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lOMoARcPSD|7864644 SEOR - Summary articles Strategic Entrepreneurship and Organizational Renewal (Vrije Universiteit Amsterdam) Scannen om te openen op Studeersnel Studeersnel wordt niet gesponsord of ondersteund door een hogeschool of universiteit Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Overview: Week 1: WHY INNOVATE AND WHY SO DIFFICULT? (E+A) Gibson, C. B., & Birkinshaw, J. (2004). The Antecedents, Consequences, and Mediating Role of Organizational Ambidexterity. Academy of Management Journal, 47(2), 209–226. https://doi.org/10.2307/20159573 (E+A) O’Connor, G. C. (2008). Major Innovation as a Dynamic Capability: A Systems Approach. Journal of Product Innovation Management, 25(4), 313–330. https://doi.org/10.1111/j.1540-5885.2008.00304.x (E+A) Tripsas, M., & Gavetti, G. (2000). Capabilities, cognition, and inertia: evidence from digital imaging. Strategic Management Journal, 21(10–11), 1147–1161. https://doi.org/10.1002/1097- 0266(200010/11)21:10/113.0.CO;2-R (E+A) Dell´Aqua et al., 2023. Navigating the jagged technological frontier: field experimental evidence of the effects of AI on knowledge worker productivity and quality. Working paper, Harvard Business School 24 – 013. (E+A) Gilsing, V.A. (2022) Lecture 1.1 & slides (practical overview) (E+A) Gilsing, V.A. (2022) Lecture 1.2 & slides. Week 2: STRUCTURE & SYSTEMS (E+A) Burgers, J. H., & Covin, J. G. (2016). The contingent effects of differentiation and integration on corporate entrepreneurship. Strategic Management Journal, 37(3), 521–540. (E+A) O’Connor, G. C., & DeMartino, R. (2006). Organizing for Radical Innovation: An Exploratory Study of the Structural Aspects of RI Management Systems in Large Established Firms. Journal of Product Innovation Management, 23(6), 475–497. https://doi.org/10.1111/j.1540- 5885.2006.00219.x (E+A) O’Reilly, C. A., & Tushman, M. L. (2013). Organizational Ambidexterity: Past, Present, and Future. The Academy of Management Perspectives, 27(4), 324–338. https://doi.org/10.5465/amp.2013.0025 (E+A) Gilsing, V.A. (2022). Lecture 2.1 & slides. Week 3: STRATEGY & LEADERSHIP (E+A) Meissner, P., Wulf, T., 2013. Cognitive benefits of scenario planning: Its impact on biases and decision quality. Technological Forecasting & Social Change, 80, 801 – 814 (E + A) Hammond, J.S., Keeney, R.L., Raiffa, H., 1998. The Hidden Traps in Decision Making. Harvard Business Review, Sep – Oct. (E+A), Tversky, A., Kahneman, D. Judgment under Uncertainty: Heuristics and Biases in judgments reveal some heuristics of thinking under uncertainty. Science, 185, 1123 - 1131 Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 (E+A) Maula, M. V. J., Keil, T., & Zahra, S. A. (2012). Top Management’s Attention to Discontinuous Technological Change: Corporate Venture Capital as an Alert Mechanism. Organization Science, 24(3), 926–947. https://doi.org/10.1287/orsc.1120.0775 (E+A) Smith, W. K., & Tushman, M. L. (2005). Managing Strategic Contradictions: A Top Management Model for Managing Innovation Streams. Organization Science, 16(5), 522–536. https://doi.org/10.1287/orsc.1050.0134 (E+A) Raffaeilli, R. L., Glynn, M. A., & Tushman, M. 2018. Flexing the frame: TMT framing and the adoption of non-incremental innovations by incumbent firms. Harvard Business School Organizational Behavior Unit Working Paper, 17-091 (E+A) Richard, O., Wu, J., Markoczy, L., Chung, Y., 2019. Top management team demographic-faultline strength and strategic change: What role does environmental dynamism play? Strategic Management Journal, 40, 6, 987 – 1009. (E+A) Gilsing, V.A. (2022). Lecture 3.1 & slides. (E+A) Bahlman, M. (2022). Lecture 3.2 & slides (E+A) Gilsing, V.A. (2022). Lecture 3.3 & slides. Week 4: PEOPLE & CULTURE (E+A) Schilling, M. A. 2017. Serial Breakthrough Innovation: The Roles of Separateness, Self-Efficacy, and Idealism. Working Paper. (E+A) Tellis, G. J., Prabhu, J. C., & Chandy, R. K. (2009). Radical Innovation Across Nations: The Preeminence of Corporate Culture. Journal of Marketing, 73(1), 3–23. https://doi.org/10.1509/jmkg.73.1.3 (E+A) O’Connor, G. C., Corbett, A., & Pierantozzi, R. (2009). Create Three Distinct Career Paths for Innovators. Harvard Business Review. Retrieved July 4, 2017, from https://hbr.org/2009/12/create-three-distinct-career- paths-for-innovators (E+A) Tripsas, M. (2009). Technology, Identity, and Inertia Through the Lens of “The Digital Photography Company.” Organization Science, 20(2), 441–460. https://doi.org/10.1287/orsc.1080.0419 (E+A) Kammerlander, N., König, A., & Richards, M. (2018). Why do incumbents respond heterogeneously to disruptive innovations? The interplay of domain identity and role identity. Journal of Management Studies. (E+A) Perra, D., Sidhu, J., Volberda, H., 2017. How do established firms produce breakthrough innovations? Managerial identity-dissemination discourse and the creation of novel product-market solutions. Journal of Product Innovation Management, 34, 4, 509 – 525. (E+A) Gilsing, V.A. (2022). Lecture 4.1 & slides. Week 5: EFFECT CONDITIONS ON EXECUTION AND INTEGRATION OF DIGITAL INNOVATIONS Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 (E+A) Keil, T., McGrath, R. G., & Tukiainen, T. (2009). Gems from the Ashes: Capability Creation and Transformation in Internal Corporate Venturing. Organization Science, 20(3), 601–620. https://doi.org/10.1287/orsc.1080.0373 (E+A) Khanna, R., Guler, I., & Nerkar, A. (2016). Fail Often, Fail Big, and Fail Fast? Learning from Small Failures and R&D Performance in the Pharmaceutical Industry. Academy of Management Journal, 59(2), 436– 459. https://doi.org/10.5465/amj.2013.1109 (E+A) Lange, D., Boivie, S., & Henderson, A. D. (2009). The Parenting Paradox: How Multibusiness Diversifiers Endorse Disruptive Technologies While Their Corporate Children Struggle. Academy of Management Journal, 52(1), 179–198. https://doi.org/10.5465/AMJ.2009.36462006 (E+A) Raisch, S., & Tushman, M. L. (2016). Growing New Corporate Businesses: From Initiation to Graduation. Organization Science, 27(5), 1237–1257. https://doi.org/10.1287/orsc.2016.1081 (E+A) Gilsing, V.A. (2022). Lecture 5.1 & slides. (E) Guest speaker. Lecture 5.2 & slides Week 6: PROCESS OF BUILDING AN INNOVATIVE ORGANIZATION: DIGITAL TRANSFORMATION (E + A) Collis & Tunker (2018) Digitalization at Siemens. (E+A) Teece, D., 1997. Explicating dynamic capabilities: the nature and micro-foundations of (sustainable) enterprise performance. Strategic Management Journal, 28, 1319 - 1350 (E+A) Birkinshaw, J., Zimmerman, A., Raisch, S. 2016. How do firms adapt to discontinuous change? Bridging the dynamic capabilities and ambidexterity perspectives. California Management Review, 58, 36 – 58. (E+A) Guest lecture: slides 6.1 (E+A) Gilsing, V.A. (2022). Lecture 6.1 & slides Digital Transformation Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 The Antecedents, Consequences, and Mediating Role of Organizational Ambidexterity Introduction and Concepts: Ambidexterity in Organizations: Organizations need to handle current demands efficiently while adapting to future changes. This capability, known as ambidexterity, involves managing alignment (efficiency) and adaptability (innovation) either concurrently or sequentially. Traditional View - Structural Ambidexterity: Historically, ambidexterity was managed by segregating structures or teams—one for efficiency and another for innovation. New Approach - Contextual Ambidexterity: A modern approach emphasizes balancing alignment and adaptability within the same unit. This is achieved by creating a supportive environment where employees decide how to manage these demands, integrating both aspects across all organizational levels. Importance of Systems and Processes: Organizations should implement systems and processes that enable simultaneous handling of current and future needs rather than relying on separate structures. Hypotheses and Findings: H1: Ambidexterity and Performance: Successfully balancing alignment and adaptability is essential for sustained performance. Viewing these elements as complementary rather than conflicting helps manage tensions and improve long-term performance. Contextual ambidexterity, integrating both aspects within a business unit, can be more beneficial and potentially cost-effective compared to rigid structural solutions. H2: Antecedents of Ambidexterity: Achieving ambidexterity involves creating a supportive organizational context, characterized by systems, processes, and beliefs that encourage both efficiency and innovation. Key drivers include: ○ Worker Training and Trust: Emphasized by Adler et al. (1999) for fostering trust and effective training. ○ Decentralized Structure and Culture: Highlighted by Tushman and O'Reilly (1996) as crucial for a supportive structure and shared culture. ○ Shared Vision and Leadership Development: As noted by Bartlett and Ghoshal (1989), shared vision and effective leadership are vital. ○ Organization Context: Includes tangible systems (e.g., incentives) and intangible elements (e.g., discipline, trust) that shape individual behavior. Ghoshal and Bartlett's Framework: Outlined four key attributes for creating a supportive context—discipline, stretch, support, and trust. These need to be balanced as they are interdependent. Too much emphasis on any one attribute can create internal tensions or lead to poor performance if not managed properly. Evidence and Analogy: Case Studies: High-performing units achieved a balance of support and discipline, allowing flexibility while maintaining clear goals. Units with low ambidexterity faced inconsistent management and struggled with adaptation, resulting in poor performance. Market Orientation Analogy: Similar to market orientation, contextual ambidexterity builds over time and influences performance indirectly through a supportive context rather than through direct application of techniques. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Summary of Findings and Implications: Research Approach: The study employed a multi-method approach to explore how contextual ambidexterity impacts performance, testing hypotheses and understanding underlying mechanisms. Key Findings: ○ No Trade-off Between Alignment and Adaptability: Successful units achieve both by integrating them, challenging the traditional structural ambidexterity model. Contextual ambidexterity supports a more flexible approach where both aspects are managed within the same environment. ○ Equifinality: There are multiple paths to achieving ambidexterity. Units in the study demonstrated different methods to balance alignment and adaptability, indicating that various strategies can be effective. ○ Role of Senior Executives: Executives play a critical role in fostering ambidexterity by setting the context and modeling adaptable behavior. Their support is crucial for developing contextual ambidexterity. Practical Implications: Business units should aim to create a balanced environment that supports both discipline and flexibility. Senior leaders need to actively foster this context. Future Research Directions: ○ Diverse Contexts: Explore contextual ambidexterity across different industries and environments. ○ Behavior of Executives: Investigate how executives’ actions contribute to fostering ambidexterity. ○ Methodology: Consider various methods to capture contextual ambidexterity and develop objective performance indicators. Conclusion: Contextual ambidexterity is a promising concept for understanding and managing the balance between efficiency and innovation. Developing a supportive context that integrates both aspects may be key to achieving sustained business performance in dynamic environments. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Major Innovation as a Dynamic Capability: A Systems Approach Introduction Organizational growth is crucial for long-term survival, achieved through both organic growth and radical innovations (RIs). RIs involve high risk and reward, disrupting markets and requiring reconfiguration of value chains. Established firms face internal barriers like core rigidities and challenges in managing RIs. While passionate champions are important, a dynamic capability system is essential for sustainable innovation. This paper explores how firms can develop a sustainable innovation capability using systems theory and dynamic capabilities. Radical Innovation and Major Innovation Concepts: RIs are characterized by significant improvements, new features, or substantial cost reductions. They are often enabled by novel or uniquely combined technologies and can transform existing markets or create new ones. Challenges: Managing RIs involves high uncertainty related to markets, technology, resources, and organizational practices. This requires acquiring new knowledge and departing from existing practices. Criticism and Typology: The radical-incremental dichotomy is criticized for being overly simplistic. Garcia and Calantone propose a three-level typology: ○ Micro (firm) and macro (industry) impacts ○ Technical and market discontinuities ○ Radical and "really new" innovations differ in degree of uncertainty. Systems Theory Definition: Systems theory views a system as a complex of interacting elements where the whole is greater than the sum of its parts. It contrasts with mechanistic views by focusing on integration and interaction. Historical Background: Developed as a counter to mechanistic views, systems theory emphasizes understanding systems as integrated wholes rather than analyzing them by their smallest components. Key Concepts: ○ Integrated Systems: Properties emerge from interactions among parts; changes in one part affect others. ○ Closed Systems: Have clear boundaries and may face entropy unless they fail. ○ Open Systems: Have semi-permeable boundaries, avoiding entropy through interaction with the environment, achieving orderliness through self- regulation. ○ System Properties: Autopoiesis: Self-making and reproduction through continuous adaptation. Homeostasis: Mechanism for maintaining dynamic balance within tolerance limits. Nesting and Networking: Systems are nested within and linked to other systems, meaning their context is relative to interconnected systems. Application to Innovation: Systems theory has limited application in innovation research but offers potential for defining relationships within an innovation management system and its organizational context. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Dynamic Capabilities Theory Foundation: Originates from the resource-based view (RBV), which focuses on a firm’s unique assets and resources as sources of competitive advantage. Emphasizes the need for capabilities to adapt, integrate, and reconfigure these assets in response to environmental changes. Theory Evolution: Initially focused on fixed organizational routines and stable activity patterns, it now highlights flexibility and learning, especially in rapidly changing environments. Application to Major Innovation: ○ High Uncertainty: Traditional codifiable processes may be less effective for managing major innovations due to extreme uncertainty. ○ Market Dynamics: Firms in high-velocity markets must adapt rapidly with less reliance on existing knowledge and more focus on real-time learning and problem-solving. ○ Iterative Learning: Frequent iterations and real-time information are crucial for navigating high uncertainty and developing new capabilities. Challenges: ○ Routine vs. Flexibility: Routines can foster inertia, contrasting with the need for dynamic capabilities in uncertain environments. ○ Skill Sets: Requires unique skills like creativity and complex problem-solving. ○ Sustainability: Dynamic capabilities in high-uncertainty markets are difficult to sustain and can dissipate without continuous practice and vigilance. Focus for Firms: The goal is to build a management system that supports ongoing major innovation capabilities systematically, not just through individual projects or exceptions. Element 1: Identified Organizational Structure Purpose: Designate a team, department, or entity specifically responsible for major innovation (MI). Rationale: ○ Structure for Innovation: Breakthrough innovations need structure and clear reporting. ○ Experience Accumulation: A dedicated group helps build and sustain MI through repeated experiences. ○ Focused Attention: Ensures continuous attention and resources for MI. ○ Cultural and Physical Separation: Allows innovation without hindrance from mainstream processes. ○ Resource Access: Leverages parent company’s resources and reputation. Element 2: Internal and External Interface Mechanisms Purpose: Manage interfaces between the MI system and internal/external constituents to leverage and build competencies. External Linkages: ○ Knowledge Creation: Establish connections with external resources to enhance knowledge and opportunities. ○ Network Enrichment: Frequent interactions with external entities provide richer opportunities. Internal Linkages: ○ Role Communication: Clearly communicate the MI system’s role within the organization. ○ Strategic Alignment: Align MI objectives with the firm’s strategic intent. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 ○ Resource and Network Coupling: Balance loose and tight coupling with mainstream systems. ○ Process Decoupling: Develop distinct processes for MI projects to handle high-uncertainty environments. Element 3: Exploratory Processes Purpose: Use learning-oriented, exploratory processes to manage progress in high- uncertainty environments. Key Aspects: ○ Knowledge Creation: Create new knowledge about tasks and contexts. ○ Variety Enhancement: Encourage diverse experiences and options. ○ Process Flexibility: Use exploratory approaches like hypothesis testing. ○ Market and Technical Development: Explore both market and technology simultaneously. Element 4: Requisite Skills Purpose: Identify and develop skills necessary for managing innovation in high- uncertainty environments. Key Aspects: ○ Broad Skill Sets: Requires multifunctional individuals with entrepreneurial traits. ○ Challenges with Existing Talent: Managers from stable environments may struggle with uncertainty. ○ Mentoring and Coaching: Essential for developing capabilities and managing career risks. ○ Talent Development: Focus on nurturing talent for MI projects. Element 5: Governance and Decision-Making Mechanisms and Criteria Purpose: Ensure effective oversight and adaptability of the MI system. Systems Theory Overview: ○ Autopoiesis: Systems reproduce themselves through adaptation. ○ Single-Loop Learning: Changes enhance the system’s longevity. ○ Double-Loop Learning: Questions and adjusts the system’s objectives. ○ Flow Equilibrium: Systems seek ongoing change and adaptation. Element 5a: Governance Over the Portfolio ○ Objective: Manage and oversee a portfolio of MI projects. ○ Key Considerations: Develop mechanisms for portfolio diversification and management of high-risk projects. Element 5b: Governance Over Specific Projects ○ Objective: Evaluate and oversee individual MI projects. ○ Key Considerations: Use real-options theory and establish specialized governance boards. Element 5c: Governance Over the MI System ○ Objective: Continuously adapt and refine the MI system. ○ Key Considerations: Implement mechanisms for ongoing reflection and reconfiguration. Element 6: Appropriate Metrics Objective: Establish metrics aligned with MI projects’ unique demands. Key Aspects: Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 ○ Differential Metrics and Budgeting: Use metrics suitable for the experimental nature of MI. ○ Types of Metrics: Activity-Based Metrics: Track activities and processes. Performance-Based Metrics: Measure outcomes and strategic impacts. ○ Examples: Assess market connections, technical capabilities, partnerships, and strategic domain shifts. Element 7: Cultural and Leadership Context Objective: Ensure MI is supported by a culture and leadership that value MI efforts. Key Aspects: ○ Integration into Mainstream: MI should be integrated into organizational strategy. ○ Cultural and Leadership Support: Investment in strategic thinking, vision, and capability development. ○ Adaptability to Change: Develop a system-level capability resilient to changing management priorities. Discussion System Identifiability and Interdependence: The MI system must be distinct with a clear structure and interconnected elements. Whole Greater than the Sum of Its Parts: Combined elements should create more impact than individual elements. Interaction with Environment and Homeostasis: The MI system must adapt to its environment, maintaining dynamic equilibrium. Unique Role: The MI system should support the firm’s strategic goals and be integral to its strategy. Implications Understanding MI: The seven elements offer a framework for embedding MI within organizations. Dynamic Capability Theory: Provides models for managing complex, uncertain environments. Practice: Leaders should integrate MI systems into organizational strategy, focusing on transformational routines. Future Research: Explore how elements interact as a whole system to enhance MI capabilities. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Capabilities, cognition, and inertia: evidence from digital imaging Organizational change is challenging, and established firms often fail to adapt to radical technological shifts. Failures are commonly due to issues with existing capabilities and managerial cognition. Capabilities: Firms struggle with new technologies due to reliance on established routines and competencies. When new technologies disrupt these routines or destroy existing assets, adaptation becomes difficult. Managerial Cognition: Managers’ mental models and historical experiences shape their decision-making, often hindering adaptation in rapidly changing environments. This cognitive inertia contributes significantly to organizational failure. Case Study - Polaroid: Polaroid’s difficulties in transitioning to digital imaging, despite early investments, were influenced by its existing business model and managerial beliefs, which delayed digital product commercialization. Summary of Polaroid’s Capabilities and Beliefs (1980): Capabilities (1980): ○ Technological Expertise: Polaroid had unmatched expertise in instant photography, including over 500 patents held by Edwin Land. This strong patent portfolio allowed them to successfully litigate against Kodak in 1976. ○ Manufacturing Strengths: The firm developed significant in-house manufacturing capabilities for both cameras and film, including precision assembly and thin film coating. ○ Distribution Channels: Polaroid effectively used mass market retailers like K-Mart and Wal-Mart, avoiding direct competition with traditional camera stores. Managerial Beliefs (1980): ○ Technology-Driven Approach: Polaroid's philosophy was driven by technological innovation rather than market research. They believed in creating markets through groundbreaking products rather than responding to existing consumer needs. ○ Large-Scale Projects: The management, influenced by Land’s vision, prioritized ambitious, long-term projects, such as the SX-70 instant camera, which was developed over eight years and was a significant commercial success. ○ Physical Print Preference: The belief that customers valued physical instant prints over electronic alternatives led Polaroid to dismiss video camcorders and similar technologies as competitors. ○ Quality Focus: Polaroid was committed to matching or exceeding the quality of traditional 35 mm prints. ○ Razor/Blade Model: The firm operated under the razor/blade model, focusing on making money from film sales rather than camera hardware. This strategy involved lowering camera prices to boost film sales and increasing film prices to maintain profitability. Digital Imaging Search (1981–89): Investments and Developments: Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 ○ Leadership and Funding: CEO Bill McCune led a significant investment in digital imaging, establishing a microelectronics lab and allocating 42% of R&D dollars to digital technologies. ○ PIF Concept: Polaroid developed the Printer In the Field (PIF), a hybrid product combining digital sensors with instant film, leveraging their existing film expertise. ○ Helios System: They also developed Helios, a high-resolution medical imaging system using laser technology, following a similar razor/blade model focused on consumables. ○ Electronic Imaging Products: A series of image recorders were introduced for specialized markets, integrating new electronics with Polaroid's existing chemistry knowledge. Capabilities and Beliefs: ○ Technical Growth: Polaroid advanced its digital imaging technology, including high-resolution sensors and lossless compression algorithms. ○ Management Beliefs: The management continued to emphasize technology over market needs, adhered to the razor/blade business model, and believed strongly in the value of instant prints. Shifts in Approach: ○ Market Focus: By the late 1980s, Polaroid began incorporating market research into product development, marking a shift from its previous technology-centric approach. Refocusing on Digital Imaging (1990–98): Reorganization and Focus: ○ Corporate Changes (1990): Polaroid reorganized, elevating the Electronic Imaging Division and focusing on relevant technologies. Non-core areas like fiber optics were cut, and the Microelectronics Lab was sold. ○ New Leadership: The Electronic Imaging Division saw a major influx of new hires with digital imaging experience, including a new marketing team and project leaders from outside Polaroid. Conflicts and Delays: ○ Business Model Dispute: Tensions arose between senior management, which favored the razor/blade model and was skeptical of digital-only strategies, and the new team, which saw potential in digital imaging without immediate film integration. ○ Development Delays: Disagreements led to delays and difficulties in launching digital products, such as the PDC-2000 camera, which was introduced late and struggled in the market despite its technical accolades. Product Focus and Setbacks: ○ Helios Medical System: The Helios system, a significant project, received continued support but failed commercially due to distribution issues and market misjudgments. ○ Decline and Outsourcing: Under new CEO Gary DiCamillo (1996), Polaroid shifted focus from technology to marketing, decreasing R&D expenditures and outsourcing future digital camera development. Marketing efforts were increased, with new product categories like 'photo-play.' Results and Evolution: Capability and Beliefs by 1998: Polaroid's internal digital imaging expertise diminished, with a shift towards rapid product development and market-driven strategies. Despite still supporting the razor/blade model and valuing high Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 photographic quality, Polaroid's early technological advantages in digital imaging did not translate into market success. Discussion and Conclusions: Objective: This paper explores how capabilities, cognition, and inertia interact within organizations. It extends evolutionary theory by incorporating managerial cognition's impact on the dynamics of organizational capabilities. Key Findings: ○ Technological Capability vs. Managerial Cognition: Polaroid’s Strengths: Despite having advanced technological capabilities, such as a prototype digital camera and the Helios medical imaging system, Polaroid struggled with adapting to the shifting digital imaging market. ○ Managerial Cognition: The company’s failure to leverage its technological advancements was due to deeply ingrained managerial beliefs and cognitive inertia. Polaroid's senior management was resistant to change, clinging to outdated business models and strategic beliefs. ○ Beliefs and Inertia: Technology vs. Business Model: Polaroid's belief in the razor/blade model, which worked well for instant photography, impeded its ability to adapt to digital imaging. New ideas from the Electronic Imaging Division were often dismissed if they did not align with these traditional beliefs. ○ Path Dependency: While Polaroid successfully developed new technologies, its rigid adherence to old business models and strategic beliefs hindered its ability to capitalize on these innovations. ○ Evolution of Beliefs and Management: Managerial Beliefs: The persistence of senior management’s beliefs prevented adaptation, despite the presence of more adaptable managers in the digital imaging division. ○ Leadership Changes: The arrival of new CEO Gary DiCamillo and a fresh management team led to a shift towards rapid, incremental product development and a focus on marketing, but this came too late to reverse previous setbacks. ○ The Role of Hierarchy and Cognitive Adaptability: Hierarchical Impact: Cognitive dissonance between senior management and digital imaging managers highlighted how hierarchical levels can affect cognitive adaptability. The disconnect between the two groups' understanding of the market contributed to Polaroid’s difficulties. ○ Organizational Imprinting: Founder Edwin Land's influence persisted, shaping the company’s capabilities and cognition long after his departure. The historical development of capabilities and cognition, influenced by initial conditions, warrants further research. Implications for Research and Practice: ○ Understanding Cognitive Change: Organizations need to recognize when changes in strategic beliefs are necessary and how to manage such transitions without causing disruptive effects. ○ Managing Multiple Logics: Firms operating in rapidly evolving environments may benefit from being 'ambidextrous,' capable of balancing different strategic approaches simultaneously. ○ Leadership and Turnover: Frequent changes in leadership can drive organizational change, but ongoing turnover might not always be practical. Developing skills to question and adapt strategic beliefs is crucial. ○ Historical Context: Examining how initial conditions and founders influence organizational capabilities and cognition can provide insights into long-term strategic development. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Navigating the Jagged Technological Frontier: Field Experimental Evidence of the Effects of AI on Knowledge Worker Productivity and Quality This research paper investigates how the integration of AI, specifically GPT-4, affects the productivity and quality of knowledge work. The study, conducted with a significant number of consultants from the Boston Consulting Group (BCG), explores the dual role of AI as both an enhancer and a disruptor, depending on the nature of the tasks and the strategies used by professionals to integrate AI into their workflows. Introduction The introduction discusses the rapid advancement of Artificial Intelligence, particularly with the release of Large Language Models (LLMs) like GPT-4, which are capable of performing a wide range of tasks previously thought to be beyond the reach of AI. The authors introduce the concept of the "jagged technological frontier," which describes the uneven landscape of AI capabilities—where AI performs exceptionally well on certain tasks but fails on others that might seem similar in complexity. This frontier poses challenges for knowledge workers who must navigate which tasks to delegate to AI and which to handle manually. The introduction also sets the stage for the paper's central inquiry: understanding how AI can both augment and potentially degrade human performance in high-skill, knowledge-intensive work. Methods The study employed a rigorous experimental design involving 758 individual contributor-level consultants at BCG, which represented about 7% of the company's global consultant cohort. Participants were randomly assigned to one of three experimental conditions: no AI access (control group), access to GPT-4, or access to GPT-4 with additional prompt engineering training (GPT + Overview). The study was conducted in three phases: 1. Initial Phase: Participants completed a demographic and psychological profiling survey, capturing information such as their tenure at BCG, personality traits, and openness to technology. 2. Main Experimental Phase: Participants were tasked with completing a series of realistic consulting tasks. The tasks were divided into two categories: those within the AI’s technological frontier (where AI was expected to perform well) and those outside of it (where AI was expected to struggle). The performance of participants was measured based on both the quality and quantity of the tasks completed. 