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The International Journal of Human ResourceManagement

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Strengthening organizational ambidexteritywith top management team mechanisms andprocesses

Aparna Venugopal, T. N. Krishnan, Manish Kumar & Rajesh SrinivasUpadhyayula

To cite this article: Aparna Venugopal, T. N. Krishnan, Manish Kumar & Rajesh SrinivasUpadhyayula (2017): Strengthening organizational ambidexterity with top management teammechanisms and processes, The International Journal of Human Resource Management, DOI:10.1080/09585192.2016.1277369

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The InTernaTIonal Journal of human resource managemenT, 2017http://dx.doi.org/10.1080/09585192.2016.1277369

Strengthening organizational ambidexterity with top management team mechanisms and processes

Aparna Venugopala, T. N. Krishnana, Manish Kumara and Rajesh Srinivas Upadhyayulab

aorganizational Behaviour and human resources, Indian Institute of management Kozhikode, Kozhikode, India; bstrategic management area, Indian Institute of management Kozhikode, Kozhikode, India

ABSTRACTOrganizational ambidexterity is the organizational capability to simultaneously pursue explorative and exploitative innovation strategies. Studies have examined the Top Management Team (TMT) actions and decisions with the ambidextrous orientation of a firm. Further, studies have also shown that a behaviourally integrated TMT is positively associated with organizational ambidexterity. However, there has been limited research examining the antecedents to the behaviourally integrated TMT. Anchored in the upper echelons perspective, we have examined the influence of TMT processes and mechanisms on organizational ambidexterity. The TMT is observed to positively influence ambidexterity by enhancing the firm’s ability to meet the differentiation-integration challenges, and by facilitating the effective deployment of ambidextrous Human Resource (HR) architectures for employee learning. Thereby, this investigation examines the effect of TMT processes and mechanisms in enabling structural as well as contextual ambidexterity. The results from a sample of 78 hi-tech Small and Medium Enterprises (SMEs) across different industries were analysed using partial least squares structural equation modelling. We find the mediating role of TMT behavioural integration in the effect of TMT connectedness and TMT cross-functional interfacing mechanisms on organizational ambidexterity. However, our results show that rewards contingent on organizational performance do not motivate the TMT members to facilitate organizational ambidexterity. The results from this study lend support to the upper echelons perspective and add to two distinct streams of literature namely organizational ambidexterity and behavioural integration.

Introduction

Extant literature argues that firms need to simultaneously pursue explorative and exploitative innovation strategies for their survival (Cegarra-Navarro & Dewhurst,

© 2017 Informa uK limited, trading as Taylor & francis group

KEYWORDSambidexterity; top management team behavioural integration; connectedness; cross-functional interfacing; contingency rewards

CONTACT aparna Venugopal [email protected]

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2 A. VENUGOPAL ET AL.

2007; March, 1991; Tushman, Anderson, & O’Reilly, 1997). Organizational ambi-dexterity is a firm’s capability to simultaneously pursue explorative and exploitative innovation strategies (Gibson & Birkinshaw, 2004). Studies have established that organizational ambidexterity leads to organizational performance such as firm financial performance (Auh & Menguc, 2005; He & Wong, 2004), innovation (Katila & Ahuja, 2002; Rothaermel & Deeds, 2004) and overall firm performance (Cao, Gedajlovic, & Zhang, 2009; Gibson & Birkinshaw, 2004). However, research on antecedents to organizational ambidexterity is still in its nascent stage. The genesis of organizational ambidexterity can be traced to structural (Tushman & O’Reilly, 1996) as well as contextual antecedents (Gibson & Birkinshaw, 2004). While structural ambidexterity presumes that the top management chooses the explorative and exploitative strategies of the firm, contextual ambidexterity assumes that these choices are made at the level of each of the individual employ-ees. Following this, structural ambidexterity studies have examined various Top Management Team (TMT) actions, and characteristics as significant predictors of ambidexterity (Jansen, Tempelaar, Van den Bosch, & Volberda, 2009; Raisch, Birkinshaw, Probst, & Tushman, 2009), while contextual ambidexterity studies have examined various employee work practices and HR systems as important predictors of ambidexterity (Güttel & Konlechner, 2009; Kang & Snell, 2009).

Top managers could facilitate a social climate conducive for ambidexterity in two ways - one as visible role models, especially in a SME context, they could set expectations on the behaviours and actions that are appreciated in a firm. Second, as strategic decision-makers they have an important role in deciding the HR practices that could foster ambidexterity. Because of their unique position at the top of their organization, top managers are able to influence the information flow within the organization by accumulating and redistributing information to key internal and external actors (Collins & Clark, 2003). The way the TMT members behave and act could signal the norms and expectations for a pattern of behaviour for the rest of the employees (Carmeli, 2008). In a context where the organiza-tion wishes to pursue two apparently contradictory innovation strategies, unless the TMT shares a common understanding of the goals of the organization and activities and behaviours associated with achieving those goals, there could be inconsistent signals and behaviours being picked up by the rest of the employees. At best this could confuse the employees, but at worst it could result in employ-ees working at cross-purposes. This points towards a need for the TMT to share a common understanding of the exploratory and exploitative innovation goals of the organization and activities and processes associated with achieving those goals. The shared understanding of the goals, activities and behaviours required for achieving these goals, are better facilitated in a firm where the behavioural integration within the TMT is high. TMT behavioural integration is the degree to which senior management group engages in mutual and collective interaction (Hambrick, 1994).

THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 3

Further, TMT also plays an important role in strategic decisions including HR policy level decisions in a firm. This is all the more pronounced in SMEs as HR decision-making is often centralized in such firms (Krishnan & Scullion, 2016; Wilkinson, 1999). In the context of ambidexterity, it is necessary for a firm to build a set of employee resource base that could exploit existing market realities, and at the same time to develop another set of employees that could explore new opportunities. Consequently, combining the different set of practices into an HPWS will promote a context that helps to create an ambidextrous workforce (Patel, Messersmith, & Lepak, 2013). However, this is easier said than done – there are inherent tensions in developing capabilities required for both exploring and exploiting opportunities. Practices that help create a clear sense of stretch and discipline (Ghoshal & Bartlett, 1994) amongst others include clearly defining performance standards, selecting individuals best suited to meet those stand-ards, assessing performance on goals relative to those standards and stretching individuals to exceed expectations via incentives. These practices are necessary to exploit market realities (Patel et al., 2013). Distinct practices such as advance-ment opportunities, job security provisions, participation and information sharing elements provide a greater sense of trust and support (Ghoshal & Bartlett, 1994). They are necessary for exploring new opportunities (Patel et al., 2013). While the practices are not inherently orthogonal to one another, there has to be a clear understanding of the different purposes being served and the set of complemen-tary human resource and work practices that motivate employee behaviours in attaining these different purposes. TMT has an important role not only in devel-oping a shared understanding of the different purposes being served but also in identifying a coherent and consistent set of HR practices targeted at attaining these goals. In developing these it would have to resolve conflicting interests of the individual TMT members and also consider potential trade-offs in implementing these practices. A behaviourally integrated TMT is better placed in resolving these conflicting interests and trade-offs.

