Facilitating ambidexterity with HR practices – a case ...

Int. J. Automotive Technology and Management, Vol. 13, No. 3, 2013

Facilitating ambidexterity with HR practices – a case study of an automotive supplier Birgit Renzl* Privatuniversitaet Schloss Seeburg, A-5201 Seekirchen am Wallersee/Salzburg, Austria E-mail: [email protected] *Corresponding author

Martin Rost Universitaet der Bundeswehr München, D-85577 Neubiberg, Germany E-mail: [email protected]

Jürgen Kaschube Privatuniversitaet Schloss Seeburg, A-5201 Seekirchen am Wallersee/Salzburg, Austria E-mail: [email protected] Abstract: In dynamic environments organisations are challenged to simultaneously explore new capabilities and to exploit existing ones; a capability that has been named ‘ambidexterity’. Research identified that ambidexterity can be achieved through different means (e.g., structural ambidexterity, contextual ambidexterity). Ambidexterity, however, is always based on individual competencies of organisational members. Yet, the link between organisational means aimed at achieving ambidexterity and the individual competencies of the employees have remained imprecise. In order to tackle this link, we conducted a case study at a technological leader in the automotive supplier industry. We analyse how ambidexterity can be combined with issues of psychological management research, transformational leadership style, competency management and new theories on work performance. Thereby, we shed light on the link between individual competencies and human resource (HR) practices aimed at achieving organisational ambidexterity. Our research allows inferring recommendations for academics and practitioners how to better manage ambidexterity. Keywords: supplier; ambidexterity; automotive industry; competency management; transformational leadership; transactional leadership; human resource management; HRM; HR practices; case study. Reference to this paper should be made as follows: Renzl, B., Rost, M. and Kaschube, J. (2013) ‘Facilitating ambidexterity with HR practices – a case study of an automotive supplier’, Int. J. Automotive Technology and Management, Vol. 13, No. 3, pp.257–272.

Copyright © 2013 Inderscience Enterprises Ltd.

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B. Renzl et al. Biographical notes: Birgit Renzl is a Professor of Strategy and Organization at the Private University Seeburg Castle at Seekirchen am Wallersee near Salzburg. She studied international business studies in Innsbruck and Göteborg/Sweden and did her PhD research and habilitation in the field of knowledge management. She (co-)authored over 50 articles and book chapters in the area of strategic management and knowledge management. Martin Rost is a Lecturer at the Universitaet der Bundeswehr in Munich and currently working on his PhD in Business Psychology in the area of competence management. He studied business administration at the LMU in Munich/Germany and attends the research colloquia at the Private University Seeburg Castle. Besides research, he has worked in several consulting projects in the fields of change management, evaluation and personnel development. Jürgen Kaschube is a Professor of Business Psychology and Human Resource Management at the Private University Seeburg Castle at Seekirchen am Wallersee near Salzburg. He studied communication sciences, psychology and political sciences at the LMU in Munich/Germany. Besides research, he has co-founded a consulting company providing clients with his expertise in the area of human resource management, leadership and personnel selection.

1

Introduction

The automotive industry is facing profound changes. Changes in mobility and new markets in the Far East force companies to adapt to global competition. New drive systems like hybrid electric vehicles (HEVs) are based on fundamentally new capabilities that challenge the existing competencies of companies in the automotive industry. It is of vital importance to adapt the existing core competencies (Prahalad and Hamel, 1990) to future development. Thus, it is necessary to exploit existing competencies and explore new competencies at the same time as suggested by the concept of ambidexterity (Duncan, 1976; Tushman and O’Reilly, 1996; Gibson and Birkinshaw, 2004; O’Reilly and Tushman, 2004). Ambidexterity symbolises the balance between stability, coming from the use of existent knowledge (exploitation), and the ability to adapt and acquire new knowledge (exploration) (March, 1991). Achieving ambidexterity in practice is a huge challenge for companies. Both processes are entirely different, divergent and require varied modes of learning (March, 1991). However, the combination of exploration and exploitation is essential for realising change and achieving sustainable competitive advantages. If firms focus only on exploration, they will fall off in efficiency and cannot use improvement of existing processes (March, 1991). On the other hand, too much focus on exploitation crowds out exploration (Benner and Tushman, 2002), which might lead to core competencies becoming core rigidities (Leonard-Barton, 1992). Ambidextrous organisations control both processes on a high level. To survive, firms have to “engage in enough exploitation to ensure the organisation’s current viability and to engage in enough exploration to ensure future viability” (Levinthal and March, 1993). In the literature ambidexterity is seen as a particular dynamic capability, which allows firms to adapt to change (Gibson and Birkinshaw, 2004; O’Reilly and Tushman, 2007; Güttel and Konlechner, 2009).

