Henk W. Volberda

Absorbing the Concept of Absorptive Capacity: How to Realize Its Potential in the Organization Field

The purpose of this perspective paper is to advance understanding of absorptive capacity, its underlying dimensions, its multilevel antecedents, its impact on firm performance, and the contextual factors that affect absorptive capacity. Twenty years after the Cohen and Levinthal 1990 paper, the field is characterized by a wide array of theoretical perspectives and a wealth of empirical evidence. In this paper, we first review these underlying theories and empirical studies of absorptive capacity. Given the size and diversity of the absorptive capacity literature, we subsequently map the existing terrain of research through a bibliometric analysis. The resulting bibliometric cartography shows the major discrepancies in the organization field, namely that (1) most attention so far has been focused on the tangible outcomes of absorptive capacity; (2) organizational design and individual level antecedents have been relatively neglected in the absorptive capacity literature; and (3) the emergence of absorptive capacity from the actions and interactions of individual, organizational, and interorganizational antecedents remains unclear. Building on the bibliometric analysis, we develop an integrative model that identifies the multilevel antecedents, process dimensions, and outcomes of absorptive capacity as well as the contextual factors that affect absorptive capacity. We argue that realizing the potential of the absorptive capacity concept requires more research that shows how “micro-antecedents” and “macro-antecedents” influence future outcomes such as competitive advantage, innovation, and firm performance. In particular, we identify conceptual gaps that may guide future research to fully exploit the absorptive capacity concept in the organization field and to explore future fruitful extensions of the concept.

Senior Team Attributes and Organizational Ambidexterity: The Moderating Role of Transformational Leadership

Organizations capable of pursuing exploration and exploitation simultaneously have been suggested to obtain superior performance. Combining both types of activities and achieving organizational ambidexterity, however, leads to the presence of multiple and often conflicting goals, and poses considerable challenges to senior teams in ambidextrous organizations. This study explores the role of senior team attributes and leadership behaviour in reconciling conflicting interests among senior team members and achieving organizational ambidexterity. Findings indicate that a senior team shared vision and contingency rewards are associated with a firms ability to combine high levels of exploratory and exploitative innovations. In addition, our study shows that an executive directors transformational leadership increases the effectiveness of senior team attributes in ambidextrous organizations and moderates the effectiveness of senior team social integration and contingency rewards. Hence, our study clarifies how senior executives reconcile conflicting demands and facilitate the balancing of seemingly contradictory forces in ambidextrous organizations. Implications for literatures on senior team attributes, transformational leadership and organizational ambidexterity are discussed.

Investigating Managers' Exploration and Exploitation Activities: The Influence of Top-Down, Bottom-Up, and Horizontal Knowledge Inflows

This paper develops and tests hypotheses on the influence of a manager’s knowledge inflows on this manager’s exploration and exploitation activities. Based on a survey among managers of a leading electronics firm, the findings indicate, as expected, that top-down knowledge inflows of a manager positively relate to the extent to which this manager conducts exploitation activities, while they do not relate to a manager’s exploration activities. Furthermore, as expected, bottom-up and horizontal knowledge inflows of a manager positively relate to this manager’s exploration activities, while they do not relate to a manager’s exploitation activities. We contribute to current literature on exploration and exploitation by focusing on the manager level of analysis, and by adding the importance of knowledge flow configurations to the literature on the impact of organizational factors upon exploration and exploitation.

Building alliance capability : management techniques for superior alliance performance

Despite the fact that they represent a growing element of business strategy, alliances between organisations quite often result in failure. This is partly due to the fact that firms have not built up adequate capabilities to manage alliances. Special management techniques have to be implemented in order to strengthen the organisation’s alliance capability. This article evaluates a number of these techniques with regard to their impact on alliance success, and reports on a quantitative study on alliances and alliance-management techniques of 46 large companies to assess this impact.

Management Innovation and Leadership: The Moderating Role of Organizational Size

Recent research on management innovation, i.e. new managerial processes, practices, or structures that change the nature of managerial work, suggests it can be an important source of competitive advantage. In this study, we focus on management innovation at the organization level and investigate the role of leadership behaviour as a key antecedent. Due to its prominent role within organizations, top management has the ability to greatly influence management innovation. In particular, we focus on leadership behaviour and examine transformational and transactional leadership. Additionally, as contextual variables like organizational size may influence the impact of leadership, we investigate its moderating role. Findings show that both leadership behaviours contribute to management innovation. Interestingly, our study indicates that smaller, less complex, organizations benefit more from transactional leadership in realizing management innovation. On the other hand, larger organizations need to draw on transformational leaders to compensate for their complexity and allow management innovation to flourish.

Managing Organizational Knowledge Integration in the Emerging Multimedia Complex

Due to technological convergence, complexes of interrelated industries are emerging. This paper presents a conceptual framework of the role different organizational forms and combinative capabilities play in the management of organizational knowledge integration in this context. The focus is on firms previously operating in one of the relatively stable constituting industries. We argue that a firms organizational form has to be matched with appropriate combinative capabilities in order to integrate component knowledge into architectural knowledge that consequently serves as a platform for generating new product–market combinations. The framework is empirically illustrated using the example of two Dutch publishing firms moving into the multimedia complex, which is currently emerging around information and communication technologies. The empirical analysis shows that the framework offers strong potential for improving the understanding of the complex process of organizational knowledge integration, as the prerequisite for developing new business in an emerging industrial complex.