Despite the significance of TMT behavioural integration in enhancing both structural and contextual organizational ambidexterity, few studies have explored the means through which TMTs are behaviourally integrated to build ambidex-trous firms. Very few studies have even observed the effect of TMT mechanisms as, senior team rewards (Ahammad, Lee, Malul, & Shoham, 2015), executive’s knowledge management practices (Berraies, Achour, & Chaher, 2015) and man-ager’s cross-functional interfaces (Garaus et al., 2016; Kanter, 2006; Mom, Van Den Bosch, & Volberda, 2009) directly on ambidexterity. Most of these studies emphasize the significance of TMT communication, cross-functional interfac-ing, knowledge sharing and group based incentives in motivating and providing opportunities to the TMT to build ambidextrous firms. However, there has not been a comprehensive study looking at the effects of each of the mechanisms on TMT processes and in turn on ambidexterity. Moreover, the mediating role played by TMT behavioural integration in the influence of TMT mechanisms on


organizational ambidexterity has also not been explored previously. Though Smith and Tushman (2005, p. 534) exhorted researchers that ‘conditions that enabled senior managers to deal with strategic contradictions should be the centre of future scholarship’, there has still been little research in this area. Therefore, in this paper, we first posit that TMT behavioural integration is positively associated with ambi-dexterity. In addition, we posit that the TMT mechanisms of connectedness and cross-functional interfacing mechanisms are important contributors to building an ambidextrous firm. We further examine the effect of these mechanisms on TMT behavioural integration. Moreover, we specifically examine the mediating role of TMT behavioural integration in the effect of these TMT mechanisms on organizational ambidexterity. Since the operational and strategic effects of TMT leadership are more significant in smaller organizations, we chose to examine SMEs (Donate & Guadamillas, 2011; Heavey, Simsek, & Fox, 2015).

We examined the hypothesized relationships with Partial Least Squares Structural Equation Modelling (PLS SEM) technique, with multiple responses from 78 high tech SMEs in India. We find that TMT behavioural integration mediates the effect of TMT connectedness, and TMT cross-functional interfac-ing mechanisms on organizational ambidexterity. Interestingly, we also find that senior team contingency rewards have no significant impact on organizational ambidexterity. This paper adds to the existing literature on organizational ambi-dexterity by demonstrating the effects of TMT behavioural integration and TMT connectedness and cross-functional interfacing mechanisms on organizational ambidexterity. In addition, it contributes to the literature on ambidexterity by emphasizing the mediating role of TMT behavioural integration in the effects of TMT mechanisms on organizational ambidexterity. Furthermore, the findings from this paper lend support to the claims of the upper echelons perspective in ambidexterity studies, and add to the theory of behavioural integration by empir-ically observing the antecedents of TMT behavioural integration. In examining the effect of TMT behavioural integration on ambidexterity, this study unravels the influence of a behaviourally integrated TMT in the effective implementation of the HR systems needed to manage people in ambidextrous firms. Thereby, this study contributes to a distinct field of Strategic Human Resource Management (SHRM) (Jiang, Lepak, Hu, & Baer, 2012; Jiang, Takeuchi, & Lepak, 2013; Lengnick-Hall, Lengnick-Hall, Andrade, & Drake, 2009) by examining the nuances of the TMT processes that make significant strategic contributions in ambidextrous firms. This paper is divided into four sections. The first section details the theo-retical background of our study, and demonstrates the logical arguments of our hypotheses. The second and third sections elaborate the methods used to analyse these hypotheses and the results gathered from theses analyses. The fourth and final sections examine the managerial and theoretical implications of our study and point out potential avenues for future research.


Theoretical background

Recently, studies have examined the pertinent role played by both TMT task (Beckman, 2006; Cao, Simsek, & Zhang, 2010; Heavey et al., 2015; Jansen, George, Van den Bosch, & Volberda, 2008; Jansen, Tempelaar et al., 2009; Mihalache, Jansen, Van den Bosch, & Volberda, 2014) and social integration processes (Cao et al., 2010; Heavey et al., 2015; Jansen, Tempelaar, et al., 2009) in meeting the resource differentiation-integration challenges of ambidextrous firms. Few studies have also proposed (Carmeli & Halevi, 2009; Hambrick, 1994, 1995; Simsek, 2009) and empirically observed (Lubatkin, Simsek, Ling, & Veiga, 2006; Yitzhack Halevi, Carmeli, & Brueller, 2015) the significance of a ‘behaviorally integrated TMT’ (combined task and social integration in TMT) in enabling ambidexterity amongst SMEs. A behaviourally integrated TMT is a meta-construct of three mutually interdependent as well as reinforcing team processes, collaborative behaviour, information exchange and joint decision-making (Hambrick, 1994).

TMT behavioural integration and organizational ambidexterity

The ambidextrous orientation of a firm is influenced by the TMTs, either directly through their abilities to manage resources and make the strategic decisions to meet the paradoxical demands of ambidextrous firms (Carmeli & Halevi, 2009) or through their abilities in designing and facilitating the effective deployment of ambidextrous HR architectures for the employees (Kang & Snell, 2009). Studies have identified different TMT characteristics and actions viz., top management composition (Bantel & Jackson, 1989), demographic characteristics (Wiersema & Bantel, 1992), cognitive diversity (Hambrick, Cho, & Chen, 1996; Olson, Parayitam, & Bao, 2007) and managerial discretion (Haleblian & Finkelstein, 1993) as sig-nificant factors in deciding the innovation strategies of a firm. Moreover, extant literature on ambidexterity has observed the relevance of ambidextrous managers with paradoxical thinking and cognition (Raisch et al., 2009; Smith & Tushman, 2005), behavioural repertoire (ability to fulfil different roles) and behavioural differentiation (ability to lead differently under different contexts) (Carmeli & Halevi, 2009; Raisch et al., 2009) in enabling ambidextrous firms. Further, stud-ies suggest that the top manager’s ability to sense opportunities and seize them by reconfiguring the tangible and intangible assets (O’Reilly & Tushman, 2011) and their formal structural and personal coordination mechanisms used to sense and seize these assets (Mom et al., 2009) are the primary predictors of a firm’s ambidexterity.

However, previous studies have not comprehensively examined the exact nature of TMT processes enabling ambidexterity. Few studies which have examined some of these mechanisms suggest that processes which motivate the TMT to share knowledge provide opportunities to collaborate and make joint decisions, play a significant role in deciding the ambidexterity orientation of the firm


(Cao et al., 2010; Lubatkin et al., 2006; Mihalache et al., 2014). The theory of behav-ioural integration (Hambrick, 1994) suggests that behaviourally integrated TMTs share resources, information and decisions through mutually interdependent and reinforcing team processes of collaborative behaviour, information exchange and joint decision-making, respectively. These team processes develop common men-tal frames and cognitive processes within the TMT (Hambrick, 1994, 1995). While the collective mental frames provide the lenses used by the TMT to understand each situation, the collective cognitive processes decide the behavioural routines used by the TMT to respond to, and evaluate each situation (Smith & Tushman, 2005). Since, behaviourally integrated TMTs exhibit enhanced task and social interaction, their shared mental frames and cognitive processes have the capacity to accept and manage the contradictory strategic demands of exploration and exploitation in a firm (Hambrick, 1994; Lubatkin et al., 2006). In other words, with shared mental frames and cognitive processes, the TMT members develop a shared knowledge of the assumptions, alternatives and consequences of all the explorative and exploitative innovation strategies in the firm. Similarly, with a shared understanding of the cognitive processes, the TMT is better positioned to build ambidextrous firms, by seamlessly differentiating, integrating and recom-bining the knowledge and financial resources of a firm (Smith & Tushman, 2005). Therefore, behaviourally integrated TMTs enable firms to meet the paradoxical demands of ambidextrous innovation through their processes of simultaneous explorative and exploitative learning.

Recently, studies on TMT behavioural integration have proposed (Carmeli & Halevi, 2009; Venugopal & Krishnan, 2014) and established (Lubatkin et al., 2006; Yitzhack Halevi et al., 2015) its ability to enhance organizational ambidexterity. For example, Pelaez and Mohan (2013) in their research on the effects of a behav-iourally integrated TMT on software development emphasized the importance of collaborative behaviour in the TMT for timely responses and critical decisions in innovation strategies. Enhanced TMT information exchange enables the TMT to consider divergent perspectives for in-depth analysis of issues and avoid group-think (Carmeli, 2008).