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This paper presents a case study of a technologically leading automotive supplier coping with two different ways of change. First with change which results from the external environment in the automotive industry as well as second with change which emanates from an internal structural transformation due to the company’s particular life cycle. The concept of ambidexterity might assist in coping with this challenge and building and sustaining dynamic capabilities (Teece et al., 1997). The paper discusses how to facilitate ambidexterity with HR practices. The case study (Eisenhardt, 1989; Heimerl, 2007) analyses the possibilities of promoting structural and contextual ambidexterity. It shows how the theory of ambidexterity can be linked with leadership research, competency management, and new theories of job performance as a basis for generating hypotheses (Boos, 1992). Two important questions are leading the research: •

How can structural and contextual ambidexterity in a medium-sized production-oriented company be facilitated through organisational design, leadership style and culture, and competency management?

•

What competencies do employees need to cope with structural and contextual ambidexterity and how can leadership promote structural and contextual ambidexterity?

The following section outlines the theoretical background of the two forms of structural and contextual ambidexterity and it introduces leadership style and competency management as HR practices. Section 3 presents the case study. The conclusion section summarises the core issues of the paper and presents recommendations and limitations of this research.

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Theoretical background

2.1 Structural ambidexterity In the context of structural ambidexterity, a dual system is required to counteract possible conflicts between the activities of exploration and exploitation (Gilbert, 2006; O’Reilly and Tushman, 2007). Structural ambidexterity is achieved by structural segregation of the two learning processes, for example, in the field of new technologies sub-units are used to gather experience in (structural) differentiated fields (Hobus and Busch, 2011). Two structural concepts exist to foster structural ambidexterity: separation and parallel structures. Separation results from specialisation. There are units which carry out either exploration or exploitation. Using parallel structures allows for primary structures for routine work and secondary structures (projects or networks) for non-routine work. Following Brunner et al. (2010) structural ambidexterity can be seen in the tradition of the Conflict School (Abernathy, 1978; Levinthal and March, 1993; Benner and Tushman, 2002), which is based on a strict trade-off between exploitation and exploration. Exploitation is based on predictable routines, whereas exploration tries to break routines and find new ways of doing things (Hobus and Busch, 2011). Based on the assumption of the conflict school it is not possible to pursue both learning modes at once. To achieve structural ambidexterity, the ability to cooperate is indispensable; as well as a constant exchange of information and a clear vision on the top management team

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(TMT) level [see concept of behavioural integration by Lubatkin et al. (2006)]. Its members distribute resources and act as knowledge broker between units focusing on exploitation and units focusing on exploration (Hobus and Busch, 2011). From this we derive our first proposition: Proposition 1

The TMT is in charge to start various initiatives to integrate structurally segregated units again.

2.2 Contextual ambidexterity The main difference of contextual ambidexterity is the possibility of combining the two different modes of learning in one unit and even in one person. The concept of contextual ambidexterity is based on the Complement School (Brunner et al., 2010) which complements exploration and exploitation. Contextual ambidexterity requires ambidextrous mindsets, which are based on the organisational context, values and norms with mutual understanding and empathy. Research and knowledge-based firms are examples of organisations with a high level of contextual ambidexterity. The business model aims for incremental and radical learning at the same time. The employees of these firms are living to a certain extent in two worlds. They have to deal with both sets of tasks (innovation versus replication) (Gibson and Birkinshaw, 2004; Güttel and Konlechner, 2009). Employees have to deal with various tensions and conflicts, whereby the firm has to provide for appropriate working conditions like flexible organisations, target agreements, etc., to guarantee the scope for development. The top management only intervenes for corrective action, mostly indirectly through shaping corporate culture and/or by modifying the context, such as how the teams are composed, etc. Achieving ambidexterity, however, depends upon employees working within these structures and practices, which organisations introduce in order to enhance their ambidexterity. Hence, employees need specific competencies. For example, Mason and Wagner (2005) have shown in their study, comparing workforce skills of automotive component suppliers in Germany and Britain, that higher levels of craft apprentice training in German establishments help the employees in responding flexibly to changes in markets, technologies and supply-chains. Organisations (or managers), which enhance ambidexterity, are facing the challenge of supporting individual competencies of their employees, whereas they have to adapt elements (like leadership styles, designing organisational structures, etc.) to the individual competencies. This requires on the one hand a specific management of individual competencies in order to enhance ambidexterity (Mason and Wagner, 2005) and on the other hand a specific leadership style. Both concepts are outlined briefly in the following sections.

