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Write a 300 word paper in APA 7.0 to reflect on the issues ambidextrous organization face when implementing innovation as part of the local or global strategy.  What concepts do you consider relevant to get a more in-depth understanding of this concept.  This is not a summary paper.  The intention is to demonstrate your understanding, knowledge and express your discussion in a research paper. International ambidexterity in
firms’ innovation of multinational

enterprises from emerging
economies: an investigation of

TMT attributes
Hang Wu

East China University of Political Science and Law, Shanghai, China, and

Jin Chen
Tsinghua University, Beijing, China

Abstract

Purpose – Extant research has integrated ambidexterity perspective into international business studies and
calls for emerging market multinational enterprises (EM MNEs) to implement exploration and exploitation
activities simultaneously in foreign markets. However, less attention has been paid to empirically test whether
and how international ambidexterity can benefit the innovation performance of EM MNEs. Based on the data of
international manufacturing firms in China, this paper explores the relationship between international
ambidexterity and innovation performance and investigates four contingency factors of top management team
(TMT): two external resource accumulation elements (i.e. TMT business ties and TMT political ties) and two
internal resource integration elements (i.e. TMT contingency rewards and TMT social integration).
Design/methodology/approach – The author conducts multiple hierarchical linear regression analysis to
test the hypothesis by collecting survey data from 227 MNEs from several Economic Development Zones
located in Zhejiang province in China.
Findings – The results show that international ambidexterity is positively related to innovation performance,
and the international ambidexterity–innovation performance relationship is amplified when TMTs build
strong ties with external business partners and political departments, when EM MNEs link top managers’
income to team collective performance and create a highly social integrated TMT.
Originality/value – The results contributes to answer the question that how well EM MNEs will succeed and
enrich the context specificity of international ambidexterity. The findings also help us better understand the
inconsistent empirical findings in organizational ambidexterity by uncovering the contingency role of several
TMT attributes.

Keywords International ambidexterity, Exploratory internationalization, Exploitative internationalization,

EM MNEs, TMT

Paper type Research paper

1. Introduction
In view of the tremendous global integration speed of emerging market multinational
enterprises (EM MNEs) and the strategic significance of internationalization to EM MNEs’
innovation and catch-up (Wu et al., 2017; Dong et al., 2019), researchers have paid great
attention to explaining the distinct motivation and antecedents of EM MNEs and testing the
performance implication of different entry modes (Luo and Zhang, 2016; Li et al., 2017), but
ignored to uncover how well companies will succeed when investing and operating overseas
(Luo and Rui, 2009). Existing theoretical perspectives on EM MNEs’ international operations
have undergone a transformation from exploration, exploitation to ambidexterity. Some

International
ambidexterity

in firms’
innovation

431

The authors are indebted to Dr. Umans, Prof. Ruta Kazlauskaite and anonymous reviewers for their
many constructive insights and suggestions. The research was supported by the National Natural
Science Foundation of China (71972075, 71702057).

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1746-5265.htm

Received 24 July 2019
Revised 12 December 2019

3 March 2020
Accepted 3 March 2020

Baltic Journal of Management
Vol. 15 No. 3, 2020

pp. 431-451
© Emerald Publishing Limited

1746-5265
DOI 10.1108/BJM-07-2019-0267

https://doi.org/10.1108/BJM-07-2019-0267

researchers have highlighted that EM MNEs should become ambidextrous and conduct
exploratory and exploitative activities simultaneously in foreign markets to assure both
short-term survival and longer-term growth (Luo and Rui, 2009; Prange and Verdier, 2011;
Bandeira-de-Mello et al., 2016).

