles of Univariate Analysis of Variance. The second regression model incorporated two time periods (pre-I phone phase and post-I phone phase), and metrics of market pull or technological push as the independent variables. Likewise, the dependent variable for the second regression model was once again the organizational performance of the global and local telecom distributors in Deutschland. The third regression model includes organizational ambidexterity and its subcomponents (exploitive and explorative innovation) as the dependent variable while the economic conditions of Deutschland, market share and value growth of the referred telecom companies, client satisfaction, and employee satisfaction parameters were considered as the independent variables for the regression model.
Research Questions and Hypothesis testing
The present study will explore one main research question that would be backed by different sub-research questions. The sub-research questions were explored to address the main research question in a comprehensive manner. Both the main and the sub-research questions were critiqued based on the acceptance of the null or the alternative hypothesis. To recall, the null hypothesis contends that there is no significant difference between two or more observations in different study groups. Any observed difference is attributed to the probability of chance. The H0 has accepted if the p-value of the statistical test of inference is greater than the chosen level of significance.
On the contrary, the alternative hypothesis contends that there is a significant difference between two or more observations in different study groups. Any observed difference is not attributed to the probability of chance. Rather, it reflects that the independent variables that are considered for the study might have attributed to the observed differences. The H1 is accepted if the p-value of the statistical test of inference is lesser than the chosen level of significance. All the statistical tests of inference that would be undertaken in the present study will be critiqued at the 0.05 level of significance.
Main and Sub-Research Questions
The main research question for this study was “Whether organizational ambidexterity along with its subcomponents such as explorative and exploitive innovation influences the performance of different telecom distributor companies across the global telecommunication industry in Germany? The Sub-Research Questions and their respective hypothesis are presented in Table 1.
SRQ1: Whether explorative innovation independently influences the performance (as measured from different performance indicators) of different telecom distributor companies in Germany?
H0 (SRQ1): Explorative innovation independently does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany (p>0.05).
H1 (SRQ1): Explorative innovation independently does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany (p<0.05).
SRQ2: Whether exploitive innovation independently influences the performance (as measured from different performance indicators) of different telecom distributor companies in Germany?
H0 (SRQ2): Exploitive innovation independently does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany (p>0.05).
H(SRQ2): Exploitive innovation independently does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany (p<0.05).
SRQ3: Whether organizational ambidexterity holistically influences the performance (as measured from different performance indicators) of different distributor companies in Germany compared to exploitive innovation alone?
H0 (SRQ3): organizational ambidexterity does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany compared to exploitive innovation alone (p>0.05).
H1 (SRQ3): organizational ambidexterity does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany (p<0.05) compared to exploitive innovation alone.
SRQ4: Whether organizational ambidexterity holistically influences the performance (as measured from different performance indicators) of different telecom distributor companies in Germany compared to explorative innovation alone?
H0 (SRQ4): organizational ambidexterity does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany compared to explorative innovation alone (p>0.05).
H1 (SRQ4): organizational ambidexterity does not significantly influence the performance (as measured from different performance indicators) of telecom distributor companies in Germany (p<0.05) compared to explorative innovation alone.
SRQ5: Whether market or company-related factors and economic condition of Germany influence the organizational ambidexterity or its subcomponents (exploitive and explorative innovation) of different telecom distributor companies in Germany?
H0: Market or company-related factors and economic condition of Germany did no significantly influence the organizational ambidexterity or its subcomponents (exploitive and explorative innovation) of different telecom distributor companies in Germany (p>0.05).
H1: Market or company-related factors and economic condition of Germany significantly influenced the organizational ambidexterity or its subcomponents (exploitive and explorative innovation) of different telecom distributor companies in Germany (p<0.05).
Plan of Analysis
In the first model of regression, the determinants of organizational ambidexterity and its subcomponents (explorative and exploitive innovation) were estimated as a function of liberalization, technological disruption, and introduction of i-Phone revolution. Therefore, the function of the determinants reflected the market push and technological pull characteristics that influenced organizational ambidexterity and its subcomponents (explorative and exploitive innovation) in general across the telecom distributor companies in Deutschland. The first set of regression models explored the influence of longitudinal responses on organizational ambidexterity and its subcomponents of exploitive and explorative innovation. Next, the regression analysis of technology disruption on ambidexterity was conducted. Such model explored whether technological disruption also positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. Likewise, another regression analysis explored the influence of I-phone introduction on overall organizational ambidexterity. This regression explored whether I-phone introduction influenced exploratory or exploitive innovation lesser than the overall organizational ambidexterity or vice-versa. In this case study, the regression analysis explored whether the introduction of I-phone enhanced the overall ambidexterity of an organization rather than improving the organization’s exploitive or explorative innovation on a standalone basis.
The second set of regression models explored the influence of manufacturer to distributor knowledge transfer on organizational ambidexterity and its subcomponents of exploitive and explorative innovation. The regression analysis of explicit knowledge on ambidexterity explored whether explicit knowledge positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. The regression analysis of tacit knowledge on ambidexterity explored whether tacit knowledge is negatively correlated with organizational ambidexterity. Likewise, the regression analysis of performance management on ambidexterity explored whether performance management influenced exploratory or exploitive innovation lesser than the overall organizational ambidexterity.