3. Concluding Phase: Participants were interviewed about their experiences using AI during the tasks, providing qualitative insights into how AI impacted their work processes. The randomized controlled trial approach ensured that the study could rigorously evaluate the causal effects of AI on knowledge worker productivity and quality. Results Quality and Productivity Booster - Inside the Frontier Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 In tasks that fell within the AI's technological frontier—such as creative product innovation and analytical tasks—AI significantly improved both the quality and productivity of the consultants' work. Participants with AI support completed more tasks (an average increase of 12.2%) and did so more quickly (a 25.1% faster completion rate) than those without AI. Additionally, the quality of the output, measured through human grading, was higher by more than 40% for those using AI compared to the control group. Importantly, AI had a leveling effect, particularly benefiting consultants who initially performed below average. For these bottom-half performers, the introduction of AI led to a 43% improvement in their work quality, compared to a 17% improvement for those who were already high performers. This suggests that AI can help reduce performance disparities among workers by providing lower-performing individuals with tools that enhance their capabilities. Quality Disruptor - Outside the Frontier Conversely, when the tasks were outside the AI’s capabilities, AI usage resulted in a significant drop in performance. In these cases, the consultants relying on AI were 19 percentage points less likely to arrive at correct solutions compared to those who did not use AI. These findings highlight the risks associated with over-reliance on AI in contexts where its capabilities are limited. For tasks that require more nuanced understanding or intricate human judgment, AI's involvement can actually hinder performance by leading to incorrect conclusions or misguided recommendations. This outcome underscores the importance of recognizing the limitations of AI and the need for careful human oversight when integrating AI into complex decision-making processes. Navigating the Frontier The study identified two distinct strategies that consultants used to navigate the jagged technological frontier: Centaur Strategy: Named after the mythical creature that is half-human, half-horse, this approach involves a strategic division of labor between humans and AI. Consultants employing this strategy selectively used AI for specific tasks where it excelled, while handling the more complex or ambiguous tasks themselves. This division allowed them to maximize the strengths of both human and machine intelligence. Cyborg Strategy: This approach involves a deeper integration of AI into the workflow, where consultants and AI work in tandem at a granular level. Cyborg users seamlessly integrate AI assistance into almost every aspect of the task, constantly interacting with the AI to refine and improve their work. This method allows for a more dynamic and fluid collaboration between human and AI capabilities. The results showed that while both strategies could be effective, the choice of strategy depended on the nature of the tasks and the individual's comfort and skill in working with AI. Discussion The discussion elaborates on the implications of the findings for both individuals and organizations. The study highlights the significant potential of AI to enhance productivity and quality in knowledge work, especially when tasks are within the AI's capabilities. However, it Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 also cautions against the risks of over-reliance on AI, particularly for tasks that fall outside the technological frontier, where AI can lead to reduced accuracy and performance. The authors suggest that organizations need to carefully consider how they integrate AI into their workflows. It is not enough to simply adopt AI tools; organizations must also develop strategies to ensure that AI is used effectively and that workers are trained to understand the limitations of these technologies. The study also raises important questions about the future of work, particularly how the integration of AI might change the nature of knowledge work, the skills required for success, and the potential impacts on workforce development. The findings also suggest that organizations should think about AI not as a replacement for human workers but as a tool that can complement and enhance human capabilities when used appropriately. However, the potential for AI to create homogenized outputs and the risk of diminishing the diversity of ideas in creative processes are areas of concern that need further exploration. The authors conclude by emphasizing the need for ongoing research into the best practices for integrating AI into high-end knowledge work. They call for a deeper understanding of how to navigate the jagged technological frontier and optimize the collaboration between human workers and AI. Conclusion The paper concludes that AI, particularly in the form of LLMs like GPT-4, has the potential to dramatically improve productivity and quality in knowledge work. However, its benefits are highly context-dependent, and the effectiveness of AI integration hinges on workers' ability to strategically navigate the jagged frontier of AI capabilities. The study provides a nuanced perspective on the role of AI in the modern workplace, highlighting both its transformative potential and the challenges it poses. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 The Contingent Effects of Differentiation and Integration on Corporate Entrepreneurship This study examines how structural differentiation and integration influence corporate entrepreneurship (CE) within organizations. It also explores the moderating effects of organizational size and environmental dynamism on these relationships, providing insights into how firms can balance differentiation and integration to foster entrepreneurship. The study is grounded in structural contingency theory and emphasizes the importance of understanding when integration helps or hinders CE. Introduction Corporate entrepreneurship (CE) refers to a firm's efforts in innovation, venturing, and strategic renewal. It typically requires a different organizational structure compared to mainstream business activities. Structural differentiation, which creates autonomy for entrepreneurial units, is commonly used to promote CE. However, differentiation introduces coordination problems, such as knowledge transfer issues and agency risks, which can reduce CE effectiveness. The study suggests that integration mechanisms may mitigate these problems, but it is unclear how much integration is needed to strike the right balance. The study builds on structural contingency theory, proposing that the effectiveness of differentiation and integration is influenced by organizational size and environmental dynamism. It also highlights three key integration mechanisms: shared vision, senior team social integration, and cross-functional interfaces, which are examined for their ability to facilitate CE in differentiated organizations. Theoretical Background and Model Traditionally, research on CE has focused on new venture divisions, where high autonomy is essential for entrepreneurial success. However, recent studies argue that autonomy is not always necessary, and organizational structures can vary widely depending on the goals of CE. Structural differentiation refers to the way an organization divides its activities into separate units or departments, each with its own specific tasks, responsibilities, and goals. In simple terms, it's like creating different "teams" within a company, where each team focuses on a different type of work. For example, imagine a company that has one department focused on creating new, innovative products (an exploratory unit), and another department focused on improving and maintaining existing products (an exploitative unit). These two departments might operate very differently because their goals are not the same. The innovation team needs freedom to experiment and take risks, while the maintenance team needs to focus on efficiency and reliability. The idea behind structural differentiation is to allow each unit to specialize in what they do best. This can be particularly important for corporate entrepreneurship (CE), where companies want to encourage new ideas and innovations while still running their core business efficiently. However, structural differentiation creates challenges. The different teams or units may have trouble communicating or working together because they are focused on different goals. This can lead to problems like lack of coordination, inefficiency, or even conflicts between units. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 That's where integration mechanisms (like shared goals or cross-functional teams) come in—to help the different units stay aligned and work together, even though they are focused on different tasks. In summary, structural differentiation helps organizations break down their operations into specialized parts, promoting innovation and efficiency, but it also requires careful management to ensure that the different parts of the organization can still collaborate effectively. Integration mechanisms help address these issues by facilitating communication and coordination between units. However, integration also carries costs, such as slowing decision-making and reducing flexibility, which are crucial for CE. The study focuses on three integration mechanisms: Shared Vision: The extent to which members of an organization share common goals and aspirations, facilitating knowledge transfer and reducing agency conflicts. Senior Team Social Integration: The degree of social cohesion among top management teams, which can help coordinate actions across units. Cross-Functional Interfaces: Formal mechanisms like task forces and liaison roles that connect different units and promote knowledge sharing. Hypotheses Organizational Size 1. Shared Vision and Organizational Size: Larger organizations are more complex and diverse, making a shared vision more necessary to facilitate communication and alignment across differentiated units. In smaller organizations, where employees have closer contact, a shared vision is less critical for promoting CE. Hypothesis 1A: The positive effect of shared vision on the differentiation-CE relationship is stronger in larger organizations. 2. Senior Team Social Integration and Organizational Size: In larger organizations, senior teams play a critical role in resolving conflicts and sharing knowledge across differentiated units. In smaller organizations, where members are more closely connected, senior team integration is less important for promoting CE. Hypothesis 1B: The positive effect of senior team social integration on the differentiation-CE relationship is stronger in larger organizations. 3. Cross-Functional Interfaces and Organizational Size: Larger organizations benefit more from cross-functional interfaces because of their complexity and need for formal coordination. In smaller organizations, where informal communication is easier, cross-functional interfaces may add unnecessary complexity. Hypothesis 1C: The positive effect of cross-functional interfaces on the differentiation-CE relationship is stronger in larger organizations. Environmental Dynamism 1. Shared Vision and Environmental Dynamism: In dynamic environments, where the pace of change is fast, a shared vision may constrain creativity by imposing rigid norms. Differentiated units need flexibility to respond to changes, and a strong shared vision may limit their ability to innovate. Hypothesis 2A: The positive effect of shared vision on the differentiation-CE relationship is weaker in dynamic environments. 