Despite the intuitive appeal of ambidexterity to EM MNEs, less attention has been paid to
empirically test the performance effect and contextual conditions of international
ambidexterity. Since Luo and Rui (2009) extend ambidexterity perspective into the foreign
operation of EM MNEs, a few scholars have started to investigate the capability attribute,
performance implication and implementation process of international ambidexterity. Prange
and Verdier (2011) argue that international ambidexterity is a third-order dynamic capability,
which in turn increases internationalization performance. Hsu et al. (2013) firstly conduct an
empirical test about the impact of international ambidexterity on financial performance using
balancedpanel dataof 207 Taiwanese firms. Bandeira-de-Mello et al. (2016) use a singleprocess-
based case study in a Brazilian multinational to explore how ambidexterity implementation
process actually happens. Ina word, existing researchers havejustconductedan initial study to
integrate ambidexterity perspective with international business research to answer the
question of “how EM MNEs can succeed”; future research calls for more empirical work to
explain how international ambidexterity acts on EM MNEs’ performance.

Moreover, it is noteworthy that although ambidexterity research in such fields as
organizational learning (March, 1991), innovation (Jansen et al., 2006) and knowledge search
(Katila and Ahuja, 2002) inspires us and has empirically investigated the performance effect
of various kinds of ambidexterity, the ambidexterity–performance relationship remains
unclear. Some researchers find that organizational ambidexterity directly improves firm
performance (Gibson and Birkinshaw, 2004; He and Wong, 2004), while others show a
contingent effect (Lin et al., 2007), negative effect (Atuahene-Gima, 2005) and even no
support for the ambidexterity hypothesis (De et al., 2014). These conflicting empirical results
indicate that the path from ambidexterity to firm performance is not straightforward but
paved with implementation challenges, and ambidextrous firms should be capable of
providing enough resources for and promoting the resource integration of both exploration
and exploitation departments (Clercq et al., 2013, 2014). Therefore, it is vital to consider what
contingencies enable firms to convert ambidexterity into improved performance.

In response, the purpose of this study is to empirically examine the impact of international
ambidexterity on innovation performance and reveal the boundary conditions under which
such ambidextrous strategy for EM MNEs works. The reason why we focus on the innovation
performance consequence is that researchers in the fields of strategy and international
business have argued that internationalization has been conducted as a vehicle for EM MNEs
to broaden their knowledge base (Wu et al., 2016, 2017) and to achieve innovation catch-up
with their competitors in developed countries (Hitt et al., 1997; Bauer et al., 2016). A lot of
empirical studies have empirically tested such various measures of internationalization as
foreign direct investment, exporting and international diversification on firm’s innovation
(Hitt et al., 1997; Salomon and Shaver, 2005; Bauer et al., 2016; Wu et al., 2016, 2017). In this
paper, we propose that implementing international ambidexterity can avoid the drawbacks of
overemphasizing each strategy, which in turn improves innovation performance.

In view of the strategic significance of top management team (TMT) played in external
resource accumulation (Park and Luo, 2001; Collins and Clark, 2003) and internal resource
integration (Jansen et al., 2009; Umans et al., 2018), we will investigate the moderating impact
of TMT on the relationship between international ambidexterity and innovation performance.
TMT is a team composed of senior managers who make strategic decisions and are
responsible for the organization and coordination of the entire enterprise (Asghar et al., 2018).
For lacking of such facilitating mechanism as resource search mechanism and hierarchical
administrative systems, EM MNEs’ TMT must represent an important locus for

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accumulating critical resources and resolving integration tensions in achieving organizational
ambidexterity (Wang et al., 2015; Li and Huang, 2019). In this study, we use the ties with
external business partners and ties with government departments to reflect TMT’s resource
accumulation mechanism. We expect that both TMT’s business and political ties may provide
EM MNEs with a lot of resources, which may enhance the positive relationship between
international ambidexterity and innovation performance. Except that, we use contingency
rewards and social integration to reflect TMT’s resource integration mechanism. We also
argue that the impact of international ambidexterity on innovation performance will be
positively moderated by TMT contingency rewards and TMT social integration. The reason
is that when EM MNEs link top managers’ income to team collective performance and create a
highly social integrated TMT, it is likely more beneficial for facilitating mutual negotiation
and combining strategic contradictions, which in turn enhances the innovation performance
of international ambidexterity. Figure 1 presents our theoretical model.