The third model of analysis include Spearman’s correlating on company specific factors in influencing organizational ambidexterity and performance between two distributing companies of a telecom brand. The correlation analysis explored whether company specific factors differ between two distributors of the same telecom brand.
Matrix table for Dependent Variable and its dependence on independent variables
Dependent Variable Independent variables
Introduction of I-phone
Trust promotion amongst customers
Since the study was primarily based on secondary data analysis, there was no issue of conflict regarding the confidentiality and the secrecy of data that was analyzed for addressing the research questions. Moreover, the identity of the participants was kept anonymous. Hence, the present study complied with the ethical considerations of experimental research.
Limitation of Methodology CriteriaSince the study included subjective responses from the respective stakeholders, the chances of subjective bias cannot be ruled out in the study. However, the research triangulation based on validating the subjective measures (subjective responses obtained through semi-structured interviews) and objective measures (secondary sources on business performance and organizational strategies) was the primary method of counteracting this weakness.
Sampling criteriaParticipants were selected using two criteria: The duration of their task either as distributors or employees within the industry. The essence for selecting participants on their duration of stay in the industry was to obtain a big picture of their views and experience in the industry. Secondly, it was the issue of complementarity, assessing employees or distributors on how complementarity would be important in recognizing if they worked with other related firms or worked at different points within the firm.
Validity and reliabilityThe study used three approaches to guarantee reliability and validity. Firstly, all participants were subjected to the critical incident technique. This incident technique provided that every primary event reached completion. Secondly, the process of integrating events or removing events from the “primary events” status was accompanied by a vigorous discussion by research members. At times, participants were involved in such a process. Lastly, each group having more than one researcher meticulously did the process of coding and interpretation. The study validity was reached when participants, especially industry-specific professional, evaluated preliminary discussion results.
Finding and Discussion5.1 Evaluation of Longitudinal responsesWhile seeking to establish discontinuities, three phases emerged. All participants suggested the launch of the iPhone as the transformer and the cause of shifting in the industry. Some indicated that such events happened “pre or post the iPhone.” Notwithstanding, its emergence was a significant event that initiated the phase of telecommunication shifts. The subsequent phase was more difficult to put in define time.
Table 5.1: Longitudinal responses on distributionLongitudinal Response Exploitation Exploration Ambidexterity
Liberalisation 27 21 19
Technological Disruption 13 34 9
Introduction of iPhone 15 15 30
Liberalisation: This was the initial stage that started from 1991 to 1993, which brought to an end the monopoly regime widening the markets for new players. As a result, the monopoly-discontinuity brought in differentiation and cost‐effectiveness. Participants suggested that liberalization resulted to exploitative shifts in parent companies that later affected distributing agents. Starting from 1991 to 1993, market liberalization strongly influenced telecommunication distributors. According to participants who stayed through the period of liberalization, telecommunication distributing companies were affected based on the parent company. Descriptive analysis from secondary sources reveal that liberalization of the telecommunication industry attenuated the degree of manufacturer concentration, increased distributor competition, and engendered price reductions for distributors, manufacturers, and suppliers in the industry. Many distributing competitors experienced the force earlier on CITATION Geo12 l 1031 (Georgopoulos & Karamanis, 2012).
Simple Linear Regression: Ambidexterity on Liberalization
Statistics Estimate S.D. T-STAT (H0: coeff=0) P-value (two-sided)
constant term 7.1538462 1.505 4.75363 0.131998
slope -0.230769 0.067 -3.4641 0.178912
Simple Linear Regression: Ambidexterity on Technological Disruption
Statistics Estimate S.D. T-STAT (H0: coeff=0) P-value (two-sided)
constant term 2.207024 1.594 1.384471 0.398228
slope -0.011091 0.074 -0.15061 0.904832
Simple Linear Regression: Ambidexterity on I-phone introduction
Statistics Estimate S.D. T-STAT (H0: coeff=0) P-value (two-sided)
constant term 1.54E-15 1.225 1.26E-15 1
slope 0.1 0.058 1.732051 0.333333
The linear regression analysis reflected that liberalization did not holistically led to ambidexterity parameters. Moreover, the p-value of the intercept was also greater than 0.05. Hence, there were no identified factors related to liberalization that significantly influenced organizational ambidexterity or its subcomponents explorative and exploitive innovation.
Technological disruption: 13 respondents agreed that technological disruption was an exploitative force that changed distribution of telecommunication services. Nine suggested that it affected both explorative and explorative (ambidexterity) while 34 indicated that it was an explorative force. This was the second phase of telecommunication shifts that set in from 2000. It started with a technological disruption whereby the rotation‐based networks were suggested as being replaced by IP‐based technology. While such a technological convergence was meant to propel significant reductions in expenses, it also reduced the market entry impediments for over‐the‐top providers. This phase witnessed mobile telephony beginning to increase rapidly, starting a convergence of fixed and mobile networks. Such coverage integrated both voice and data services CITATION Kau17 l 1031 (Kaulio, Thorén, & Rohrbeck, 2017).
The coming of Apple. Drawing from the figures represented in the table above, most of the respondents agreed that Apple was the turning point of telecommunication distributor industry. Thirty respondents agreed that Apple had a perfect match of exploration and exploitation, and this was the reason for its success in the industry. The coming of the i-Phone formed the new stage of shifts starting from 2007. During this period, a lot of profits shifted to the higher levels of the technology stack. Money transitioned from the operators of the core network, towards distributors, to mobile manufacturers and ultimately reached service and app providers; many distributor companies shifted from their parent manufacturers in favour of new product listing from Apple CITATION San18 l 1031 (Sandler, 2018).
The consequent upward movement of profit persisted until the emergence of the Apple App Store. The app store revolutionized telecommunication market with third‐party developers, promoting their services in the industry. Such discontinuity was reflected both on the technological segment (Exploratory-whereby modern app and devices were brought in) as well as on the marketing segment (a change in the marketing influence from network operators to the device and service providers). This combined influence placed the traditional telecommunication distributors under an industrial pressure to adjust their operations.
The first set of regression models explored the influence of longitudinal responses on organizational ambidexterity and its subcomponents of exploitive and explorative innovation. The regression analysis of liberalization on ambidexterity reflected that liberalization is negatively correlated with organizational ambidexterity. This means that liberalization positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. The regression analysis of technology disruption on ambidexterity also reflected that technological disruption is negatively correlated with organizational ambidexterity. This means that technological disruption also positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. Likewise, the regression analysis of I-phone introduction on ambidexterity reflected that I-phone introduction is positively correlated with overall organizational ambidexterity. This means that I-phone introduction influenced exploratory or exploitive innovation lesser than the overall organizational ambidexterity. Hence, this finding was aligned with secondary data that suggested sudden and technical changes in the consumer market either as a component of market-push or technological pull affects the performance of any organization. In this case study, the introduction of I-phone enhanced the overall ambidexterity of an organization rather than improving the organization’s exploitive or explorative innovation on a standalone basis.
5.2 Manufacturer-to-distributor knowledge transferOne factor that is believed to result to explorative and exploitative measures among telecommunication distributors is the result of manufacturer-to-distributor knowledge transfer CITATION Red15 l 1031 (Redaelli, Paiva, & Teixeira, 2015). Collected data revealed that ambidexterity was influenced by the following factors according to response rate from participants.
Number of respondents: 25
Table5.2: Ambidexterity responses by participantsExploratory Exploitation Ambidexterity
Explicit knowledge acquisition 9 10 6
Tacit knowledge acquisition 9 9 7
Performance Monitoring 2 19 4
From the results discussed, manufacturers have a direct influence on how distributors react towards changes in their distribution approach. The study revealed that tacit and explicit knowledge incredibly influenced exploratory nature of distributors in telecommunication industry. Distributors are more likely to engage in innovative products after learning from new manufacturers. Their response can make them dump their accustomed manufacturers in case they stick with old products. For instance, by acquiring knowledge from manufacturers, distributors are more likely to recognize their performance breaches as well as their weaknesses. By acquiring more knowledge on their performance, they are better placed to engage in innovative ways to improve performance. Other than being entirely exploratory, they can seek to exploit their potential to improve. This indicates that distributor-manufacturer knowledge can improve distribution ambidexterity.
Simple Linear Regression: Explicit knowledge on Ambidexterity
Statistics Estimate S.D. T-STAT (H0: coeff=0) P-value (two-sided)
constant term 4.885 2.833 1.724 0.335
slope -0.346 0.333 -1.039 0.488
Simple Linear Regression: Tacit Knowledge on Ambidexterity
Statistics Estimate S.D. T-STAT (H0: coeff=0) P-value (two-sided)
constant term 8.25 3.631 2.272 0.264
slope -0.75 0.433 -1.732 0.333
Simple Linear Regression: performance monitoring on ambidexterity
Statistics Estimate S.D. T-STAT (H0: coeff=0) P-value (two-sided)
constant term 1.903 1.206 1.579 0.359
slope 0.012 0.107 0.108 0.931
The second set of regression models explored the influence of manufacturer to distributor knowledge transfer on organizational ambidexterity and its subcomponents of exploitive and explorative innovation. The regression analysis of explicit knowledge on ambidexterity reflected that explicit knowledge is negatively correlated with organizational ambidexterity. This means that explicit knowledge positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. The regression analysis of tacit knowledge on ambidexterity also reflected that tacit knowledge is negatively correlated with organizational ambidexterity. This means that tacit knowledge positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. Likewise, the regression analysis of performance management on ambidexterity reflected that performance management is positively correlated with overall organizational ambidexterity. This means that performance management influenced exploratory or exploitive innovation lesser than the overall organizational ambidexterity. Hence, this finding was aligned with secondary data that suggested performance management systems are implemented to enhance the overall ambidexterity of an organization rather than improving the organization’s exploitive or explorative innovation on a standalone basis.
5.3 Company specific factorsNumber of respondents: (%)
Table 5.3: Company-Specific Factors That Affect Distribution(Explorative and Exploitation)Response Nokia (%) Apple (%) IBM (%)
Strength of the market 91 74 65
Support from marketing 85 79 67
Top management participation 81 95 77
Level of innovation 96 97 93
Monitoring resources 93 69 75
Competition 76 Research and development 93 95 92
Technology 91 94 91
Organizational strategy 77 87 Market strategy 76 71 74
The above mentioned are the responses of managers from companies researched. They were asked to respond on each variable to establish factors that affected distribution in telecommunication industry. Results reveal that for a telecommunication distributing firm to perform better, it must have a mix of exploitative and explorative paradigms. Most of respondents agreed that innovation drove telecommunication industry with a range of 89–97%; Apple asserted that innovation was the highest paradigm for distribution success. 5.4 Individual companies’ responses5.4.1 Nokia184.108.40.206 Nokia and response to ambidexterity
Nokia has been a leading manufacturer and a distributor in telecommunication industry before the company suddenly collapsed. Researchers indicate reasons why even a company with significant portion of market share may fail to operate if not backed by ambidexterity, and such companies would fall prey to disruptive innovation if they do not adjust their distribution strategies. During the launching of the i-Phone in 2007, Nokia was the big brand on the block and a strong chain distributor of their products in various locations. The company had a remarkable Symbian operating system that scooped at least 60% of the global telecommunication market. However, it died down under seven years because of lack of ambidexterity. Authors suggested that in 2007, Nokia did not adapt its operations to match with change in the block. The company only realised later that Apple would threaten their survival because of adopting a disruptive innovation CITATION Lub15 l 1031 (Lubinaite, 2015).
In response, Nokia instead decided to pursue hardware upgrades. The company was slow in distributing its products because it did not have active partners and innovative distributors. Such consequences caused Apple, which was one of the leading companies, to overrun them on the market because Apple had an attractive distribution chain. Nokia underestimated the new technology and the use of internet in marketing its products.
220.127.116.11 Nokia’s distribution chain – A new approach to ambidexterity
In its distribution chain, Nokia partners with players from different parts of the globe, including G.Fast and Zycko, among other. While many competitors were rushing in to adjust new practices to remain competitive, Nokia slacked back; for instance, companies like Google realized the need to absorb the new technology and rushed to introduce the user-friendly Android OS in 2008. As a result, Google gained a dominant share of smartphone industry commanding a more than 80% share by 2014. However, Apple decided to integrate its OS with its hardware as a luxury item. On the other hand, Google strengthened its search engine market through Android. Nokia’s responses were the slowest. The recent strategy by Nokia to adapt to exploitative change is by partnering with new distributors to market its products. Examples of partnerships include the following.
18.104.22.168 Nokia’s reseller – G.Fast- Energia Communications (EneCom)
Nokia has established links with partners from Asia to respond to marketing shifts and competition in the industry. One such partnership with Energia Communications (EneCom) has seen the company rise and shift from a commercial deployment to a reseller strategy. The company signed the distributor agreement with Energia Communications (EneCom) to sell its G.fast fixed ultra-broadband access technology in Japan CITATION Nok17 l 1031 (Telegeography, 2017). This partnership aimed at giving the company an ultra-broadband entry in the region. Nokia intends to use EneCom as the first client for next-gen broadband technology in Japan. EneCom is the licensed reseller for the fixed access technology, making it available nationwide across Japan.
G.fast is a technology that delivers customers fiber-like speeds compared to copper cable over short distances, such asin apartment buildings with no fiber connections. The new service in EneCom’s portfolio will enable the company to expand its business and interests in the utility service provider space by offering a fast, easy and economical way to replace traditional VDSL2 technology and offer subscribers a choice of higher speed access packages.
22.214.171.124 Zycko distributing strategy with Nokia
The partnership of Nokia with Zycko is another initiative meant to bring diversification in distribution channel. According to news by SizeBrown (2016), Zycko is a specialist value-added reseller. This partnership starts a new phase of evolution in the go-to-market diversification at Nokia. Following this joint venture, Nokia’s distribution channel as well as the value-added distribution has been expanded. Nokia’s reaction in the change of distribution is an example of explorative approach. By learning from its failures, the company can extend the foothold in the mid-market space across EMEA.
126.96.36.199 Zycko’s distribution strategy
Zycko is a global specialist information technology (IT) distributing company. The company offers innovative IT solutions, covering technology areas for every part of the business IT infrastructure. The company operates in fields such as data storage, data networking, and virtualization. It also manages and distributes cloud computing services, control and management, and serves as a data centre solution.
The company works with leading and successful partners and technologies where they deliver outstanding customer services. The company focuses on differentiating their distribution base to stand out among the mushroomed competition. The company has various distribution outlets and 17 offices across EMEA. It manages its distribution network from the UK-based headquarters CITATION Siz16 l 1031 (SizeBrown, 2016).
188.8.131.52 Reconfiguring distribution strategy with Nokia
Software and Hardware component: For a start, the company will focus on hardware and software integration. This would constitute IP routing and optical transport networks. Using this fibre-based LAN interactivity framework will re-establish Nokia like a giant in network solutions, which is something it missed earlier. The focus is to distribute internet among infrastructural networks, such as colleges, health centres, business buildings, government posts, and homesteads. The company also hopes to integrate the system with open standards of DDI management software to multiply the base.
