Organizational ambidexterity: The role of technological capacity and dynamic capabilities in the face of environmental dynamism

Abstract

Organizational ambidexterity has been widely established as necessary for economic sustainability in the financial services sector. Organizational ambidexterity is an organization's ability to be aligned and efficient in management to meet business needs while simultaneously adapting to environmental changes. To meet the challenges of the new digital economy, banking organizations require substantial technological changes and must also recognize that the banking business itself is one of technology. Organizational ambidexterity is essential for financial sector businesses, but their relationship and relative merits are unclear. This research focuses on the role of technological capacity and dynamic capability of the banking sector in Indonesia in an effort to achieve organizational ambidexterity in the face of a dynamic environment. This research uses quantitative methods by surveying leaders from Indonesian commercial banks and analyzed using the SMART PLS program. Our investigation found that technological capacity influences organizational Ambidexterity, with the link becoming stronger when mediated by an organization's dynamic capability. In the meantime, environmental dynamism has no impact on the organizational ambidexterity of the banking sector in Indonesia. Our findings also indicate that the associated security risk will increase if a bank improves its technological capacity in a highly dynamic environment. This paper is an empirical study of technological capacity and presents a method for creating organizational ambidexterity through dynamic capability, especially in the banking sector.