2. Theory and hypotheses
2.1 Organizational ambidexterity
Organizational ambidexterity is defined as the ability of firms to pursue and synchronize
disparate exploration and exploitation simultaneously (He and Wong, 2004). Exploration is
related to search, experimentation and variance increase, whereas exploitation is associated
with activities such as refinement, efficiency, selection and implementation (March, 1991).
Overemphasizing exploitation and neglecting exploration will be subject to core rigidities and
powerful path dependencies, finally leading to the risk of obsolescence. Similarly, paying
excessive attention to exploration against exploitation will provide firms with a large amount
of differentiated innovation information, which will lead to overload of information
processing and reduction of innovation efficiency. At the same time, excessive exploratory
activities make it difficult for firms to recover search costs and ultimately lead to innovation
failure. In comparison, balance and coordination of exploration and exploitation enable firms
to avoid the risk of overemphasis on one aspect over the other and more critically achieve the
complementary integration effect (Gibson and Birkinshaw, 2004; Cao et al., 2009).

2.2 Ambidexterity perspective of EM MNEs’ internationalization
Inspired by organizational ambidexterity research, which highlights the importance of
pursuing disparate goals concurrently for firms’ survival, international business scholars
insist that MNEs can not only exploit existing advantages overseas to bolster short-term
survival but also explore and capture resources in overseas markets to compensate
competitive disadvantages for long-term growth (Chen and Chen, 1998; Makino et al., 2002).
This is significantly different from the traditional international business theories proposed
based on MNEs in developed countries, which view internationalization as the exploitation of

TMT contingency

rewards

International

ambidexterity

Innovation

performance

TMT business

ties

TMT political

ties

TMT social

integration

Resource accumulation Resource integration

H1

H2 H3 H4 H5

Figure 1.
Conceptual model

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ambidexterity

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MNEs’ ownership advantage in foreign markets (Caves, 1971), and is especially true for EM
MNEs that face an unprecedented competitive environment and want urgently to compete
more effectively against global rivals. Luo and Rui (2009) first introduce an ambidexterity
perspective into the international expansion of EM MNEs, emphasize EM MNEs’ need to
build and leverage ambidexterity to offset late-mover disadvantages and specifically answer
the question “why ambidexterity is unique to EM MNEs.” After that, several researchers
have called for ambidextrous strategic action of EM MNEs in international markets (Prange
and Verdier, 2011; Hsu et al., 2013; Bandeira-de-Mello et al., 2016).

According to existing literature, this study divides EM MNEs’ internationalization into
two types, including exploration and exploitation. Exploratory internationalization is
regarded as a compensatory response to search or acquire strategic assets in foreign
countries to secure new capabilities (Makino et al., 2002; Luo and Tung, 2007; Rui and Yip,
2008), associated with broad and distant learning activity beyond the current knowledge area
of the firm, which leads to greater experimentation and radical innovation (Katila and Ahuja,
2002). In contrast, exploitative internationalization is viewed as the transfer of such
ownership-specific advantages as cost-effective mass production capabilities across borders
to bolster short-term profitability (Makino et al., 2002; Peng, 2012), accompanied by local and
deep learning activity within a well-defined and limited knowledge space related to the firm’s
previous experience, which ensures efficiency and incremental innovation (Katila and Ahuja,
2002). International ambidexterity means the simultaneous pursuit of exploratory and
exploitative internationalization to achieve complementary effects (Prange and Verdier, 2011;
Hsu et al., 2013).

2.3 Impact of international ambidexterity on innovation performance
Innovation performance refers to the innovation outputs reflected in new product
development and patenting frequency (Chen et al., 2011; Wu et al., 2016). There are two
distinct mechanisms by which international ambidexterity contributes to better innovation
performance. The first is that exploratory internationalization can avoid the competence trap
caused by exploitative internationalization. Although exploitative internationalization can
bring short-term cash income and increased innovation efficiency, excessive emphasis on
exploitative internationalization can lead to the core rigidity and competence trap (Levitt and
March, 1988), which lead EM MNEs to gradually lose its environmental responsiveness and
hinder the further improvement of innovation performance. Exploratory internationalization
can help EM MNEs avoid short-sightedness caused by exploitative internationalization (Hsu
et al., 2013). Exploratory internationalization will bring a large amount of differentiated
information, which can greatly promote the integration of existing knowledge and new
knowledge and thus significantly enhance the ability of enterprises to innovate.