Despise the collapse, Nokia is seeking to re-emerge and take advantage of ambidexterity to boost its position as a telecommunication manufacturing and distribution agent. The target is to reach-out to millions of help communication service providers to enhance their network capacity. Nokia seeks to use 5G internet speed with Cloud Computing and the Internet of Things to remain relevant on the market.
Number of respondents: 30
Table 5.4: Nokia’s Views on Distribution AmbidexterityResponse Partner with EneCom (no. of respondents) Partner with Zycko (no. of respondents
Increases efficiency 3 4
Broadens market base 9 6
Increases innovation 5 8
Promotes trust in customers 4 5
Fights competition 4 4
Resource management 5 3
Total 30 30
Two Sample t-test (paired)
Difference: Mean1 – Mean2 0
H0 value 0
CI Level 0.95
F-test to compare two variances
H0 value 1
CI Level 0.95
Spearman Rank Correlation
2-sided p-value 0.428
The t-test result showed that the number of responses obtained for each category of company specific factors for both the distributors of Nokia were same at baseline. Hence, the validity and reliability of the responses on company specific factors did not confound the end-points of the study. The Spearman’s correlation did reflect that there was no correlation between the company specific factors between the two distributors of Nokia in Germany. Such findings reflected that company-specific factors do influence organizational performance and ambidexterity.
The head-to-head comparison between reflected that Zyco is a more efficient (a marker of performance) distributor of Nokia than EneCom. The comparison further showed that higher efficiency of Zyco could be attributed to innovative strategies and promotion of trust amongst its customers. On the contrary, the comparison reflected that resource management (that was more with Enecom) and widening of market base might not translate into increased efficiency of distribution.
Respondents interviewed had positive remarks concerning Nokia’s integration with distributing agents. Because of the changing face of telecommunication world, companies had to readjust their policies, while still embracing the original techniques but by exploring new approaches such as new partnerships and inventions would promote their distribution base.
One of the interviewed managers responded that it was delightful to have Nokia integrate with Zycko for purposes of maximising distribution base. The following is the response: “As part of the Nuevas Group, Zycko can offer a true, professional EMEA solution, with sales, marketing and technical support, as well as consistent delivery spanning the region” CITATION Siz16 l 1031 (SizeBrown, 2016).
Another respondent suggested that the partnership reinforced a strong endorsement of mutual trust in building and redefining global speciality-value distribution. “Nokia has a unique place in the connected world, with exceptional products, and we look forward to helping them successfully grow their pan-EMEA distribution network and increasing sales in the enterprise and mid-market sectors through the channel” CITATION Siz16 l 1031 (SizeBrown, 2016).
In an interview with us, the CEO of EneCom also expressed optimism in Nokia’s integration with EneCom to provide exclusive customer service. The respondent suggested that by partnering with Nokia, the company would gain strong distribution foothold in Japan and East Asia at large. This partnership would be built across the exploitative approach, retaining Nokia’s original strategy while also trying to expand the distribution base in Japan. The following is the quoted response from the CEO, “We have been very happy with the service and have complete trust in Nokia’s capability and strengths of its fixed access business, which is why we decided to take the relationship as a business partnership/reseller model” (Nokia 2018).
Nokia’s lead distribution manager in Japan suggested that the strategic partnership would extend Nokia’s distribution in Japan. G.fast would be readily accessible in the region, which promote customer’s interests and its satisfy, especially for those who might not obtain the chance to access ultra-broadband speeds. The respondent recounted the importance of Japan as a distribution base and how they intend to extend bases across all regions CITATION Nok18 l 1031 (Nokia, 2018).
5.4.2 Apple184.108.40.206 Apple Inc.’s response to ambidexterity
Apple has been proudly called the Innovator Company. The company stepped in the market and immediately killed many established giants, such as Nokia, wooeing a lot of distributors worldwide CITATION Goy12 l 1031 (Goyal, 2012). Other than working as a manufacturer, Apple places itself as a distributing giant through the recent shifting to act as a service industry, distributing Apple’s brand products in various parts of the country.
Number respondents: 47
Table5.5: Apple’s response to distribution ambidexterityResponses Exploratory
Capitalising strengths 7
New resources 5
New ways 13
The above data reveals that Apple treasures a lot of innovation in its processes. This implies that it depends more on exploratory approach than exploitative approach. However, it tends to balance out the two approaches, especially when it comes to efficiency which is an exploitative initiative. A lot of responses confirmed that Apple enjoys innovation as the pillar for its success. We can conclude that the reasons behind the frequent conflicts in the company may be because of its exploratory approach to distribution CITATION Swe16 l 1031 (Sweeney, 2016). As part of their innovation, Apple welcomes other distributors, and it partners with companies like AT&T to distribute products in the US, as well as other resellers globally. Its distribution approach welcomes recommendation from customers, suppliers, and other sources of knowledge to build a sturdy distribution base and gain market acceptance CITATION Jon18 l 1031 (Brodkin, 2018).
The company is frequently after the change, and while it embraces modern and new ways of development, it does not shun from capitalising the existing market base as exhibited by the number of respondents. This also confirms that Apple is the perfect match for ambidexterity. The company knows how to integrate both new and existing strategies into its manufacturing and distribution chain.