2. Senior Team Social Integration and Environmental Dynamism: In dynamic environments, senior team integration may hinder flexibility by slowing down decision-making and creating a focus on existing business activities rather than new Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 opportunities. Hypothesis 2B: The positive effect of senior team social integration on the differentiation-CE relationship is weaker in dynamic environments. 3. Cross-Functional Interfaces and Environmental Dynamism: In stable environments, cross-functional interfaces promote knowledge sharing and innovation. However, in dynamic environments, these interfaces may reduce flexibility by channeling resources into established processes, slowing the response to changes. Hypothesis 2C: The positive effect of cross-functional interfaces on the differentiation-CE relationship is weaker in dynamic environments. Data and Methods The study used data from a sample of 240 firms across various industries in the Netherlands. The firms were surveyed twice, with time separation between the collection of independent and dependent variables, to reduce bias. The key variables were measured using multi-item scales from existing literature, including measures for corporate entrepreneurship, structural differentiation, integration mechanisms, organizational size, and environmental dynamism. Results The analysis supported most of the hypotheses. Organizational Size: Shared vision and cross-functional interfaces had a more positive effect on CE in larger organizations. However, senior team social integration showed mixed results, where it was beneficial in larger firms but sometimes less so in smaller ones. Environmental Dynamism: As predicted, the benefits of integration mechanisms like shared vision and cross-functional interfaces were diminished in dynamic environments. In such contexts, these mechanisms tended to slow down decision- making and reduce flexibility, which are essential for entrepreneurship in fast- changing environments. Discussion The findings highlight the importance of balancing differentiation and integration to foster corporate entrepreneurship. While differentiation allows units to innovate freely, integration is necessary to coordinate activities and align goals across the organization. However, the right balance depends on the firm's size and the stability of its environment. In larger organizations, where complexity and specialization are high, integration mechanisms like shared vision and cross-functional interfaces are crucial for ensuring that differentiated units work together effectively. In smaller organizations, informal communication and closer personal connections reduce the need for these mechanisms. In dynamic environments, firms must be cautious about over-integrating their differentiated units, as too much integration can slow down decision-making and reduce the flexibility needed for innovation. Conclusion This study provides important insights into how firms can structure their organizations to promote corporate entrepreneurship. It shows that the effects of differentiation and integration on CE are contingent on organizational size and environmental dynamism. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Managers need to carefully consider these factors when designing their organizational structures to maximize innovation and entrepreneurial activity. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Organizing for Radical Innovation: An Exploratory Study of the Structural Aspects of Radical Innovation (RI) Management Systems in Large Established Firms This study by Gina Colarelli O’Connor and Richard DeMartino explores how large, established firms manage radical innovation (RI)—which involves the development of entirely new products, technologies, or markets that can significantly transform industries. The research focuses on the structures and systems firms use to enable radical innovation repeatedly, rather than just as a one-time event. The study looks at 12 large firms over three years, examining how they organize for RI and the challenges they face in doing so. Introduction Radical innovation is seen as essential for large firms seeking to stay competitive in the fast- moving global economy. Unlike incremental innovation, which makes small improvements to existing products or services, radical innovation creates entirely new markets or product categories. However, radical innovation is difficult to manage because it involves high uncertainty, long time horizons, and significant investment. This study looks at the management systems these firms develop to enable radical innovation consistently. Rather than focusing on individual innovation projects, the research examines how these firms build the capacity to engage in radical innovation continuously. Radical Innovation and Organizational Growth Large organizations typically focus on incremental innovation because their established processes are geared toward efficiency and improving existing products. However, this focus can become a core rigidity, where the same processes that make a company efficient also make it resistant to change. Radical innovation requires breaking away from these established processes, which can be risky and resource-intensive. Firms are increasingly recognizing that radical innovation is critical for long-term survival and growth. They are seeking ways to commercialize radical innovations and turn them into new business lines that can drive growth, even though such projects often take many years to yield financial returns. Organizational Structures for Radical Innovation One of the main challenges in organizing for radical innovation is deciding how to structure the company to support innovation while maintaining the core business. Many firms set up dedicated groups or new business divisions responsible for managing radical innovation separately from the core business. These groups are designed to provide the flexibility and creativity needed for radical innovation without being constrained by the more rigid structures of the main organization. The study identifies different models of organizational structures used by the firms in the sample: Discovery–Incubation–Acceleration (DIA) Model: This model divides the innovation process into three phases—discovery (idea generation), incubation (developing the concept), and acceleration (bringing the innovation to market). Each phase requires different skills and structures. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Corporate Venture Units: Some firms establish corporate venture units that function like internal startups, giving teams the autonomy and resources to develop radical innovations. Embedded Innovation Groups: Other firms embed radical innovation groups within their core divisions, allowing them to leverage existing resources while maintaining some level of separation to protect the innovation process. Building Radical Innovation Capabilities The research emphasizes that successful radical innovation requires more than just a few successful projects—it requires building a capability for innovation. This means creating systems that allow firms to engage in radical innovation repeatedly over time. The study identifies three key competencies firms must develop for radical innovation: 1. Technological Competency: The ability to develop or access the necessary technologies for radical innovation. 2. Market Competency: Understanding and identifying new market opportunities for radical innovations. 3. Organizational Competency: Developing the organizational structures and processes that allow the firm to manage and commercialize radical innovations. Challenges and Transition Issues One of the major challenges in managing radical innovation is dealing with the internal resistance to change, often referred to as organizational antibodies. These are the forces within the company that resist anything that threatens the status quo. Firms need strong leadership and dedicated teams to overcome these barriers and ensure that innovation projects can move forward. Another challenge is the transition from innovation to commercialization. Many radical innovation projects fail not because the technology is lacking, but because the company is unable to effectively transition the project from the research phase into a profitable business. The study highlights the importance of having clear governance and decision-making structures to guide this transition. Senior Leadership and Organizational Ambidexterity Organizational ambidexterity refers to the ability of a company to balance the exploitation of existing products and markets with the exploration of new ones. This is especially important for radical innovation, as firms need to continue operating their core business while also investing in new, unproven innovations. Senior leadership plays a critical role in supporting radical innovation by providing the necessary resources, protecting innovation teams from internal pressures, and fostering a culture of experimentation and learning. Leaders must also ensure that the innovation process aligns with the overall strategy of the company. Conclusion The study concludes that there is no one-size-fits-all approach to organizing for radical innovation. Different firms adopt different structures depending on their specific needs and circumstances. However, the research highlights the importance of having dedicated groups or processes to manage radical innovation, as well as the need for strong leadership to support these efforts. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Ultimately, radical innovation is about building a long-term capability within the organization. It requires developing the right mix of structures, processes, and culture to enable firms to continually engage in breakthrough innovations that can transform their industries. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Organizational Ambidexterity: Past, Present, and Future Introduction Organizational ambidexterity refers to an organization’s ability to balance two crucial activities: exploitation and exploration. Exploitation involves improving and expanding on existing products, technologies, and processes, while exploration focuses on innovation, developing new ideas, and entering new markets. The balance of these two approaches is critical for long-term success. This study reviews the state of research on organizational ambidexterity, looking at both theoretical developments and empirical findings over the past 15 years. The Past: Origins of the Construct The idea of ambidexterity dates back to organizational research in the mid-20th century. Early studies showed that firms in stable environments tended to develop mechanistic structures—rigid, hierarchical systems focused on efficiency. In contrast, firms in more dynamic environments adopted organic structures, which are more flexible, encouraging creativity and adaptability. James March (1991) contributed to the concept by highlighting the tension between exploitation and exploration. Exploitation is about efficiency, certainty, and maximizing current resources, while exploration is about searching for new opportunities, taking risks, and innovating. Firms need to balance both to survive long-term. However, there is often a bias toward exploitation because it provides more immediate results, while exploration is riskier and often less efficient in the short term. The term "ambidexterity" was first introduced by Robert Duncan (1976), who suggested that firms need to be able to switch between different structures for exploitation and exploration depending on the environment. O'Reilly and Tushman later argued that successful firms need to pursue both simultaneously, leading to the concept of organizational ambidexterity—the ability to explore and exploit at the same time. The Present: What Does the Evidence Show? The research overwhelmingly shows that organizational ambidexterity is positively associated with firm performance. Ambidextrous firms are more innovative, have higher sales growth, and are more likely to survive in the long term. Studies have shown that ambidexterity leads to benefits such as: Innovation: Firms that balance exploration and exploitation tend to be more innovative, as they are constantly developing new products while improving existing ones. Firm Growth: Ambidexterity has been linked to both short-term and long-term growth. Firms that successfully balance these activities can adapt to changes in the market while remaining efficient in their core business. Survival: Especially in uncertain or dynamic environments, ambidextrous firms are more resilient, as they can pivot to new opportunities while maintaining their current operations. How is Ambidexterity Achieved? There are three primary ways in which organizations achieve ambidexterity: Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 1. Sequential Ambidexterity: This approach involves switching between periods of exploitation and exploration. For example, a firm may focus on improving existing products during stable times, then shift its focus to exploring new markets when the environment changes. This method is more common in industries with slower rates of change. 2. Simultaneous or Structural Ambidexterity: In this approach, organizations create separate units or teams for exploration and exploitation. For example, a company may have a core team focused on maintaining the current business while setting up a separate innovation team to explore new ideas. These units operate independently but are aligned with the same overall strategy. Leadership plays a critical role in managing the tensions between these units, ensuring that both exploitation and exploration are pursued simultaneously. 3. Contextual Ambidexterity: Here, the emphasis is on individuals within the organization. Rather than creating separate units, the firm fosters a culture in which employees are encouraged to engage in both exploitative and explorative activities. This requires a strong organizational context that supports flexibility and creativity while maintaining discipline and alignment with company goals. Challenges in Achieving Ambidexterity One of the major challenges of ambidexterity is managing the tension between exploitation and exploration. Exploitation focuses on improving efficiency and leveraging current assets, while exploration requires a more flexible approach, encouraging experimentation and risk- taking. Firms often struggle to balance these two conflicting priorities because the systems that work for one can inhibit the other. For example, a focus on efficiency may stifle the creativity needed for innovation. Another challenge is organizational resistance. Employees or managers may resist changes that prioritize exploration, as this can disrupt established processes and create uncertainty. Overcoming this resistance often requires strong leadership and a clear vision of how exploration and exploitation fit into the company’s long-term strategy. The Future: Issues to be Resolved While much progress has been made in understanding ambidexterity, there are still several areas where more research is needed: Definitional Clarity: There is still some ambiguity about what exactly is meant by exploration and exploitation. Different studies use these terms in different ways, leading to potential confusion. For example, "exploration" might mean incremental improvements in some contexts, while in others it refers to radical innovation. Future research needs to refine these definitions. Leadership and Ambidexterity: More work is needed to understand the role of leadership in managing ambidextrous organizations. How do leaders balance the conflicting demands of exploration and exploitation, and what leadership styles are most effective in ambidextrous firms? Timing and Context: The timing of when to pursue exploration and exploitation is also an open question. In what situations is sequential ambidexterity more appropriate, and when should firms aim for structural or contextual ambidexterity? Additionally, the external environment—such as the rate of technological change or market competition—can influence which form of ambidexterity is most effective. Conclusion Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Organizational ambidexterity is essential for firms seeking long-term success. It allows them to improve and optimize their existing operations while also exploring new opportunities for growth and innovation. However, achieving ambidexterity is complex, requiring careful balance and strong leadership. As the concept continues to evolve, future research will need to address the challenges of defining, measuring, and implementing ambidexterity in different organizational contexts. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Top Management’s Attention to DiscontinuousTechnological Change: Corporate Venture Capital As an Alert Mechanism Introduction The paper investigates how top managers allocate attention to technological discontinuities —radical changes that disrupt industries and challenge existing business models. Such changes are typically initiated by startups backed by venture capital, and incumbents often struggle to respond effectively due to cognitive biases and organizational inertia. The research extends the attention-based view (ABV) of the firm by analyzing how external relationships, particularly corporate venture capital (CVC) ties, influence managerial attention to these technological disruptions. The study argues that homophilous (relationships with similar firms) and heterophilous (relationships with different firms, such as VCs) interorganizational ties play critical roles in shaping the attention of top management toward technological shifts. Technological Discontinuities and Firm Attention Incumbents and Technological Discontinuities Technological discontinuities represent a significant shift from one dominant technology to another, disrupting industries by changing competitive dynamics, market structures, and product development. Incumbent firms, or well-established firms in an industry, are particularly vulnerable during such periods. Despite having the resources to innovate, incumbents often fail to adapt because they are entrenched in existing technologies and cognitive frameworks. This failure is due to several factors: path dependency, organizational inertia, and the reliance on outdated knowledge structures that no longer apply in the face of new technologies. These discontinuities often occur at the periphery of industries, outside the typical focus of incumbents. As a result, incumbents may not recognize the importance of these new technologies early enough to respond effectively, which can lead to a decline in their competitive position. The difficulty lies in adapting the firm’s strategy and operations to emerging technologies that challenge their established routines and practices. Managerial Attention to Discontinuities Managerial attention is central to how firms respond to technological change. The attention- based view (ABV) of the firm posits that where and how top management focuses its attention directly influences organizational action. In the context of technological discontinuities, ABV suggests that incumbent firms often fail to recognize new technologies because their attention is directed towards familiar, incremental innovations rather than radical shifts. This happens due to the structure of their decision-making processes, organizational routines, and the cognitive frames managers use to interpret the business environment. The ABV highlights three core principles: Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 1. Focus of Attention: Managers act on the issues they pay attention to, so if their focus remains on established technologies, they may miss opportunities presented by new technologies. 2. Situated Attention: The context within which attention occurs influences what managers see as relevant. Organizational structure and routines often steer attention toward familiar areas, making it difficult to shift focus to emerging disruptions. 3. Distributed Attention: Attention is shaped by the firm’s internal and external environments. External factors, such as relationships with partners, play a role in directing attention toward or away from discontinuities. Interorganizational Relationships and Managerial Attention Homophilous Relationships with Industry Peers and Top Management’s Attention to Discontinuities Homophilous relationships refer to partnerships formed with similar firms, such as industry peers. These relationships are common in industries where firms collaborate through alliances, joint ventures, or research partnerships. While these collaborations can help firms innovate incrementally, they often reinforce existing industry norms and cognitive biases. Homophilous ties can limit exposure to disruptive innovations because the firms involved tend to share the same mental models, resources, and knowledge structures. This leads to a collective myopia, where all the firms in a network fail to recognize or act upon technological discontinuities. Furthermore, incumbents within the same industry may be reluctant to share information about emerging technologies that could undermine their competitive advantage. As a result, homophilous relationships may inhibit timely attention to discontinuities, as firms focus on improving existing technologies rather than exploring disruptive alternatives. Status, Homophily, and Top Management’s Attention to Discontinuities High-status firms often have a greater influence on their industry peers, and their involvement in homophilous relationships can further delay recognition of technological shifts. High-status incumbents may downplay the importance of discontinuities because they have a vested interest in maintaining the dominance of the existing technology that has contributed to their success. Other firms in the network are likely to follow their lead, thus reinforcing the status quo. The influence of high-status partners in homophilous relationships creates a feedback loop, where firms rely on trusted, established partners for information and validation. This can blind them to the emergence of new technologies developed by startups or fringe players outside their immediate networks. Heterophilous Interorganizational Relationships with VCs and Attention to Discontinuities Heterophilous relationships, on the other hand, expose firms to different perspectives and information sources, which are essential for recognizing and responding to technological discontinuities. Venture capital firms (VCs), particularly those investing in startups, are more likely to be attuned to emerging technologies. These relationships can be especially valuable for incumbent firms, as they provide access to insights about disruptive innovations that may not be evident within the industry itself. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Corporate venture capital (CVC) allows incumbents to establish ties with VCs and startups by co-investing in innovative ventures. These relationships connect incumbent firms to the cutting-edge developments that occur outside their traditional networks. Startups, being more agile and less constrained by legacy systems, are often the first to experiment with new technologies. By engaging with VCs through CVC, incumbents can gain early access to information about these emerging trends. Bridging to Networks of High-Status VCs: Status, Heterophily, and Attention to Discontinuities Bridging to networks of high-status VCs is particularly valuable for directing managerial attention to technological discontinuities. High-status VCs often have superior information about emerging technologies due to their central position in innovation networks. Their involvement provides incumbents with both credibility and valuable knowledge, increasing the likelihood that top managers will pay attention to the technological changes identified by these VCs. VCs with high status in the venture capital community are seen as experts in evaluating and commercializing disruptive technologies. When incumbents co-invest with these VCs, they not only gain access to innovative ventures but also benefit from the status and legitimacy that come with these relationships. This increases the probability that incumbents will recognize the importance of discontinuities and act upon them. Methods The research methodology is a longitudinal study spanning from 1989 to 2000, focusing on four sectors within the U.S. information and communication technology (ICT) industries. The study investigates how alliances and venture capital networks influence top management's attention to technological discontinuities, such as the Internet and wireless technologies. The dataset includes information on corporate venture capital investments, alliances, joint ventures, and annual reports. The study uses event history analysis and fixed-effects panel regression models to explore the timing of top management’s attention to technological shifts. The dependent variable is the timing of formal recognition of technological discontinuities, measured by the first mention of these technologies in annual reports and SEC filings. Independent variables include measures of homophilous and heterophilous interorganizational ties, partner status, and the centrality of venture capital firms in syndication networks. Discussion Technological Discontinuities and Top Management’s Attention The findings indicate that heterophilous relationships, especially those involving high-status VCs, have a significant positive impact on the timely recognition of technological discontinuities. In contrast, homophilous relationships with industry peers, particularly those with high-status incumbents, delay managerial attention to disruptive innovations. The results support the hypothesis that external networks can either enhance or hinder a firm’s ability to adapt to technological change, depending on the nature of the relationships. Attention-Based View of the Firm Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 The study extends the attention-based view (ABV) of the firm by highlighting the importance of external, interorganizational relationships in shaping managerial attention. It demonstrates that top management’s attention is not solely determined by internal processes but also by the external networks in which a firm is embedded. By engaging with diverse partners, firms can overcome cognitive biases and organizational inertia, which often limit their ability to recognize disruptive technologies. Interorganizational Networks Interorganizational networks, particularly those involving VCs, play a crucial role in guiding attention to technological discontinuities. Heterophilous networks expose firms to new ideas and innovations that may be overlooked within homophilous networks. High-status partners within these networks provide credibility and legitimacy, increasing the likelihood that firms will act on emerging opportunities. Corporate Venture Capital Corporate venture capital (CVC) serves as an important mechanism for directing top management’s attention to technological discontinuities. By investing alongside VCs, incumbents gain access to new technologies and business models that may not be visible within their traditional networks. CVC investments allow firms to monitor and engage with startups, providing an early warning system for technological shifts. Managerial Implications The findings suggest that firms should actively cultivate heterophilous relationships, particularly with high-status VCs, to enhance their ability to recognize and respond to technological discontinuities. Managers should be aware of the limitations of homophilous relationships, which can reinforce cognitive biases and delay recognition of emerging trends. By strategically building external networks, firms can improve their adaptability and maintain a competitive edge in rapidly evolving markets. Limitations The study is limited by its focus on four ICT industries in the U.S. from 1989 to 2000, which may affect the generalizability of the findings. Future research could examine other industries and geographic regions to validate the results. Additionally, the study relies on publicly available documents to measure managerial attention, which may not capture all aspects of attention allocation within firms. Directions for Future Research Future research could explore the mechanisms through which different types of interorganizational relationships influence managerial attention. Studies could also investigate how different industries or regions experience technological discontinuities and the role of CVC in facilitating adaptation. Further exploration of the role of status in interorganizational networks could provide deeper insights into how firms navigate technological change. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Managing Strategic Contradictions: A Top Management Model for Managing Innovation Streams Introduction The paper examines how top management teams navigate the challenge of balancing two fundamentally opposing strategies: exploration (pursuing innovation and new opportunities) and exploitation (maximizing efficiency and refining existing capabilities). These strategies are contradictory yet essential for long-term organizational success. Exploration focuses on developing new products, entering new markets, or discovering new processes, while exploitation emphasizes refining existing products, optimizing processes, and increasing efficiency. The authors suggest that organizations must embrace both strategies simultaneously to maintain adaptability and competitiveness. This duality poses a strategic contradiction, as exploration requires flexibility, risk-taking, and openness to experimentation, while exploitation demands focus, discipline, and cost-efficiency. The paper introduces the concept of paradoxical cognition, which allows top management to accept and manage these contradictions, rather than seeing them as a binary choice. This paradoxical thinking involves separating and integrating these conflicting agendas to ensure that both strategies thrive. On Exploring and Exploiting: Innovation Streams, Organizational Outcomes, and Ambidextrous Designs Innovation streams create tension because exploration and exploitation are linked to different organizational structures, mindsets, and resource allocation strategies. Firms that focus too heavily on exploitation risk becoming stagnant, unable to adapt to disruptive technological changes. Conversely, firms that prioritize exploration might fail to achieve operational efficiency and scale, leading to unsustainable costs and inefficiencies. The authors introduce the concept of ambidextrous designs, organizational structures that allow firms to pursue both exploration and exploitation by creating separate units or divisions for each. These units have distinct goals, processes, and cultures, yet top management integrates them, ensuring that the company balances short-term efficiency with long-term innovation. Ambidextrous organizations are better equipped to navigate the contradictions inherent in balancing innovation with ongoing operational success. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Top Management Teams, Team Outcomes, and Barriers to Exploring and Exploiting Top management teams (TMTs) play a critical role in determining how an organization balances exploration and exploitation. They must make strategic decisions about resource allocation, organizational structure, and process design that support both activities. However, there are significant barriers to achieving this balance. One major barrier is structural inertia, which refers to the resistance to change embedded within an organization’s structure and culture. This inertia makes it difficult for organizations to pivot towards exploration when they are entrenched in their existing capabilities (exploitation). Another barrier is cognitive bias, where managers tend to favor exploitation over exploration because the former offers more immediate and tangible returns, while the latter involves uncertainty and risk. Risk aversion is another key psychological factor that hampers exploration. Managers are often more comfortable supporting projects that ensure short-term gains rather than pursuing risky innovations that could fail. These biases create a situation where even when firms intend to innovate, they may inadvertently focus their resources and attention on incremental improvements, missing the opportunity for breakthrough innovations. The authors argue that overcoming these barriers is essential for creating ambidextrous firms that can balance both strategies. Managing Strategic Contradictions: Paradoxical Cognition To manage the inherent contradictions between exploration and exploitation, top management teams must adopt paradoxical cognition. This concept refers to the ability to hold and embrace two contradictory ideas simultaneously, without choosing one over the other. Rather than viewing exploration and exploitation as mutually exclusive, paradoxical cognition encourages managers to see both as equally essential, enabling firms to balance them effectively. Paradoxical cognition involves two key processes: 1. Differentiation: This process requires recognizing the distinct needs, strategies, and organizational structures associated with exploration and exploitation. For example, exploration often requires decentralized decision-making, autonomy, and a culture of experimentation, whereas exploitation thrives under centralized control, discipline, and efficiency. Differentiation allows managers to allocate resources, design processes, and structure their teams in ways that recognize these differences. 