Joint decision-making enables the TMT to clarify the distinctions, and integrate the similarities in explorative and exploitative strategies through iterative cycles of differentiation and integration (Raisch et al., 2009). Since TMTs often have multi-ple functional representations, when they engage in joint decision-making, they not only make the process inclusive, but also exhaustive (Menguc & Auh, 2005). In addition, TMT behavioural integration has been observed to be a significant facilitator of employee HR architectures in two ways. Firstly, by providing the resource and motivation (Shin & Konrad, 2014), by exhibiting flexibility (Boxall & Macky, 2009) and by illustrating transformational leadership (Pereira & Gomes, 2012), the TMT can influence the employees to be ambidextrous by being role models of the desired skills and behaviours. Secondly, a behaviourally integrated TMT can facilitate the successful design and implementation of HR systems to


enhance the abilities, opportunities and motivation of employees for ambidextrous learning (Tsao & Wang, 2014), thereby enabling them to leverage the knowledge capabilities of a firm and create and share knowledge (Messersmith, Patel, Lepak, & Gould-Williams, 2011; Patel et al., 2013; Prieto-Pastor, Perez-Santana, & Martin Sierra, 2010; Swart & Kinnie, 2010). Therefore, firms with behaviourally integrated TMTs, are better poised to achieve ambidexterity.

Hambrick (1994) suggests that lower behavioural integration in the TMT, would lead to organizations facing inertia and mal-adaptation. A behaviourally disintegrated TMT shares only distilled information, leads to affective conflicts and unnecessary politics (Mooney & Sonnenfeld, 2001) and organizational decline (Carmeli & Schaubroeck, 2006). In summary, a behaviourally integrated TMT, which engages in collaborative behaviour, joint decision-making and information exchange, is better positioned to accept, manage and decide on the contradictory demands of exploration and exploitation innovation strategies, and thereby build an ambidextrous firm. Hence, we hypothesize that;

H1: TMT behavioural integration is positively associated with organizational ambidexterity.

To the best of our knowledge, no study has examined the mechanisms that build a behaviourally integrated TMT or has explored the effects of these mech-anisms on ambidexterity. In this study, we further examine the mechanisms that nurture a behaviourally integrated TMT to build ambidextrous firms. Studies have suggested that the sub-processes of a behaviourally integrated TMT such as collaborative behaviour, information exchange and joint decision-making are enhanced with frequent interactions, enhanced social and task dependence amongst strategic decision-makers and formal top leadership communication channels across functional units (Cross, Borgatti, & Parker, 2002; Westphal, 1999). Therefore, we propose and explore TMT connected mechanisms, cross-functional interfacing mechanisms and senior team contingency rewards as antecedents to behaviourally integrated TMTs.

TMT connectedness mechanisms and organizational ambidexterity

Literature has associated organizational social networks, connectedness and social capital with enhanced organizational ambidexterity (Berraies et al., 2015; Jansen, Tempelaar et al., 2009; Li & Huang, 2013; Mom et al., 2009; Prieto & Pilar Pérez Santana, 2012; Li, Lin, & Huang, 2014). In keeping with the definition of organi-zational connectedness mechanisms suggested by Jansen, Tempelaar et al. (2009), in this paper, we define TMT connectedness mechanisms as the mechanisms that enhance each member’s social network within the TMT in order to facilitate knowledge exchange. A well connected TMT can be understood as one with dense as well as larger number of network ties. Well connected TMT members have more access to each other, freedom to approach each other without power


biases and have more open communication systems in place (Cao et al., 2010). The social networks in TMTs have been associated with enhanced firm performance and exploratory and exploitative innovations (Clark, Smith, & Oliver, 2003). Well connected TMTs can sense knowledge bases better, seize opportunities effec-tively and recombine resources effectively, to pursue exploratory and exploitative innovations simultaneously (O’Reilly & Tushman, 2008). We further examine the processes through which TMT connectedness mechanisms might affect organi-zational ambidexterity.

When the network ties are strong, the TMT members are more likely to share sensitive and proprietary information, thereby enhancing the information advan-tage of the TMT (Hansen, 1999; Krackhardt, 1992). The increased TMT network ties open more avenues for the members to collaborate and exchange information. In addition, the enhanced network ties provide more opportunities to the team members to express their individual views and resolve resource sharing dilem-mas through collaborative efforts. Collaboration within the TMT enhances the quantity and quality of social interactions too (Levi, 2013; Sinha, 2013). With improved quality of social interaction, more team members and their opinions are included thereby ensuring that alternatives are not missed out from consideration and thus the decision-making processes become more inclusive and exhaustive. Therefore, we hypothesize that TMT connectedness mechanisms enhance each of the sub-processes of a behaviourally integrated TMT namely, collaborative behaviour, information exchange and joint decision-making. We can derive from the above arguments that, behaviourally integrated TMTs help transmit the posi-tive effect of TMT connectedness mechanisms on organizational ambidexterity.

However, studies have shown that TMT connectedness mechanisms enhance other TMT level constructs such as TMT satisfaction (Stokes, 1983), TMT task coordination and overall TMT effectiveness (Hackman, 1987), which in turn are likely to enhance organizational ambidexterity. Following these arguments, it can be hypothesized that TMT behavioural integration partially mediates the effect of TMT connectedness mechanisms on organizational ambidexterity.

H2: TMT behavioural integration partially mediates the effect of TMT connectedness mechanisms on organizational ambidexterity.

TMT cross-functional interfacing mechanisms and organizational ambidexterity

TMTs with multiple functional representatives within the teams are able to consider solutions from each functional perspective in their decision-making processes (Simons, Pelled, & Smith, 1999). Previous research has associated TMT functional diversity with better decision-making and thereby enhanced firm performance (Cannella, Park, & Lee, 2008). TMT cross-functional interfacing mechanisms are defined as the mechanisms that enable formal and informal knowledge exchange


between members from different units in the team so that they can reach a com-mon frame of reference to build understanding and agreement (Jansen, Tempelaar et al., 2009; Mom et al., 2009). Increased communication in the senior team across functional units has been observed to enhance organizational ambidexterity (Cao et al., 2010). Mechanisms enhancing knowledge exchange across functional units in TMT can enhance the firm’s ability to manage the contradictory demands of exploration and exploitation (Ahammad et al., 2015; De Clercq, Thongpapanl, & Dimov, 2013; Jansen, Tempelaar, et al., 2009; Mom et al., 2009). With increased communication in the top management, each member becomes more aware of the options available for new and existing knowledge searches. Thus, while mak-ing decisions regarding exploration and exploitation; alternatives from different functional units are evaluated. Communication within a functionally diverse TMT brings forth varied functional perspectives, vested functional interests and specific functional area resource requirements, on the same collective platform. Following this logic, a TMT with enhanced communication across the different functional units should also be able to enhance the ambidextrous performance of the firms. We further examine the processes through which TMT cross-functional inter-facing mechanisms might affect organizational ambidexterity.

With common frames of reference, the TMT members are likely to exchange more knowledge with a common understanding about the alternatives, preferred order of alternatives and consequences of each alternative, in a given situation (Hambrick, 1994). The common frame of reference helps the TMT to overcome differences in understandings and interpretations, and in turn builds a common platform across paradoxical cognitive frames to take joint decisions (Smith & Tushman, 2005). The common frames of reference give the TMT a shared lens to understand a given situation and a shared set of routines to think and respond to information, thus ensuring smoother TMT collaboration (Smith & Tushman, 2005). Thus, it can be seen that mechanisms enhancing communication across units in TMT enhances information exchange, collaborative behaviour and joint decision-making in the TMT.