Boards of Directors' Contribution to Strategy: A Literature Review and Research Agenda

Research Question/Issue: Over the last four decades, research on the relationship between boards of directors and strategy has proliferated. Yet to date there is little theoretical and empirical agreement regarding the question of how boards of directors contribute to strategy. This review assesses the extant literature by highlighting emerging trends and identifying several avenues for future research. Research Findings/Results: Using a content-analysis of 150 articles published in 23 management journals up to 2007, we describe and analyze how research on boards of directors and strategy has evolved over time. We illustrate how topics, theories, settings, and sources of data interact and influence insights about board–strategy relationships during three specific periods. Theoretical Implications: Our study illustrates that research on boards of directors and strategy evolved from normative and structural approaches to behavioral and cognitive approaches. Our results encourage future studies to examine the impact of institutional and context-specific factors on the (expected) contribution of boards to strategy, and to apply alternative methods to fully capture the impact of board processes and dynamics on strategy making. Practical Implications: The increasing interest in boards of directors’ contribution to strategy echoes a movement towards more strategic involvement of boards of directors. However, best governance practices and the emphasis on board independence and control may hinder the board contribution to the strategic decision making. Our study invites investors and policy-makers to consider the requirements for an effective strategic task when they nominate board members and develop new regulations.

EXPLORATORY INNOVATION, EXPLOITATIVE INNOVATION, AND AMBIDEXTERITY: THE IMPACT OF ENVIRONMENTAL AND ORGANIZATIONAL ANTECEDENTS

Organizational ambidexterity (i.e., the ability to pursue exploratory and exploitative innovation simultaneously) is crucial to firm survival. In this study we explore how multiunit firms might develop ambidextrous organizational units in response to environmental demands. We examine how environmental and organizational antecedents affect a unit’s level of organizational ambidexterity. Our study reveals that multiunit firms develop ambidextrous organizational units to compete in dynamically competitive environments. Moreover, we show that organizational units with decentralized and densely connected social relations are able to act ambidextrously and pursue exploratory and exploitative innovations simultaneously. Our study provides new insights how multiunit firms can cope with contradictorily pressures for exploratory and exploitative innovations.

Coping with Problems of Understanding in Interorganizational Relationships: Using Formalization as a Means to Make Sense

Research into the management of interorganizational relationships has hitherto primarily focused on problems of coordination, control, and to a lesser extent, legitimacy. In this article, we assert that partners cooperating in such relationships are also confronted with ‘problems of understanding’. Such problems arise from differences between partners in terms of culture, experience, structure and industry, and from the uncertainty and ambiguity that participants in interorganizational relationships experience in early stages of collaboration. Building on Karl Weick’s theory of sensemaking, we advance that participants in interorganizational relationships use formalization as a means to make sense of their partners, the interorganizational relationships in which they are engaged and the contexts in which these are embedded so as to diminish problems of understanding. We offer a systematic overview of the mechanisms through which formalization facilitates sensemaking, including: (1) focusing participants’ attention; (2) provoking articulation, deliberation and reflection; (3) instigating and maintaining interaction; and (4) reducing judgement errors and individual biases, and diminishing the incompleteness and inconsistency of cognitive representations. In this way, the article contributes to a better understanding of the relationships between formalization and sensemaking in collaborative relationships, and it carries Karl Weick’s thinking on the relationship between sense-making and organizing forward in the context of interorganizational management.

Mastering Strategic Renewal: Mobilising Renewal Journeys in Multi-unit Firms

How do large multi-unit firms in a deconstructing world reconcile the conflicting forces of profits for today and flexibility to adapt for tomorrow? Profits for today requires order, control, and stability: adaptation for tomorrow requires flexibility and creativity in the value-added system. Large firms in many industries are confronted with this challenge of exploration and exploitation. In the European financial services industries these conflicting tendencies are increasingly obvious. Existing large financial players seem well placed to exploit the present but ill suited to adapt to the future. Why is this so, and what can be done about it? We consider the mechanisms of selection, adaptation and co-evolution that take place between levels within the firm and between the firm and its environment, and from this identify four ideal kinds of strategic renewal journeys that organisations can adopt as a way of coping with increasing environmental pressures. We label these journeys: emergent, directed, facilitated, and transformational. We show how these ideal types represent different options for top, middle and front-line managers, and we identify how each type differs in its capacity to cope with the changing environment. We illustrate our renewal journeys with examples from Dutch (ING and Rabobank) and British financials (Barclays, Lloyds and Prudential) and other organisations such as GE, IBM, Intel, Novotel and Philips. We suggest that for mobilising renewal in well-established financial institutions—once protected but now exposed to the winds of change—managers have to recognise that many of the current journeys are unsuitable for the future.