5.4.3 IBM220.127.116.11 IBM’s approaches to ambidexterity
A total of 25 managers were asked to fill a questionnaire asking on various dimensions regarding the distribution network of IBM. Responses were concerning agree, disagree, or not sure.
Number respondents: 25
Table 5.6: IBM response to distribution ambidexterityResponse Agree Disagree Not Sure
IBM Distribution is driven by innovative business 15 5 5
Consistent senior-level sponsorship 13 9 4
Dedicated team leadership 5 17 3
Quick start, quick stop 14 9 2
Monitoring resources 7 13 5
Connecting actions to critical milestones 5 5 15
New opportunities 15 7 3
Disciplined mechanisms 14 7 4
From the discussion above, it became clear that IBM’s distribution aimed at embracing ambidexterity by espousing various dynamics that promote innovation and building from the internal capacity. A lot of respondents agreed that distribution chain of the company is driven by innovation (15 respondents) and that team leadership drove the company’s distribution success (17 respondents). The company capitalises on its “Emerging Business Opportunity” (EBO) strategy to cultivate innovative new businesses. Every business had a manager who answered to a business unit head, although, these managers would also answer to Bruce, the senior executive, in charge of new growth opportunities. Through this new approach, every initiative was accorded with sufficient resources.
In response to the persistent long-term disruptions, IBM opted for EBO approach that would guide the rest of decisions. This strategy saw the company gain $26B extra revenue CITATION ORe09 l 1031 (O’Reilly III, Harreld, & Tushman, 2009). The value of the profit was the highly recorded since IBM started to operate. Moreover, this organisational strategy enabled IBM to reposition as a business services organisation instead of being a merely technology-driven firm.
Moreover, the response from participants revealed that IBM pursued new opportunities in its manufacturing and distribution framework with 15 respondents agreeing, seven disagreeing, and four stating that they were not sure. Before the company resurfaced from its famous near-death experience, IBM was not used to going for new opportunities. However, the CEO of the company, realising this drawback, suggested the need for the company to seize new technologies as well as prevailing market opportunities. Lou Gerstner, the CEO, recognised that IBM needed to be an ambidextrous firm. Being an ambidextrous firm, IBM could seek breakthrough development in many ways. It could separate new, exploratory units from traditional units. Secondly, it would separate exploitive units while still retaining stronger networks across departments at the senior executive level.
Other values that support the manufacturing and distribution chain of IBM include consistent senior level leadership (13 respondents agreeing, 9 disagreeing). The essence of this approach was to ensure that the company’s manufacturing and distribution works in clarity of strategy and structural alignment. It also ensures constant support whenever needed. Moreover, before resurfacing, IBM had younger and less-experienced leaders who manned its EBOs. The target was that such leaders would plunge into traditional approaches of management and marketing strategy, such managers appeared to lack the needed connections for nurturing an embryonic business. This was the reason for lack of a general agreement in leadership approach with 17 disagreeing and only 5 agreeing on dedicated leadership. Also, the company employs a disciplined mechanism approach towards human resources in marketing and manufacturing to align it with the EBO. This was regardless of whether it could function against their short-term interests. Regarding the monitoring of resources for operational and marketing functions, it was found that IBM did not balance well on this section. A lot of finance is directed to existing premises, but it is not effectively planed. It is reported that the company used to poach the new business’s resources.
From the above analysis, we find that IBM tries to integrate more of exploratory measures that exploitative ones. The company seeks new approaches without strongly modifying the existing framework by backing up its resources. However, we can deduce that it has a moderate approach to ambidexterity, given that some concentration is placed on organisational leadership.
5.5 Recommendations for surviving a disruptive innovationDeveloping consistent distribution strategies can be a challenging task given that many marketing strategies often integrate inherent conflicts between major breakthroughs and consolidation. Companies are confronted with dilemmas when the expectation is to integrate their existing business while at the same time seeking for innovative ways. In a sense, they are divided between exploitation and exploration CITATION Ohr13 l 1031 (Ohr, Mattes, & Frank, 2013). They may be defeated on whether to settle on alignment or they proceed for innovation. However, marketers need to balance exploratory and exploitative strategies. But one of the challenges for settling for the best option is that distributing companies may desire to distribute new brands which may have unfinished research process. Another challenge for distributing forms comes with working locally but also integrating globally. To survive on international market, distributing companies must aim at differentiation while also promoting low-cost strategies.
This paper recommends how firms such as Nokia could adjust to survive the disruptive innovation. Companies should facilitate research and development specialist and employees to explore unlimited opportunities for creativity without organisational bounds CITATION Mir08 l 1031 (Mirow, Hoelzle, & Gemuenden, 2008). They should focus more on long-term innovative projects rather than basing on the short-term measurable outcome. In this regard, the management should be ready to learn to and be willing to incur higher levels of risk. Additionally, firms should prioritise on launching new products at the forefront of innovation and encounter challenges of possible disruption to their own market.
This study has revealed that large incumbent firms may be targeted on the incremental innovation of their products. Such products guarantee a calculated short-term return. The recommendation would be that technology firms should target less on short-term efficiency, focus more on technology, and give room to managers to explore their bigger innovative ideas.
5.5.1. ClosureTechnological firms must ensure they have a firm grip on the market to avoid replacement because of competition. Also, the telecommunication market is the most diverse and rapidly evolving segment because of exposure to technological advancements. Distributors must transform or be wiped from the market. The challenge, however, is responding to the complex transformation efforts. A large distributing company may take up to years before responding to exploration or exploitation, or before adopting both.
In the long run, they should consider both exploitative and explorative knowledge in the distribution of brands for sustained survival. They should seek new approaches and fresh brands to engage in the distribution process, while at the same time building on the primary distribution channels, what is referred to as cognitive ambidexterity. While embracing exploration and exploitation, the possibility of overcoming future distribution challenges is high. This study adopted an experimental approach to assess how firms may fail or may succeed depending on how they approached ambidexterity. The case of Nokia’s deliberate negligence of building distribution base attests to this. But the company realises that to survive the current market, they must ensure that they embrace both aspects within the distribution channel.
Because of stronger distribution base of Apple, the company managed to thrive and outdo competitors early on. From the results discussed, Apple is bent on further strengthening the distribution base by embracing new technological changes while at the same time retaining a strong distribution channel it integrated in the system earlier.
ConclusionAmbidexterity of telecommunications manufacturers has a direct impact on producing ambidexterity on the part of telecommunications distributors to enhance survival and relevance in the face of change. Explorative and exploitative innovation causes telecommunication companies to introduce disruptive products that cause distributors to shift their focus from a narrow supplier scope to a wider one in order to distribute more competitive products and ensure survival: Suppliers will normally use their tacit knowledge and express knowledge to change tact in order to adapt to supplying more superior products. Therefore, the manufacturers that fail to adapt to change lose their grip on the market. Ambidexterity, therefore, refers to an organization’s ability to exploit its current opportunities and strenghts by innovating along its current products and services, while at the same time scanning the changes in environment to produce new products. When a firm is ambidexterous, it remains relevant in the face of change and does not loose its competitiveness. Ambidexterity is, therefore, referred to by authors mentioned in this study as one of the fundamentals of dynamic capabilities. Teams are an instrumental part of an organization’s ambidexterity since innovation occurs through learning and active study of the changing environment. Firms use distributors as key intermediaries between the functions of production, supply, and consumption. For instance, a telecommunication device manufacturer may use a distributor to sell its devices to customers and retailers, as well as to provide technical services to device buyers. Notably, technology disruption in the telecommunications industry has been largely dynamic in the last two decades. The changes have been a result of innovativeness and the competition between players in the telecommunications industry, resulting from a broken monopoly. The impact on distributors is immense. First, due to introduction of revolutionary products and solutions in the telecommunications industry, distributors have been forced to innovate in order to align their competencies with the expectations of the device manufacturers. They aim to cement their current position as distributors by improving their current processes (exploitative innovation), as well as identifying new products such as provision of technology solutions in addition to sale of devices (explorative innovation). Such trends, therefore, show without doubt that ambidexterity among telecommunication companies has a direct impact on their distributors’ ambidexterity.
The regression analysis of liberalization on ambidexterity reflected that liberalization positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. The regression analysis of technology disruption reflected that technological disruption also positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. Likewise, the regression analysis of I-phone introduction on ambidexterity reflected that I-phone introduction influenced exploratory or exploitive innovation lesser than the overall organizational ambidexterity. Hence, this finding was aligned with secondary data that suggested sudden and technical changes in the consumer market either as a component of market-push or technological pull affects the performance of any organization. In this case study, the introduction of I-phone enhanced the overall ambidexterity of an organization rather than improving the organization’s exploitive or explorative innovation on a standalone basis.
The regression analysis of explicit knowledge on ambidexterity reflected that explicit knowledge that explicit knowledge positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. The regression analysis of tacit knowledge on ambidexterity also reflected that tacit knowledge positively influenced exploratory or exploitive innovation than overall organizational ambidexterity. Likewise, the regression analysis of performance management on ambidexterity reflected that performance management influenced exploratory or exploitive innovation lesser than the overall organizational ambidexterity. Studies suggest that performance management systems are implemented to enhance the overall ambidexterity of an organization rather than improving the organization’s exploitive or explorative innovation on a standalone basis. The Spearman’s correlation did reflect that there was no correlation between the company specific factors between the two distributors of Nokia in Germany. Such findings reflected that company-specific factors do influence organizational performance and ambidexterity.