Furthermore, studies have also shown that cross-functional interfaces within the TMT can impact ambidexterity through other team or organization level constructs, such as the strategic orientation of the TMT or firm (Menguc & Auh, 2005). Therefore, we hypothesize that TMT behavioural integration partially mediates the effect of TMT cross-functional interfacing mechanisms on organ-izational ambidexterity.

H3: TMT behavioural integration mediates the effect of TMT cross functional interfac-ing mechanisms on organizational ambidexterity.


Senior team contingency reward mechanisms and organizational ambidexterity

Incentives based on group performance in the TMT are usually termed as ‘senior team contingency rewards’ (Jansen et al., 2008). The senior team contingency reward system is an interdependent reward system in which the reward is accrued equally to every member in the senior team based on their collective performance and that is independent of their individual performance (Wageman & Baker, 1997). Stock options, profit sharing and bonuses based on the organizational per-formance are various examples of such senior team contingency reward systems (Hambrick, 1995; Jansen et al., 2008). Senior team contingency rewards have been proposed (Jansen et al., 2008; O’Reilly & Tushman, 2004; Smith & Tushman, 2005), to enhance organizational ambidexterity. Ahammad et al. (2015) argued that the financial incentives motivated employees to improve their individual explora-tive and exploitative efforts. Jansen, Tempelaar et al. (2009) argued that senior team contingency rewards dependent on organizational performance motivates TMT members to accommodate the strategic intent of balancing exploration and exploitation without internal rivalry. These studies reflect the positive effect of the senior team contingency reward mechanisms on organizational ambidexterity.

Further, senior team contingency rewards dependent on organizational out-comes help in motivating the team members to reinforce integrative thinking and to consider overarching organizational goals and exchange information, make joint decisions and collaborate (Jansen et al., 2008; Smith & Tushman, 2005). The promise of rewards contingent on their collective performances motivates the TMT members to transcend the vested interests of their individual units, and exchange information regarding knowledge sources without resistance. When the collaborative efforts are expected to accrue more financial gains than the non-collaborative efforts, cross-functional collaborative behaviours are bound to increase within the TMT. In addition, senior team contingency rewards have been proposed to foster a supporting organizational context for contextual ambi-dexterity (Smith & Tushman, 2005). However, senior team contingency reward mechanisms are likely to enhance other TMT level variables as shared vision and strategic consensus (Pearce, 2004), which in turn are likely to enhance organiza-tional ambidexterity (Wang & Rafiq, 2009). Therefore, we hypothesize that TMT behavioural integration partially mediates the effect of senior team contingency rewards on organizational ambidexterity.

H4: TMT behavioural integration mediates the effect of senior team contingency reward mechanisms on organizational ambidexterity.

In sum, we examine the effects of different TMT mechanisms as connectedness, cross-functional interfaces and team contingency rewards on organizational ambi-dexterity. Further, we examine the mediating role of a behaviourally integrated TMT in these relationships. We hypothesize that the TMT mechanisms encourag-ing united efforts for firm goals, and knowledge exchange through social networks


across functional units, encourage the TMT members to be more behaviourally integrated, and this in turn enhances the simultaneous pursuit of exploratory and exploitative innovation strategies in firms. All the hypothesized relationships together are shown in Figure 1.

Methods

Research setting and data sample

The hypothesized relationships are examined in a research context of SMEs. An SME research context was chosen for examination based on two logical arguments. Firstly, compared to large firms, the role of upper echelons is highly salient in SMEs (Cao et al., 2009). SMEs have to rely more on the ability of their TMT to attain ambidexterity because they have fewer hierarchical levels and their managers have to adorn both strategic and operational roles (Lubatkin et al., 2006). Centralized control over decision-making and informal work practices are important means by which SMEs could reduce their cost and remain flexible (Krishnan & Scullion, 2016). Secondly, small firm’s TMTs are more likely to be behaviourally integrated than be a loosely defined group of people who hardly know each other (Hambrick, 1994). While conceptualizing behavioural integration, Hambrick (1994) consid-ered that behavioural integration would be higher in organizations of smaller sizes. Moreover, in the past, TMT behavioural integration has been empirically established to facilitate ambidexterity in SMEs employing more than 10 and less than 300 employees (Lubatkin et al., 2006).

Figure 1. hypothesized model.


In India, the National Knowledge Commission (NKC) report of 2007 has suggested that the industries of Information Technology (IT), Electronics and Biotechnology have the highest innovation intensity. Therefore, this research is limited to the Indian product innovating SMEs employing more than 10 and less than 300 employees in IT, electronics and biotechnology industries. To explore the research questions; we chose to collect quantitative data via survey instru-ments from the TMT members (independent variables) and managerial exec-utives (dependent variables) of Indian SMEs of the said industry sectors. The initial literature review, theory building and research design were done from September 2013 to October 2014. The data collection of the study was conducted from November 2014 to June 2015, the analyses were done, and the work was completed by November 2015.

Since the Ministry of Micro Small and Medium Enterprises (MSME) annual report of India (MSME, 2014–2015, p. 26) cited Kerala and Karnataka to be the 6th and 8th in the MSME enterprise and employment presence rankings in India, we chose to concentrate on the SMEs from this region so that they are a representative population of Indian SMEs. The list of SME firms was obtained from D&B India’s Emerging SME database (D & B India, 2008). Initially we contacted the first 250 alphabetically listed firms in the D & B data base in the regions of Karnataka and Kerala via email. At least two reminders were also sent to each of these firms, but none responded. After this, we initiated contact to all the 425 companies listed in the database in the regions of Kerala and Karnataka via landline phones. Of the 425 firms, only 134 firms responded and on intimation of the research information and time requirements only a smaller group of 83 firms responded to the survey. Following the guidelines of Hair, Hult, Ringle, and Sarstedt (2013), we removed 5 firms from the sample of 83, since they had recorded less than 80% data. Thus, the total response rate was 19.5%. A total of 473 usable responses were collected in the time period from November 2014 to June 2015, of which 240 were from TMT members and the rest 233 were from managerial executives.

As shown in Table 1, the employee profile description of our sample is similar to the industry standards as described in other similar studies in Indian high tech-nology SME contexts (Renuka & Venkateshwara, 2006; Sharma & Bhagwat, 2006).

On an average the firms in the sample were 9 years old, had 80 employees and had a TMT of 5 members. The largest TMT in the sample had 10 members and the smallest had 2. The largest firm in the sample had 165 employees and the smallest had 20 employees. The oldest firm in the sample was incorporated in 1992 and the youngest firm had been set up in 2002. At least 3 TMT members including the CEO and at least 3 managerial executives from each firm responded to the survey.

Data collectionWe met up with the Managing Directors (MDs) or Chief executive officers (CEOs) of the enterprises and requested that they let their organizations be part of the study. Each of the MDs/CEOs was given a note on what was meant by exploration


and exploitation innovation choices and top management teams. To ensure that the responses would not be biased the specifics of the study were not revealed. Following previous studies (Lubatkin et al., 2006; Mihalache et al., 2014), we asked the CEOs to identify the TMT members and to send a memo to them requesting them to be part of this study. All managers and higher up executives with the ability to oversee and decide on and oversee the fulfilment of the exploration and exploitation activities of the firm as identified by the CEO constituted the TMT. The CEO was also a member of the TMT. Of the 78 firms, 43 of them had multiple founders in the TMT.

