The Paradox of Static and Dynamic Ambidexterity

This paper introduces the concept of dynamic ambidexterity, which captures a firm’s ability to adapt its exploration-exploitation balance over time. Building on strategy-environment coalignment and paradox theory perspectives, we argue that dynamic ambidexterity leads to higher firm performance than the more static forms of ambidexterity described in previous studies. Further, the concept of dynamic ambidexterity enables us to highlight a novel paradox in ambidextrous firms. We show that static ambidexterity has a self-reinforcing effect: while firms become increasingly adept at balancing exploration and exploitation over time, their ability to adapt this balance to changing environmental conditions declines. Ultimately, static ambidexterity crowds out dynamic ambidexterity, which harms firm performance. Based on a longitudinal sample of the global insurance industry, we find empirical support for our arguments. We contribute to organizational theory by developing a more dynamic understanding of ambidexterity and reveal how some of the previously described practices to promote ambidexterity can trap firms in downward spirals rather than preventing them. Further, based on our findings, we argue that coalignment and paradox theory perspectives may be complementary and their integration required to provide comprehensive theoretical models of dynamic concepts such as organizational ambidexterity.