The second is related to the fact that exploitative internationalization reduces the
uncertainty of exploratory internationalization. Although EM MNEs can acquire the latest
technology and understand innovation development trend through extensive exploration
overseas, the knowledge stemming from a high degree of exploratory effort is always novel,
distant and accompanied by unsure international partners, which may not yield the desired
outcome (Katila and Ahuja, 2002; Wu and Wu, 2014). Active exploitative internationalization
can help alleviate these problems by rapidly internalizing the knowledge explored overseas.
Through the reuse of existing knowledge, managers can better understand the distribution
and functionality of internal knowledge and thus be able to integrate existing knowledge to
discover and integrate new innovation opportunities. Except that, a thorough understanding
of the foreign context developed through extensive exploitative internationalization can help
EM MNEs refine any technologies discovered and adapt them to address foreign market
needs, leading to successful new products that appeal to foreign customers. Based on these
ideas, we propose the following hypothesis.

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H1. International ambidexterity is positively related to innovation performance

2.4 TMT of EM MNEs: accumulating and integrating resources in implementing
international ambidexterity
We have just proposed that international ambidexterity of EM MNCs can facilitate
innovation by avoiding the competence trap of exploitative internationalization and reducing
the uncertainty of exploratory internationalization. However, what is worth mentioning is
that international ambidextrous firms are inherently unstable because of the higher resource
requirements imposed upon EM MNCs to synchronously implement exploratory and
exploitative activities (Cao et al., 2009) and lack of internal consistency, which restricts the
resource exchange and combination process (Clercq et al., 2014). Therefore, the international
ambidexterity–innovation performance assumption is built on the premise that resources are
abundantly available (O’Reilly and Tushman, 2004) and can be effectively exchanged and
integrated so as to appropriate the potential value embedded in spatially separated activities
(Jansen et al., 2009). This logic suggests that the innovation performance effect of
international ambidexterity will depend on the capability of EM MNCs to accumulate and
provide enough resources for and to facilitate the integration during the ambidextrous
implementation process. When EM MNEs are more capable of accumulating resources and
contributing to the integration process, the positive relationship discussed earlier becomes
stronger.

As the principal decision-making unit of EM MNCs, TMTs play an important role in
establishing external links for resource accumulation (Park and Luo, 2001; Collins and Clark,
2003) and promoting internal coordination to support decision-makings regarding resource
integration processes (Jansen et al., 2009; Umans et al., 2018), which are crucial for EM MNCs
to balance exploration and exploitation. As a complement of formal institutional framework,
external network ties act as a vital channel in providing rich source of resources for firm’s
foreign operation (Mesquita and Lazzarini, 2008). In our research, we focus on the external
ties of TMT members because they are in a particularly favorable position to gather, sift and
collate timely and relevant knowledge and information that enables EM MNEs to conduct
exploratory and exploitative internationalization concurrently (Collins and Clark, 2003).
Except that, TMTs in international ambidextrous organizations typically face role conflicts
that may diminish acceptance of decisions, so TMTs are responsible for coordinating and
translating contradictory expectations across differentiated exploratory and exploitative
units into workable strategies (Jansen et al., 2008), which is crucial to get integrative and
synergetic value from exploratory and exploitative internationalization. In this section, we
examine the moderating role of two TMT resource accumulation mechanisms that are
considered to be good for providing resource support: TMT business ties and TMT political
ties, and two TMT resource integration mechanisms that are deemed to be beneficial for
combining strategic contradictions: TMT contingency rewards and TMT social integration.