Measures

Dependent variable: organizational ambidexterityWe adapted Lubatkin et al.’s (2006) scale to measure exploration and exploita-tion. Based on their organization’s orientation in the last three years, the mana-gerial executives and CEOs of the firms were asked to assess 6 statements each on exploration and exploitation on a scale of 1 (strongly disagree) to 5 (strongly agree). Some of the reflective items used to measure exploration were (1) Your organization looks for novel technological ideas by thinking ‘outside the box’ and (2) Your organization bases its success on its ability to explore new technologies. Similarly some of the reflective items used to measure exploitation were (1) Your organization commits to improve quality and lower cost, (2) Your organization continuously improves the reliability of its products. Similar to Mihalache et al. (2014), we measured organizational ambidexterity as the product of the explo-ration and exploitation scales. A prefix of ‘your organization’ was added to the items on the scale of ambidexterity to facilitate the responder’s understanding.

Dependent variable: TMT behavioural integrationWe adapted Simsek, Veiga, Lubatkin, and Dino’s (2005) scale to measure TMT behavioural integration. We gathered responses on this scale from the TMT mem-bers including the CEO of the firm based on their recollections of the firm’s ori-entation on the scale items in the past 3 years. TMT behavioural integration was measured as a reflective meta-construct of collaborative behaviour, information exchange and joint decision-making with three items each. Collaborative behav-iour and joint decision-making were measured on scales of 1 (strongly disagree) to 5 (strongly agree) with items as ‘When a team member is busy other team

Table 1. summary of participant firms.

Industry No. of firmsAverage no. of

employees Average TMT sizeAverage age of

organizationIT 54 81 5 8electronics 6 35 4 6Biotechnology 18 91 4 13


members often volunteer to help manage the workload’ and ‘Team members usu-ally let each other know when their actions affect another team member’s work’, respectively. Information exchange was measured on a scale of 1 (low effectiveness) to 5 (high effectiveness) with items pertaining to the quantity of ideas, quality of solutions and level of creativity. The nine item scale had a Cronbach’s alpha value of .880 and composite reliability value of .905 in our sample.

Independent variable: TMT connectedness mechanismsWe adapted Jansen, Tempelaar et al.’s (2009) scale to measure TMT connectedness mechanisms from the TMT members of firms based on their assessment of their firm’s orientation in the last three years on a scale of 1 (strongly disagree) to 5 (strongly agree). TMT connectedness mechanisms were measured with reflective items as ‘In your organization, there is ample opportunity for informal ‘hall talk’ amongst Top Management Team’ and ‘Top management Team members around here are quite accessible to each other’. The four item scale had a Cronbach’s alpha value of .828 and composite reliability value of .885 in our sample.

Independent variable: TMT cross-functional interfacing mechanismsWe adapted Jansen, Tempelaar et al.’s (2009) scale to measure TMT cross- functional interfacing mechanisms from the TMT members of firms based on their assess-ment of their firm’s orientation in the last three years on a scale of 1 (strongly disagree) to 5 (strongly agree). TMT cross-functional interfacing mechanisms were measured with reflective items as ‘There is regular talk about possibilities for collaboration between units amongst the TMT members’ and ‘The organization has cross-functional teams to exchange knowledge between departments’. The four item scale had a Cronbach’s alpha value of .851 and composite reliability value of .900 in our sample.

Independent variable: senior team contingency rewardsWe adapted Jansen et al.’s (2008) scale to measure senior team contingency rewards from the TMT members of firms based on their assessment of their firm’s orienta-tion in the last three years on a scale of 1 (strongly disagree) to 5 (strongly agree). Senior team contingency rewards were measured with reflective items as ‘TMT members’ variable pay is based on how well the company as a whole is performing’. The four item scale had a Cronbach’s apha value of .837 and composite reliability value of .891 in our sample.

Control variables: TMT size, firm size, firm performance till date, industryThe size of a firm has been suggested to be a critical variable in deciding the effect of antecedents on organizational ambidexterity (Raisch & Birkinshaw, 2008). Almost all past ambidexterity studies have controlled for the effects of firm size on ambidexterity for example, (Heavey et al., 2015; Kostopoulos, Bozionelos, & Syrigos, 2015; Yitzhack Halevi et al., 2015). Therefore, in this study, we control


for the effects of firm size. We asked the TMT including the CEO to report on the firm size in terms of employee strength.

Carpenter, Geletkanycz, and Sanders (2004) had suggested that studies meas-uring the effect of TMT characteristics on organizational outcomes should control for TMT size. Similar studies (Cao et al., 2010; Chang, 2015; Jansen et al., 2008; Mihalache et al., 2014) looking at the effects of TMT variables on ambidexterity, have controlled for the effects of TMT size. We too controlled the effects of TMT size in our study. TMT size was measured as reported by all TMT members includ-ing the CEO. In the seven cases where there was a discrepancy in the size reported by the CEO and the TMT members (certain organizations had loosely defined TMTs), the CEO’s answer was taken to be the right one. Only one member had a different response on the organization and TMT size in each of these seven TMTs.

Wiersema and Bantel (1992) had suggested that studies exploring the effects of TMT on corporate strategic changes should control for the effects of firm per-formance till date. Similar studies on ambidexterity (Cao et al., 2010; Lubatkin et al., 2006) in the past have also controlled for the effects of past financial perfor-mance of organizations. Based on Auh and Menguc’s (2005) scale of firm financial performance, we measured firm financial performance till date from the TMT members based on their assessment of their firm’s performance before 3 years of this study on a Likert scale anchored between 1 (much worse) and 5 (much better). The five item scale had a cronbach’s alpha value of .908 and composite reliability value of .931 in our sample.

Raisch and Birkinshaw (2008) had suggested that future researchers should control for industry’s effects while examining the influence of antecedents on ambidexterity. Past studies have controlled for the effects of industry (De Clercq et al., 2013; Mihalache et al., 2014). In our study, we chose to look at the MSME ranking of various industries with respect to their revenue generation and consid-ered this ranking order to control for the effects of industry in our SEM analysis. IT, electronics and biotechnology industries were ranked in the described order.

Mitigating selection and social desirability bias

While designing the survey, we had assured the respondents of their anonymity and implored them to respond most truthfully to the questions on the survey. To mitigate self report bias, while communicating the research idea to the CEOs, the specifics of the research were kept hidden so that the CEOs or the TMT members would not portray their firms in a better light. In addition, to test self report bias, following the suggestion of Podsakoff and Organ (1986), we checked the mean and standard deviation of all the variables and observed dispersed response pat-terns. To further ensure that social desirability bias did not affect the validity of our responses we measured the social desirability of all the respondents using Reynolds (1982) 13 item scale. The interaction effect of the social desirability scale with all the independent variables on organizational ambidexterity was


insignificant (p > .10). We checked for significant differences in the number of employees between the firms in the sampling frame, that had responded to the survey and that had not. No significant differences were found across groups (p > .1). Thus, selection bias was ruled out.

Results and analysis

All the organization level variables were measured through multiple responses from each firm and aggregated at the level of the firm. Before averaging the responses from the different organizations we checked whether the variance within each organization was significantly lower than the variance across organizations using F test and the value of intra-class correlation coefficient. For all variables, the intra-class correlation coefficient was greater than .7, and F statistic was significant in one way random test on each item. The measures of TMT size and firm size were not normal in distribution. Hence, like earlier studies (De Clercq et al., 2013; Mihalache et al., 2014), we too substituted these measures with their natural logs in the model to make these variable distributions normal.

We tested the hypothesized relationships with Partial Least Squares Structural Equation Modelling (PLS SEM) technique. Since our research is exploratory in nature, with non-normal variables (TMT behavioural integration and senior team contingency rewards) and a relatively small sample size, PLS SEM analysis was considered appropriate (Chin, 1998). Before analysing the data we checked for missing data in the responses. Following Hair et al.’s (2013) criteria, we removed 5 subjects from a sample of 83 firms, where the missing data exceeded 20%. We checked for response patterns in the data, and ruled out any possibility of straight lining in the respondent marks. We examined the variable box plots and stem-and-leaf plots to rule out the presence of outliers. Table 2 demonstrates the descriptive statistics of all the variables in the study.