Three phases were obtained from participants regarding discontinuities that saw rapid changes in the telecommunication industry: liberization within the industry (1991–1993), technological disruption (2000 onwards), and the emergence of Apple (2007). Liberalization entailed dimulsification of monopolies and the emergence of multiple players. The impact was reduced concentration of manufacturers, increased competition among distributors, and improvement in pricing as a result of the competition. Technological disruption entailed the covergence of fixed and mobile telephony, as well as intoduction of IP technology. The entry conditions for telecommunications were also softened. Apple introduced a smartphone with app technology. The largest proportion of partipants in the study felt that the emergence of Apple represented ambidexterity more that the other two phases of changes in the telecommunication industry. Upon studying Nokia, Apple, and IBM, it can be observed that ambidexterity enables firms to survive in the face of change, while lack of it has been demonstrated as detrimental to a firm’s relevance. Nokia, for instance, was slow in exploiting opportunities in the face of technological disruption. Apple integrated its operating system with its hardware, thereby producing revolutionary technology. The resulting benefits were reaped by the core of the company, as well as the distributors, app providers, and device manufacturers. The ultimate manifestation of ambidexterity on distributor channels was a shift from their parent manufacturers towards selling Apple products. It is noteworthy that the Apple case exemplified ambidexterity through the exploratory and exploitative fronts. The exploratory front on distributors entailed a transformation from network providers to device markerers and service centers. This is largely because the disruptive shifts in technology required people (teams) to serve as change agents in the industry as described by Chermack et al (2010). The author mentions the critical role that teams play as change agents in promoting ambidexterity on firms. The key lesson, therefore, is that technological change requires learning that needs people to champion the new innovative products. Another lesson is that change agents would normally play their role when the originators of change (in this case, manufacturing companies) demonstrate the benefit of change to the other stakholders. The other actors, which is illustrated by the findings of the study in which device distributors tended to engage in innovative products after learning from new manufacturers. Such learning was encouraged by the distributors’ tacit and explicit knowledge. Tacit knowledge enables distributors to learn about their shortcomings and define ways to adapt to change, which is explorative innovation. Apple’s distribution networks have remained largely successful. In the study, it can be seen that Apple retains a greater focus on explorative innovation. However, in order to enhance efficiency, it still attempts a reasonable degree of exploitative innovation. Apple also uses learning by obtaining feedback from its customers on how to distribute its devices and services. The latter has the benefit of enhancing acceptance in the marker since the customers contributions are actualized. Just like Apple, IBM’s distribution chain is driven by innovation, whichresulted from building a strong internal capacity. The effect based approch to operations (EBO) can be seen through IBM appointing a manager overseeing every new initiative to which the required resources are accorded. Therefore, in consistency with the literature, innovation is driven by teams or people, which further enhances its distribution networks. The idea of having unit leaders ensured consistent resource availability, clarity of strategy, and alignment of the new initiatives with the corporate structure. Therefore, IBM remains predorminantly ambidexterous, with a more moderate approach of laying emphasis on organizational leadership. After Nokia’s stint of failure, it responded by embracing more explorative strategies by partnering with two distributing agencies: G.Fast- Energia and Zyko. Notably, both companies have considerably enganged in distribution of new technology products. For instance, G.Fast- Energia is a producer of broadband technology that provides fast internet with basic copper cabling. The partnership therefore enables Nokia to be at the forefront of new competitive technology solutions. Zycho, being a value-added distributor, strengthen’s Nokia’s distribution by availing a host of benefits for its go-to-market strategies, including a wide coverage of distribution outlets.
It is, therefore, evident that ambidexterity of a telecommunication company has a resounding impact on its distribution capacity. In all cases above, companies are faced with the dilemma of balancing between their current business and creating new ones. For successful companies, such as Apple and IBM, more explorative approaches are engaged while retaining and improving the current processes. Distributors may be faced with a temptation to sell new products, which are still under research. An additional challenge is coming up with distribution strategies that work locally and globally. Like Apple, one of the methods of coping with these challenges is developing a research and development specialty within the organization. A long-term approach in innovation is more sustainable that targeting short-term income. Therefore, learning and additional risk taking becomes instrumental since such an approach may require additional financial resources and people. Firms should also give more priority to explorative innovation, i.e. creating new products at the forefront of innovation, which could lead to the possibilities of disruption of their own markets: Apple’s entry into the apps market caused a disruptive change that saw other companies enter the market, such as Google,which acquired an 80% share through Android OS that supported apps. The entry of Google and the subsequent dominance is a disruptive consequence of Apple’s innovation. In this sense, the innovation by Apple guaranteed a short-term return due to the incremental development of its idea by Google. This is a lesson that firms need to focus more on long-term technological innovation. Additionally, since teams are an instrumental part of ambidexterity, leadership and management should be geared towards promoting explorative thinking while providing sufficient resources for innovative ideas. Notably, Apple and IBM’s success is anchored on aligning leadership with emerging opportunities with sufficient resourcing. Research and Development (R&D) should therefore be recognized as a key component of any corporate’s expenditure since it ensures longevity of an enterprises relevance in the market. Innovativeness, being a largely social process, should take into account the role of customers, distributors, and competitors in enhancing innovation. Apple has been observed to rely on customer feedback for its innovative agenda. Lastly, it is important to select the righ distribution partners as a way of introducing new knowledge into the company. The new knowledge may be on how to exploit current processes and products, or on the other hand, how to define new offerings. The idea of Nokia selecting Zycko exemplifies an improvement in its distribution efforts that exposed it to more customers in the EMEA region (Comms Dealer 2016). On the other hand, partnership with G.Fast- Energia enhances its new products by transitioning from VDSL2 technology to next-gen faster internet. In a broader sense, numerous strategic partnerships would lead to upscaling of existing processes and creation of new products, hence leading to ambidexterity. Firms can therefore influence their distrubutors’ innovativeness as much as their distributors can influence their suppliers innovativeness, which makes ambidexterity a two way process.
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