2.3.1 The moderating effect of TMTs’ resource accumulation.

(1) TMT business ties

TMT business ties refer to the sets of relationships TMT members have with outside
business partners, such as customers, suppliers and competitors, who own resources of
potential value to the firm (Park and Luo, 2001; Peng and Luo, 2000; Collins and Clark, 2003).
Previous studies on EM MNEs have emphasized the importance of TMT business ties in
firms’ international success (Elango and Pattnaik, 2007; Filatotchev et al., 2009), claiming that
TMT business ties can act as a flexible resource supplement in an environment where factor
mobility is severely constrained (Luo, 2003). In our study, we argue that TMT business ties
can provide EM MNEs with enough resources to implement international ambidexterity.

International
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Establishing good relationship with upstream supplier can bring higher inventory turnover
and timely delivery to EM MNEs, which greatly enhance manufacturing productivity, lower
production cost and finally promote international exploitation activities (Mesquita and
Lazzarini, 2008). Through cooperating with peer competitors closely, firms can understand
the latest developments in the industry by information sharing and intelligence
reconnaissance, significantly enhancing the ability of EM MNEs to explore and acquire
high-end knowledge overseas. Except that, TMTs with a strong customer focus may both
develop attractive products through listening to the voices of customers repeatedly and
improve their technical capabilities in order to design and produce the final products, in favor
of the exploratory and exploitative internationalization simultaneously. Therefore, TMT
business ties provide resource guarantee for EM MNEs to implement and gain innovation
benefits from international ambidexterity. Based on these arguments, we propose the
following hypothesis:

H2. TMT business ties positively moderate the relationship between international
ambidexterity and innovation performance

(2) TMT political ties

TMT political ties refer to interpersonal social relationships of TMT members with officials
of government agencies, industrial bureaus, regulatory and supporting organizations such as
state banks, tax bureaus, commercial administration bureaus and other governmental
agencies, which serve as an important form of social capital in emerging countries (Park and
Luo, 2001; Peng and Luo, 2000; Collins and Clark, 2003). Top managers in EM MNEs tend to
spend significant portions of time and energy in establishing contacts with government
officials because the government department still controls a lot of strategic factor resources
and has the power to decide on resource allocation and projects approval (Li and Zhang,
2007). Cultivating good networking ties with government officials means that TMT members
can get financial, management and technical support much easily (Wang et al., 2015), which is
significant for the smooth implementation of international ambidexterity. For example,
entering such governmental programs as soft loan support, export subsidies, tax reduction
and exemption can greatly reduce financial pressure and increase risk-taking capacity for
EM MNEs’ foreign operation (Park and Luo, 2001; Lu et al., 2010), which is helpful for both the
exploration of strategic assets through overseas mergers and exploitation of competitive
advantages through greenfield investment. Lu et al. (2010) further persist that government
can also offer opportunities for EM MNEs’ top managers, such as participating in
international fairs, to learn foreign marketing and advanced technological knowledge,
profitable for both leveraging competitive advantages and seeking novel knowledge and
information overseas. Therefore, when TMT members have established close contact with
government officials, international ambidextrous activities of EM MNEs will be carried out
more effectively, and EM MNEs will be more likely to derive innovation value from
international ambidexterity. Based on these arguments, we propose that:

H3. TMT political ties positively moderate the relationship between international
ambidexterity and innovation performance

2.3.2 The moderating effect of TMTs’ resource integration.

(1) TMT contingency rewards

The way of top management members earning performance rewards influences interactions
and outcomes of TMTs (Siegel and Hambrick, 2005). As a kind of pay patterns among TMT
members, contingency rewards reflecting the extent to which benefits for individual team

