Individual Ambidexterity and Entrepreneurship
What is the individual ambidexterity theory of entrepreneurship?
Most new ventures are founded by former employees of organizations. Employees make discoveries while working for organizations and decide to exploit them on their own, especially when parent firms do not see the value in their discoveries, or choose not to exploit them due to a lack of fit with the firm’s strategy. When employees leave to start new ventures, we call their ventures employee spinouts.
Mom et al. (2015) propose that individuals working within organizations are ambidextrous if they
are involved in both exploration and exploitation activities. Exploration and
exploitation involve different types of learning and thus offer different
preparatory experiences for individuals involved in them. According to March (1991), exploration involves activities such as search, play, experimentation,
ideation, radical innovation, and formulation, whereas exploitation involves
activities like refinement, execution, selection, implementation, and
incremental improvement.
Yeganegi et al. (2019) propose that entrepreneurial preparation within their employing
firms is important for employees turned entrepreneurs. Work experiences may be
sources of entrepreneurial opportunities that employees can use to create new
businesses and to potentially increase their economic and social mobility. The
above argument suggests that when employees experience both exploration and
exploitation (i.e., individual-level ambidexterity) in an organizational
setting, they are mimicking the same stage-based processes that they will
likely encounter in entrepreneurship.
Seeing the whole cycle of the business
activity may enable employees to better recognize opportunities, reduce their
uncertainty, increase the depth and breadth of their knowledge, and increase
their perceptions of self-efficacy—all of which are expected to increase the
likelihood of that they will become nascent entrepreneurs. The authors
distinguish between exploration and exploitation experiences, thus draw on the
individual ambidexterity literature for inspiration. Using data from the Global
Entrepreneurship Monitor, their analyses suggest that employees who experience
individual-level ambidexterity, that is exposure to both the exploration and
exploitation phases in the corporate venturing process, are more likely to
become nascent entrepreneurs.
The degree
of ambidexterity that an individual may experience as a member of an
organization is likely to differ according to the context internal to the organization.
For example, organizations that break up exploration and exploitation tasks
with structural separations may use differentiated incentive schemes (i.e.,
different rewards for those who are engaging in exploration than those for
individuals specializing in exploitation). Alternatively, they may disallow
overlapping cultures to form around exploration and exploitation activities and
therefore be less likely to employ individuals who will experience
ambidexterity at work. By contrast, organizations that practice contextual
ambidexterity (Gibson and Birkinshaw, 2004), where both exploration and
exploitation occur within the same organizational units are
likely to accommodate ambidexterity experiences for more individuals.
Other Managerial Theories that might interest you:
- Contingency Theory and Entrepreneurship
- Disruptive Innovation Theory and Entrepreneurship
- Strategic Disagreements Theory of Entrepreneurship
- First Mover Theory of Entrepreneurship
- X-Efficiency Theory of Entrepreneurship
- Upper Echelons Theory and Entrepreneurship
- Stewardship Theory of Entrepreneurship
- Resource Based Theory and Entrepreneurship
- Resource Scarcity Theory of Entrepreneurship
- Resource Dependency Theory and Entrepreneurship
- Machiavellian Theory of Entrepreneurship
- Stakeholder Theory of Entrepreneurship
Sources:
This video is about organizational ambidexterity: