Does Ambidexterity in Marketing Pay Off? The Role of Absorptive Capacity: An Abstract

Abstract

To succeed in the complex and fast-changing marketplace nowadays, firms must not only exploit existing marketing knowledge and practices but also explore new ones; that is, firms must incorporate ambidexterity into their marketing functions (Day 2011). Through the simultaneous pursuit of exploitation and exploration across marketing programs, firms would be able to identify and seize market opportunities to a greater extent, resulting in higher performance. However, studies examining the link between marketing ambidexterity (MA) and firm performance are scarce, and limitations in these studies restrict our understanding of this complex relationship. This study aims to contribute to the marketing literature in several ways. First, we refine the conceptualization of MA as the marketing function’s bilateral focus with equal attention paid to marketing exploitation and marketing exploration respectively. Empirically, MA is operationalized as convergent levels of exploitation and exploration across major marketing actions, including product design, promotion, segmentation and targeting, pricing, and customer service. Then, we examine the nature of the relationship between MA and firm performance in terms of sales growth. Second, this study examines how the firm’s AC moderates the relationship between MA and sales growth. Since one salient aspect of AC is the capability of integrating internal and external knowledge (Cohen and Levinthal 1990; Rothaermel and Alexandre 2008), AC plays a crucial role in resolving the trade-offs between the inward-focused exploitation and the outward-focused exploration. In addition, it is likely that firms that possess strong AC are vigilant to emergent market opportunities and proactive in seizing those opportunities through the use of market-related knowledge stored in organizational knowledge repository (Vorhies et al. 2011). Therefore, AC possibly affects the extent to which firms can benefit from embracing MA. Examining the interplay between MA and AC, the present study shows their complementarity in creating market offerings that induce greater customer demand, resulting in higher sales. Analyzing a unique dataset that combines survey and archival financial data from 318 private firms, this study finds that MA is positively associated with sales growth for firms with relatively strong AC. This relationship becomes negative for firms with weak AC. Results are robust when the additive and multiplicative terms of exploitation and exploration are controlled for. The findings underscore the critical role of organizational knowledge processing in ensuring that firms can benefit from the pursuit of MA.