The PLS SEM results of this study were estimated in SmartPLS 3.2.1 trial licence version by re-sampling 3000 samples with bias corrected and accelerated (BCa) bootstrap. The significance of the path coefficients were tested against two tailed tests at a .05 significance level of confidence interval computations. Sign changes in re-samples were ignored and sample estimates were taken as they were. To weight the structural model, we used the path weighting scheme. The PLS SEM results were obtained in less than 300 iterations at the stop criterion.

Measurement model

We followed the below mentioned criteria as suggested by Hair et al. (2013), to check the reliability and validity of the scales used. The internal consistency reliabil-ity of the variables was checked with Cronbach’s alpha values (acceptable above .7) and composite reliability values (acceptable above .708). Indicator’s reliability was checked by making sure that all the indicator outer loadings were greater than .7.


Tabl

e 2.

Var

iabl

e de

scrip

tive

stat

istic

s.

a nat

ural

log

of v

aria

ble.

* corr

elat

ion

is si

gnifi

cant

at t

he .0

5 le

vel (

2-ta

iled)

. **co

rrel

atio

n is

sign

ifica

nt a

t the

.01

leve

l (2-

taile

d).

Mea

nSt

anda

rd

devi

atio

n

Org

aniz

a-tio

nal a

mbi

-de

xter

ityIn

dust

ryFi

rm p

erf

till d

ate

Firm

siz

eTM

T si

ze

TMT

beha

v-io

ural

inte

gra-

tion

TMT

conn

ecte

d-ne

ss m

echa

-ni

sms

TMT

cros

s-fu

nc-

tiona

l int

erfa

ce

mec

hani

sms

Seni

or te

am

cont

inge

ncy

rew

ards

org

aniz

atio

nal a

mbi

dex-

terit

y20

.94

3.99

1

Indu

stry

2.46

.85

−.0

361

firm

per

f till

dat

e3.

66.6

9.2

40*

.062

1fi

rm si

zea

4.19

.65

.026

−.0

63.0

981

TmT

size

a1.

43.3

5.1

43.0

43.1

05−

.101

1Tm

T be

havi

oura

l int

egra

tion

3.68

.69

.627

**.1

27.3

49**

.156

.097

1Tm

T co

nnec

tedn

ess m

ech-

anis

ms

3.77

.88

.531

**.0

59.3

43**

−.0

38.0

68.6

34**

1

TmT

cros

s-fu

nctio

nal i

nter

-fa

ce m

echa

nism

s3.

61.6

4.5

67**

.019

.282

*.1

70−

.061

.644

**.6

64**

1

seni

or te

am c

ontin

genc

y re

war

ds3.

80.7

7.2

57*

−.0

06.2

99**

.054

.019

.414

**.2

33*

.403

**1


Convergent validity of the scales was checked by seeing if the average variance extracted from each construct was greater than .5. Furthermore, to ensure the discriminant validity of the constructs, we used the Fornell Lackner criterion (Hair et al., 2013) and saw that the square root of the average variance extracted of each construct was greater than its highest inter construct correlation. Before assessing the structural model using PLS-SEM, we checked for collinearity issues between the variables. To assess collinearity of variable indicators, we followed Hair et al.’s (2013) guidelines and checked to make sure that the tolerance value of indicators is >.2 (i.e. Variance Inflation Factor, VIF < 5).

Structural model

The PLS SEM standardized path coefficients along with the corresponding p values of all the hypothesized relationships are demonstrated in Figure 2.

In addition to assessing the significance and relevance of each of the hypoth-esized relationship’s path coefficient, we also assessed the level of R2, and pre-dictive relevance Q2 in each hypothesized relationship. The Q2, cross-validated redundancy approach predictive indexes were calculated by blindfolding every 7th data point i.e. the omission distance was 7 data points. Table 3 shows the model quality fit indices and the amount of variance explained in terms of R2 and the

Figure 2. structural model.

Table 3. model quality indices.

Model quality indices TMT behavioural integration Organizational ambidexterityR2 .423 (t = 5.940, p = .000) .547 (t = 6.406, p = .000)adjusted R2 .383 (t = 5.039, p = .000) .529 (t = 5.956, p = .000)Q2(cross-validated redundancy

approach).265 .351


Tabl

e 4.

str

uctu

ral m

odel

pat

h co

effici

ents

.

**p

≤ .0

1; *

**p

≤ .0

01.

Dep

ende

nt

varia

bles

Inde

pend

ent v

aria

bles

Conn

ecte

dnes

s m

echa

nism

Cros

s-fu

nctio

nal i

nter

-fa

ce m

echa

nism

Seni

or te

am c

ontin

-ge

ncy

rew

ards

TMT

beha

viou

ral

inte

grat

ion

Indu

stry

Firm

per

form

ance

til

l dat

eFi

rm s

ize

TMT

size

ß (t

)Eff

ect

size

SDß

(t)

Effec

t si

zeSD

ß (t

)Eff

ect

size

SDß

(t)

Effec

t si

zeSD

ß (t

)Eff

ect

size

SDß

(t)

Effec

t si

zeSD

ß (t

)Eff

ect

size

SDß

(t)

Effec

t si

zeSD

TmT

Beha

v-io

ural

in

tegr

a-tio

n

.406

***

(t =

4.0

26,

p =

.000

)

.202

.101

.302

**

(t =

2.8

18,

p =

.005

)

.098

.107

.198

**

(t =

2.6

15,

p =

.009

)

.072

.076

org

aniz

a-tio

nal

ambi

dex-

terit

y

.641

***

(t =

8.8

02,

p =

.000

)

.599

.073

−.1

27

(t =

1.5

40,

p =

.124

)

.027

.083

.024

(t

= .2

75,

p =

.784

)

.001

.087

−.0

74

(t =

.788

, p

= .4

31)

.009

.094

.072

(t

= .7

61,

p =

.447

)

.009

.095


Tabl

e 5.

Indi

rect

effe

cts.

Path

to/t

hrou

gh

Conn

ecte

dnes

s m

echa

nism

Cros

s-fu

nctio

nal i

nter

face

mec

hani

smSe

nior

team

con

tinge

ncy

rew

ards

Path

co

efft s

tat, p

valu

eSD

LBL

UBL

Path

co

efft s

tat, p

valu

eSD

LBL

UBL

Path

co

efft s

tat, p

valu

eSD

LBL

UBL

TmT

beha

viou

ral i

nteg

ra-

tion-

orga

niza

tiona

l am

bi-

dext

erity

.176

†t =

2.4

85,

p =

.013

.071

.042

.313

.128

†t =

1.8

67,

p =

.062

.069

.016

.277

.090

*t =

1.9

85,

p =

.047

.045

.003

.176

Tabl

e 6.

Tota

l effe

cts.

Path

to/t

hrou

gh

Conn

ecte

dnes

s m

echa

nism

Cros

s-fu

nctio

nal i

nter

face

mec

hani

smSe

nior

team

con

tinge

ncy

rew

ards

Path

co

efft s

tat, p

valu

eSD

LBL

UBL

Path

co

efft s

tat, p

valu

eSD

LBL

UBL

Path

co

efft s

tat, p

valu

eSD

LBL

UBL

TmT

beha

viou

ral i

nteg

ra-

tion-

orga

niza

tiona

l am

bi-

dext

erity

.246

†t =

1.9

20,

p =

.055

.128

.049

.561

.408

***

t = 3

.255

, p

= .0

01.1

25.1

20.6

12.0

42t =

.411

, p

= .6

81.1

03−

.149

.256

Tabl

e 7.

Dire

ct e

ffect

s.

Path

to/t

hrou

gh

Conn

ecte

dnes

s m

echa

nism

Cros

s-fu

nctio

nal i

nter

face

mec

hani

smSe

nior

team

con

tinge

ncy

rew

ards

Path

co

efft s

tat,

p va

lue

SDLB

LU

BLPa

th

coeff

t sta

t, p

valu

eSD

LBL

UBL

Path

co

efft s

tat, p

valu

eSD

LBL

UBL

org

aniz

atio

nal

ambi

dext

erity

.070

t = .4

73,

p =

.636

.148

−.1

71.4

08.2

80t =

2.1

33,

p =

.033

.131

−.0

39.4

77−

.048

t = .4

12,

p =

.680

.116

−.2

60.1

75

† p ≤

.1**

* p ≤

.001

.

† p ≤

.1


predictive relevance of the model in the case of each of the dependent variables in terms of Q2. The R2 and adj R2 values show that the independent variables of the study explain more than 50% of variance in organizational ambidexterity (R2 = .547, t = 6.406, p = .000 and adj R2 = .529, t = 5.956, p = .000) and more than 35% variance in TMT behavioural integration (R2 = .423, t = 5.940, p = .000 and adjusted R2 = .383, t = 5.039, p = .000). The predictive relevance Q2 indices of organizational ambidexterity (Q2 = .351) having exceeded .35, and that of TMT behavioural integration (Q2 = .265) having exceeded .15, it is understood that the exogenous constructs of this study have a large and medium predictive relevance for these endogenous study constructs, respectively (Hair et al., 2013). Hair et al. (2013) had suggested that Q2 predictive indexes of .02, .15 and .35 correspond to small, medium and large effects.

Main effectsOur hypothesis postulating the positive effects of TMT behavioural integration on organizational ambidexterity was supported with PLS path coefficients of ß = .641*** (t = 8.802, p = .000). Thus, Hypothesis H1 was statistically supported. Our results are in keeping with the few other studies which examine the effect of TMT behavioural integration on organizational ambidexterity (Lubatkin et al., 2006; Yitzhack Halevi et al., 2015). While Lubatkin et al. (2006) employed Covariance Based SEM; Yitzhack Halevi et al. (2015) used hierarchical regression models to estimate the effects of TMT behavioural integration on organizational ambidexterity, respectively. Since, we have used PLS SEM analysis techniques in our paper our study has the added advantage of pointing towards the comparative predictive capability of the various drivers of organizational ambidexterity.

On further analysis, we saw that TMT behavioural integration has a higher impact on explorative innovation (ß = .643***, p < .001, SE = .093) than exploit-ative innovation (ß = .584***, p < .001, SE = .095) though the difference is not statistically significant. On comparison of the path coefficients, we also found that there is no significant difference (p > .05) in the effects of TMT behavioural integration on outcomes including organizational ambidexterity, explorative or exploitative innovation (Paternoster, Brame, Mazerolle, & Piquero, 1998). Table 4 shows the structural path coefficients along with the bootstrapped upper and lower boundary limits.

Mediation effectsSmartPLS version 3.2.1 explicitly demonstrate the indirect and total effects of relationships along with the p values, standard deviations and bootstrap confi-dence interval limits. The mediating effects of all the hypothesized relationships are shown in Table 5. Tables 6 and 7 show the total and direct effects, respec-tively. In Hypotheses 2, 3 and 4, we had postulated the mediating effect of TMT behavioural integration in the effect of TMT connectedness mechanisms, TMT cross- functional interfacing mechanisms and senior team contingency reward


mechanisms on organizational ambidexterity, respectively. From the results in Table 5 it can be seen that TMT connectedness mechanism (ß = .176†, t = 2.485, p = .013), TMT cross-functional interfacing mechanisms (ß = .128†, t = 1.867, p = .062) and senior team contingency reward mechanisms (ß = .090*, t = 1.985, p = .047) have significant indirect effects on organizational ambidexterity through TMT behavioural integration. Table 6 shows that TMT connectedness mech-anisms (ß = .246†, t = 1.920, p = .055) and TMT cross-functional interfacing mechanisms (ß = .408***, t = 3.255, p = .001) have significant total effects on organizational ambidexterity too. Moreover, Table 7 shows that the direct effects of TMT connectedness mechanisms (ß = .070, t = .473, p = .636) on organiza-tional ambidexterity become insignificant in the presence of TMT behavioural integration as a mediator. Following (Baron & Kenny, 1986) logic, these results suggest that TMT behavioural integration completely mediates the effect of TMT connectedness mechanisms on organizational ambidexterity. Similarly, Table 7 shows that the direct effects of TMT cross-functional interfacing mechanisms on organizational ambidexterity are statistically significant (ß = .280*, t = 2.133, p = .033). Therefore, following Baron and Kenny’s (1986) logic, TMT behav-ioural integration partially mediates the effect of TMT cross-functional interfacing mechanisms on organizational ambidexterity. Hypothesis 2 and 3 are supported. However, senior team contingency reward mechanisms do not have significant total effect on organizational ambidexterity (ß = .042, t = .411, p = .681). Though TMT behavioural integration mediates the effect of senior team contingency reward mechanisms on organizational ambidexterity significantly, senior team contingency reward mechanisms seem to have no significant effect on organiza-tional ambidexterity. Therefore, Hypothesis H4 is not statistically supported. On analysis of the Variance Accounted For (VAF) as suggested by Shrout and Bolger (2002), similar results were obtained. TMT behavioural integration accounted for 71.54 and 31.37% of TMT connectedness mechanism’s and TMT cross-functional interfacing mechanism’s effects on organizational ambidexterity. Following the suggestions from Shrout and Bolger (2002), to quantify the strength of mediation, these results suggest that TMT behavioural integration only partially mediates the effect of TMT cross-functional interfacing mechanism on ambidexterity. However, its mediation role is almost complete in the effect of TMT connectedness mech-anisms on ambidexterity.

Robustness tests

We rechecked the reliability of the mediating effect results by running multiple OLS regressions and used the Preacher and Hayes (2004) approach with Sobel’s standard error method (Sobel, 1986) and bootstrapped confidence intervals, to cal-culate the significance of the effects. The results from the multiple OLS regressions were in keeping with the PLS SEM results. TMT behavioural integration medi-ated the effects of TMT connectedness mechanisms and TMT cross-functional


interfacing mechanisms on organizational ambidexterity. Hypothesis 1, 2 and 3 were supported and Hypothesis 4 was not supported. TMT behavioural integra-tion did not mediate the effects of senior team contingency rewards on organi-zational ambidexterity.

To ensure the robustness of our analyses, we performed additional tests. We performed an alternative regression analysis with the independent variables of the study and the additive index of exploration and exploitation as the depend-ent variable. We found that the results were similar to our earlier findings. We performed additional regression analysis with the independent variables of the study and a single latent factor of organizational ambidexterity as the dependent variable. We calculated the single latent factor of organizational ambidexterity from the independent factor scores of exploration and exploitation. Again, we found that our results were replicated. Thus, we ensured that our results did not vary with the various conceptualization and composite scoring techniques of organizational ambidexterity.

We also checked for significant differences between the responses of CEOs and TMT members in firms on the independent variables. No significant differences were found across groups (p > .1). This further ensured that there were no trends or sub-groups in the responses.

Discussion

Despite the general understanding that the TMT plays a significant role in develop-ing organizational ambidexterity, the TMT processes and mechanisms enhancing ambidexterity remains little understood in the ambidexterity research map (Junni, Sarala, Taras, & Tarba, 2013; O’Reilly & Tushman, 2013). Through this study, we show that the TMT mechanisms such as cross-functional interface and connected mechanisms enable the TMT behavioural integration needed for organizational ambidexterity. Our findings are consistent with the theory of behavioural integra-tion, indicating that a behaviourally integrated TMT enhances the ambidextrous capabilities of firms. The study asserts the importance of TMT mechanisms that enable social networks for knowledge exchange and common frames of reference, in building ambidextrous firms. It is interesting to note, however, that senior team contingency rewards do not enhance organizational ambidexterity.

Anchored in the upper echelons perspective, our study contributes to two major streams of literature, organizational ambidexterity and the theory of behavioural integration. In the past, authors have exhorted researchers to pay closer atten-tion to the minute senior team behaviours that pave way to ambidextrous firms (O’Reilly & Tushman, 2013; Smith & Tushman, 2005). Thus, in keeping with this view, the results from this paper emphasize the importance of senior team behavioural integration in building ambidextrous capabilities in organizations. Organizational ambidexterity is likely to arise from a firm’s unique human resource base rather than a set of HR practices. This study specifically looks at the human


resource base at the top comprising of the top management team responsible for ambidextrous decision-making in a firm. The flexibility in allocating the time and attention of the TMT human resources towards exploration and exploitation are facilitated by work practices that help share information, knowledge and decisions. This is an important distinction, as the flexibility does not lie with the system, but rather with the behavioural choices of the TMT members meeting the disparate goals of the organization. More specifically we find that the connectedness and cross-functional interface work mechanisms and practices help develop behav-ioural integration in the top management team in SMEs and this TMT behavioural integration in turn enables organizational ambidexterity in two ways. First, in suc-cessful organizations top managers are leaders whose primary role is to ensure that the values are constantly made real to all the people in the organization (O’Reilly & Pfeffer, 2000). Behaviourally integrated TMT members could showcase the set of values, skills and behaviours required for contextual ambidexterity. Being role models, they could create a behavioural context that requires the integration of both explorative and exploitative activities to be followed even at lower levels of the organization. Second, TMT makes crucial decisions on the firm’s HR policies and practices. Strategic HR practices such as high performance/involvement work practices have been found to have positive performance outcomes for the organ-ization (e.g. Arthur, 1994; Huselid, 1995). In addition, the adoption of new HR practices that enable further autonomy and responsibility amongst the shopfloor employees have been observed to facilitate exploitative innovation (Santangelo & Pini, 2011). However, the adoption of similar strategic HR practices at any hier-archy within a firm, often involves resolving divergent and conflicting interests and also incurs significant direct and indirect costs (Cappelli & Neumark, 2001). The potential productivity gains could be offset by these additional costs which are particularly important considerations in the SME context (Sels et al., 2006). A behaviourally integrated TMT through its shared understanding and collaborative work philosophies could help build a social climate where the conflicting interests and trade-offs are jointly considered to arrive at an aligned set of HR practices that promote organizational ambidexterity. Thus, our investigation strengthens the argument in the ambidexterity research, that the integrative function of TMTs is significant in deciding the ambidexterity of a firm.

Few empirical studies have attempted to explore the enabling mechanisms for TMT behavioural integration to enhance organizational ambidexterity. However, recent studies,have observed that high-profile personal HR practices and collabo-rative HR practices affect firm’s innovation capabilities through human and social capital, respectively (Donate, Peña, & Sánchez de Pablo, 2016). Our results reso-nate this argument and add to the literature on ambidexterity by observing the sig-nificance of the senior team mechanisms enabling social networks for knowledge exchange and common platforms of understanding across functional units. Our results are consistent with studies (Berraies et al., 2015; Lopez-Cabrales, Perez-Luño, & Cabrera, 2009) that assert the need of knowledge integration coordination


mechanisms to build a firm’s organizational capabilities and sustain competitive advantage. Our study underscores the importance of HR practices that encour-age TMT connectedness and cross-functional interfaces in resolving conflicts over resource allocation and enabling them to balance and integrate to achieve ambidexterity.

On inspection of the indirect effects, we understand that TMT behavioural integration fully mediates the effect of ‘TMT connectedness mechanisms enabling knowledge exchange through TMT social networks’ on organizational ambidex-terity. However, TMT behavioural integration only partially mediates the effect of TMT cross-functional (?) mechanisms enabling knowledge exchange across functional units on organizational ambidexterity. Therefore, our study offers com-pelling evidence that while TMT knowledge exchange mechanisms enhance TMT behavioural integration and thereby organizational ambidexterity, the knowledge exchange mechanisms ‘across functional units’ have additional effects on organ-izational ambidexterity through other TMT level constructs. For instance, when knowledge is exchanged ‘across units’, in addition to behavioural integration, the strategic orientation of the TMT is also enhanced, thereby enhancing organiza-tional ambidexterity (Menguc & Auh, 2005). Thus, our investigation provides interesting insights into the differences in the effects of TMT knowledge exchange mechanisms ‘within’ and ‘across units’ on organizational ambidexterity and inter-mediate TMT level processes and thereby adds to the literature on ambidexterity.

In addition to TMT connectedness mechanisms, and TMT cross-functional interfacing mechanisms, we had postulated that TMT behavioural integration would mediate the effect of senior team contingency reward mechanisms on organizational ambidexterity. Senior team contingency rewards contingent on the firm’s performance was hypothesized to motivate the TMT members to over-come their functional interests, and work together towards the overarching goal of the firm. However, the results of this paper suggest that senior team contingency rewards enhance TMT behavioural integration, but not organizational ambi-dexterity. Similar results were seen in other studies (Jansen, Tempelaar et al., 2009) related to ambidexterity. Moreover, on comparing the effects of various HR practices on firm’s innovation performance, Arvanitis, Seliger, and Stucki (2016), observed that new workplace organization HR practices had a more significant impact than flexible practices of work timings and incentive payments.

We have two reasons for these non-significant results. Firstly, due to the peculiar nature of the TMT sample of this research, the majority of the TMT consisted of multiple co-founders and the founders of a firm are highly motivated to work towards enhancing their firm’s performance even without the promise of any performance linked rewards. Secondly, it is suggested that group rewards contin-gent on the tasks based on the processes of exploration and exploitation in each unit, rather than on the outcomes of the firm have a better chance of motivating integrative thinking in TMT members (Wageman, 1995).


The managerial implications of this paper are threefold. Firstly, the results suggest that firms with a strategic intent to combine exploration and exploitation should enable TMT knowledge exchange mechanisms within and across func-tional units. Secondly, the results suggest that, to attain ambidexterity firms need behaviourally integrated TMTs. Thirdly, the results suggest that, when the TMTs comprise a majority of founders within them, the joint rewards contingent on firm performance do little to promote organizational ambidexterity.

Limitations and future research

The specific features of the data, nature of its collection and techniques of oper-ationalisation define the boundaries of this study. An understanding of these limitations, reveal several potentially fruitful directions for future research. We collected data from a sample of resource advantaged SMEs from the hi tech parks in India. Future researchers can design their research by collecting data from firms belonging to different locations, with different kinds of government and private resources supports or control the effects of resource munificence in their studies. In addition, since most of the firms in the sample were not publicly listed firms; objective measures of innovation could not be gathered. Moreover, we used a composite score of exploration and exploitation to measure organizational ambi-dexterity. Although the use of composite scores is supported by Tisak and Smith (1994), the use of composite scores to measure ambidexterity might have resulted in loss of information (Edwards, 1994). Future studies can improvise the design so that the measures such as ambidexterity are directly captured. Similarly, they could also examine the effects of leadership styles, specifically transformational leadership styles in conjunction with TMT mechanisms and processes and exam-ine their interaction effects on organizational ambidexterity.

Disclosure statement

No potential conflict of interest was reported by the authors.

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