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members hinge on their team’s collective performance (Harrison et al., 2002) are conducive for
TMTs to solve complex problems and pursue complex organizational goals, which demands
mutual adjustment and the transcendence of individual interests (O’Reilly and Tushman,
2004). TMT contingency rewards reduce interpersonal competition and facilitate mutual
negotiation. When EM MNEs emphasize joint rather than individual rewards, an
interdependent cooperative atmosphere and commitment to organizational goals have
been set up, beneficial for allocating resources to differentiated international exploratory and
exploitative units, mobilizing and integrating resources across differentiated units to achieve
success of innovation (Clercq et al., 2013). In the study of Govindarajan and Trimble (2005),
they have described how Analog Devices, a semiconductor company, avoids strong
incentives tied to mature businesses’ performance and starts to evaluate and reward TMT
members based on team’s collective achievements, which finally enables Analog Devices to
leverage and integrate assets across differentiated exploratory and exploitative units.
Therefore, we predict that TMT contingency rewards enhance the potential contributions of
international ambidexterity to innovation performance through facilitating the resource
sharing and integration during the implementation of international ambidexterity. Based on
these arguments, we propose the following hypothesis:

H4. TMT contingency rewards positively moderate the relationship between
international ambidexterity and innovation performance

(2) TMT social integration

Social integration refers to the “attraction to the group, satisfaction with other members of the
group, and social interaction among the group members” (O’Reilly et al., 1989), which involves
the affective factors or social forces among members of TMTs (Smith et al., 1994). Members in
TMTs with higher social integration are expected to be willing to negotiate and compromise
with others for team success (Barkema and Shvyrkov, 2007), indicating that senior executives
always build realistic understandings of conflicting strategic agendas and make rational
thinking on resource exchange and combination, which is beneficial for the pursuit of
innovation profit during the simultaneous implementation of exploration and exploitation
activities overseas. Social integrated TMT members are inclined to use cooperative methods
and thinking to solve problems based on social interaction and trust among TMTs (Jansen
et al., 2008), which suggests that TMT members responsible for exploratory and exploitative
activities in foreign markets will keep close cooperation to push the resources integration
contributed by differentiated units. Jansen et al. (2009) argue that social integrated TMTs can
stimulate critical debate and recognize innovation opportunities through evaluating and
reconsidering various possible combinations of differentiated resources. Therefore, we
propose that TMT social integration facilitates the integration of resources between
international exploratory and exploitative units to arrive at new innovation combinations.
Based on these arguments, we propose the following hypothesis:

H5. TMT social integration positively moderates the relationship between international
ambidexterity and innovation performance

3. Methodology
3.1 Sample and data collection
Our study’s sample frame was drawn from several Economic Development Zones located in
Zhejiang province in China, including Hangzhou, Ningbo and Wenzhou, because of its highly
developed private economy and early internationalization pace (Chen et al., 2011; Wu et al.,

International
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2016). Due to budgetary constraints, we selected a random sample of 700 ventures from the
aforementioned three zones, with 300 firms from Hangzhou Economic Development Zone,
220 firms from Ningbo Economic Development Zone and 180 firms from Wenzhou Economic
Development Zone. We selected the top managers responsible for international operations
and innovation management from each of the sampled firms as the key informant. In order to
minimize the potential problem of common method bias originating from the same data
source or a single respondent (Podsakoff et al., 2003), we followed the frequently used method
to divide the survey questionnaires into two separate parts and asked for two different senior
executives from the same company to answer the question.

After several rounds of phone, fax and personal follow-ups, 227 valid questionnaires
(32.4%) were returned after deleting replies with missing observations. The firms were
operating in a wide range of industries covering electronic information (30.40%), special
equipment manufacturing (19.38%), transportation equipment manufacturing (13.22%),
ordinary machinery manufacturing (12.78%), metal products (9.25%) and other industries
(14.97%). We compared early (the first 25%) and late (the last 25%) respondents in terms of
model variables. We observed no significant differences (p < 0.05), indicating that
nonresponse bias was not a problem. As for the common method bias, because we had
assured that the questionnaires were responded by two different senior executives in the
same company, so the risk of common method variance could be greatly reduced through this
research design (Eisenhardt and Tabrizi, 1995). The results of Harman’s one-factor test also
showed that no single factor explained a majority of the variance, demonstrating that
common method bias was not a serious concern in this study.

3.2 Measures
3.2.2 Dependent variable. The measurement scale of innovation performance consisted of six
indicators used in prior research (Chen et al., 2011; Wu et al., 2016) to capture items such as the
number, sales and novelty of new products, reflecting the performance …

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