2. Integration: While differentiation acknowledges the distinct requirements of exploration and exploitation, integration focuses on finding synergies between them. Integration involves looking for ways that exploration can inform and improve Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 exploitation, and vice versa. For instance, insights gained from exploratory projects can sometimes be applied to improve existing products, or established processes from exploitation can be used to accelerate innovation. By adopting a paradoxical frame, managers can balance the tension between the two strategies and ensure that their organization remains adaptable and competitive over time. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Teamcentric and Leadercentric Models of Embracing Paradoxical Cognition Antecedents of Leadercentric Teams In leadercentric teams, the primary responsibility for balancing exploration and exploitation rests with the leader (often the CEO or a senior executive). The leader acts as the integrator who ensures that both strategies are pursued effectively, often through a combination of directive leadership and selective delegation. Distinct Roles, Goals, and Rewards: In these teams, specific members are assigned distinct roles, with some focused on exploration and others on exploitation. This clear division of responsibilities ensures that both strategies are adequately supported. Supportive Integrator: The team leader plays the role of a supportive integrator, overseeing both strategies and making sure that they align with the organization's broader objectives. The leader ensures that the tension between exploration and exploitation is managed without overwhelming the team. High-Quality Leader-Member Interactions, but Limited Member-Member Interactions: In leadercentric teams, much of the interaction happens between the leader and individual team members, rather than among team members themselves. This helps avoid conflicts that might arise from competing interests and allows the leader to manage the tension between strategies. Leader Coaching to Reinforce Differentiation: The leader provides coaching to the team, reinforcing the need for differentiation between exploration and exploitation. The leader ensures that each strategy has its own space and support within the organization, preventing one from overwhelming the other. Antecedents of Teamcentric Teams In teamcentric teams, the responsibility for balancing exploration and exploitation is shared among all team members. These teams operate collaboratively, with each member contributing to both strategies and integrating their insights collectively. Roles, Goals, and Rewards at Multiple Levels of Analysis: Team members in teamcentric structures often wear multiple hats, balancing exploration and Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 exploitation responsibilities. Their roles, goals, and rewards are aligned across multiple levels, encouraging collaboration and integration. Frequent Team Interactions: These teams engage in frequent and high-quality interactions, sharing information and ideas that contribute to both strategies. The collaborative nature of teamcentric teams allows for better integration of the two strategies and encourages creative problem-solving. Leader Coaching to Facilitate Integration: In teamcentric teams, the leader’s role shifts from directive oversight to facilitation. The leader coaches team members to engage in integration, encouraging collaboration and helping them manage the inherent contradictions between exploration and exploitation. Conclusion The paper concludes that managing strategic contradictions is critical for organizations seeking long-term success. Both leadercentric and teamcentric models can be effective depending on the organization’s context and the nature of the challenges it faces. The key to success lies in fostering paradoxical cognition within top management teams, enabling them to embrace rather than avoid the contradictions between exploration and exploitation. By adopting a paradoxical frame, top management can develop ambidextrous designs that allow for both the refinement of existing capabilities and the pursuit of new opportunities. The paper suggests that future research should explore how different organizational contexts and leadership styles impact the effectiveness of these models in managing strategic contradictions. Ultimately, the ability to manage these contradictions is seen as a critical factor in determining an organization's ability to innovate, remain efficient, and adapt to changing markets over time. The study highlights the importance of creating flexible, adaptive organizations that can simultaneously exploit their current strengths while exploring new opportunities for growth. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 Top management team demographic-faultlines strength and strategic change: What role does environmental dynamism play? Introduction The study investigates the effects of top management team (TMT) composition on strategic change in organizations. Specifically, it explores the concept of demographic faultlines— subgroups that form within teams based on demographic similarities such as age, gender, education, functional background, and tenure. Drawing from upper echelons theory, the study posits that these faultlines can influence how effectively a TMT can drive strategic changes in a company. The researchers also examine how the external environment, particularly environmental dynamism (the speed and unpredictability of changes in an industry), can moderate these effects. The goal is to understand whether faultlines hinder or foster strategic change and how environmental factors play a role in this dynamic. Theory and Hypotheses Demographic faultlines within TMTs: Faultlines are defined as hypothetical dividing lines that split a team into smaller subgroups based on shared characteristics. These characteristics can be demographic (e.g., age, gender, educational level) or functional (e.g., job roles, tenure). In this context, the faultline theory builds on social identity theory, which suggests that individuals tend to align themselves with others who share similar attributes. This can lead to subgroup formation within TMTs, potentially affecting team cohesion and decision-making processes. The strength of these faultlines depends on the degree of alignment between members across multiple attributes. For instance, if most of the males in a TMT are also similar in age and educational background, while females differ significantly, a strong faultline based on gender would emerge. Demographic faultlines within TMTs can lead to conflicts and communication breakdowns, as subgroup members identify more closely with their in-group and less with out-group members. This creates challenges for the TMT’s ability to function as a cohesive decision-making unit. Relationship-related and task-related faultline-strength effects on strategic change: The study differentiates between relationship-related faultlines and task-related faultlines: ○ Relationship-related faultlines are based on socio-cultural characteristics like gender, age, and educational level, which tend to be visually or socially salient. These characteristics can create subgroups with differing societal values, beliefs, and social experiences, often leading to tension and conflict within the team. The study hypothesizes that stronger relationship-related faultlines hinder the TMT’s ability to implement strategic change because they reduce communication and trust between subgroups, making it difficult to reach consensus on major strategic decisions. ○ Task-related faultlines are based on attributes such as functional background and tenure, which are tied to specific skills, knowledge, and expertise. These faultlines are seen as potentially beneficial, as they encourage the formation of subgroups with specialized knowledge. These subgroups may foster better problem-solving, innovation, and strategic decision-making by leveraging their diverse expertise. The study hypothesizes that stronger task-related faultlines positively influence strategic change because they promote the sharing of diverse perspectives and foster collaboration across subgroups. Gedownload door Roos Snels ([email protected]) lOMoARcPSD|7864644 This dual effect of faultlines—negative for relationship-related attributes and positive for task-related attributes—highlights the "double-edged sword" nature of diversity in teams. While diversity can bring new perspectives and skills, it can also create divisions that hinder collaboration and decision-making. The moderating role of environmental dynamism: Environmental dynamism refers to the degree of change and unpredictability in an industry. In highly dynamic environments, firms face constant shifts in market conditions, technology, and customer preferences. The study posits that such environments may alter the effects of faultlines on strategic change: ○ In dynamic environments, the urgency for firms to adapt quickly may reduce the negative impact of relationship-related faultlines. When the external environment is unpredictable, TMT members are likely to focus more on collective survival and success, rather than interpersonal differences, which may mitigate the divisive effects of socio-cultural differences. ○ At the same time, dynamic environments may enhance the positive effects of task-related faultlines, as the need for rapid innovation and problem-solving increases. The diverse expertise within task-based subgroups can provide the knowledge and creativity needed to adapt to fast-changing conditions, thus fostering more effective strategic changes. In contrast, stable environments (with little change or unpredictability) may exacerbate the negative effects of relationship-related faultlines because the urgency to collaborate is lower, allowing divisions to persist. Likewise, the benefits of task- related faultlines may be less pronounced in stable environments where fewer changes necessitate diverse problem-solving skills. Methods The study uses a panel data set of 1,393 publicly listed Chinese manufacturing firms from 2003 to 2015 to test its hypotheses. Data were gathered on the demographic and functional characteristics of the firms’ TMTs, including gender, age, education, functional background, and tenure. These characteristics were used to compute faultline-strength indices, representing the degree to which subgroups based on these characteristics emerged within the TMT. The dependent variable in the study was strategic change, defined as changes in a firm’s allocation of resources a

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