2.3 Leadership style and culture Leadership is important in the process of fostering ambidexterity (Vera and Crossan, 2004; Busch and Hobus, 2012) and by the development of individual competencies (Neuberger, 2002). An adequate counterpart to the learning modus exploration in leadership research is the ‘transformational leadership style’ (Bass and Avolio, 1994) which aims at keeping people in a learning mode of constant skill development (Müller et al., 2007). Transformational leaders exert charismatic and idealised influence on their staff and motivate them with inspiring ideas, provide intellectual stimulation and

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individualised consideration (Bass, 1990). Thereby, employees can be driven to challenge routines and to work constantly on improving processes for the benefit of the organisation (Vera and Crossan, 2004). Even though transformational leadership behaviour is often regarded as an ideal of modern leadership (Neuberger, 2002) and in numerous studies researchers found stronger correlations between transformational leadership and performance indicators than between performance and transactional leadership style (Geyer and Steyrer, 1998), it seems to be less appropriate to ensure the exploitation processes. Transactional leadership means that leaders provide contingent reward to their employees, give appreciation for good performance and feedback, define clear goals and required results and conduct follow up checks (Bass, 1990; Geyer and Steyrer, 1998; Neuberger, 2002). Vera and Crossan (2004) showed in their theoretical analysis, which is based on the organisational learning theory of Crossan et al. (1999), that transformational leadership is suitable in exploration and transactional leadership in exploitation processes; Jansen et al. (2009) approved this in a quantitative empirical study. Nevertheless, in change- or restructuring-processes transformational leadership can foster exploitation by helping to motivate employees to adopt new institutionalised routines and can be helpful in increasing psychological safety by reducing employees’ fears in uncertain situations (Vera and Crossan, 2004; Nemanich and Vera, 2009). Jansen et al. (2009) showed in a regression model the influences of transactional and transformational leadership style on exploitation and exploration innovation, which were moderated by ‘environmental dynamism’. In their study of a financial services company, they found out that transformational leadership has negative effects on exploitation innovations in dynamic situations but positive effects in a stable environment. In these situations transformational leadership promotes the improvement of existing products (Jansen et al., 2009). Altogether current research shows that leaders have to be able to use elements of transformational as well as of transactional leadership style for acting adequately in different situations. This aspect leads to our second proposition: Proposition 2

Leadership style and culture may facilitate processes of exploitation and exploration. Depending on the situation, the elements of transactional and transformational leadership styles have to be combined to facilitate ambidexterity.

2.4 Competency management To cope with uncertainty and contextual ambidexterity, leaders and employees need high manifestations of various competencies. In addition to highly-developed general competencies – social, personal, activity and action, functional and methodological (Heyse and Erpenbeck, 2004) – they need ‘metacompetencies’ to provide high performance contributions in this context. Metacompetencies (Briscoe and Hall, 1999) enable people to learn and adapt (adaptability) and to be reflexive with respect to themselves (self-awareness). Thereby, they can develop their skill bases on their own (Briscoe and Hall, 1999; Dimitrova, 2009). The task to practice exploitation or exploration and to search for a balance between exploration and exploitation makes high demands on staff – much higher than normal performance of one’s duty in regular exploitation processes. In organisational psychology, these demands may be best described by using the concepts of task performance for mere exploitation or exploration processes and contextual performance

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for ambidextrous processes, where the particular individual is responsible to decide to which extent which process should be exerted (Motowidlo and Van Scotter, 1994). Contextual performance is characterised by the fact that not all activities that are important for successful processes can be specified in a formal job description. With respect to exploration and exploitation, this extension of the required job performance can be described as self-responsibility (Kaschube and Koch, 2005; Kaschube, 2006), which comprises four dimensions: ‘general willingness to take responsibility’, ‘risk taking’, ‘self-initiative’ and ‘unconventionality’. It describes the task to cope with shifting requirements, which are defined imprecise or during the working process. In processes of exploration individuals have to decide on their own, on which task to concentrate their resources. They also have to decide which rules and routines can be challenged and which have to be obeyed. Even executives are in troubles if they have to come to a decision in these cases: in dilemma situations, they tend to restore exploration processes and thereby are in danger to miss opportunities for innovation in favour of exploitation processes (Kaschube and Gasteiger, 2005). On the other hand employees favouring self-responsibility, e.g., risk taking, challenged routines even in exploitation tasks (Kaschube, 2006). This leads to our third proposition. Proposition 3

3

Ambidextrous processes require high manifestations of various competencies, e.g., metacompetencies and self-responsibility, to meet the high demands of contextual performance.

Facilitating ambidexterity at an automotive supplier

3.1 Company description The following case study analyses possibilities of facilitating ambidexterity at a global player in the automotive industry headquartered in Germany. The enormous pressure on prices and quality standard requirements forces companies in the automotive industry to shape their processes very efficiently. To deal with this, the company has developed over many years very specialised production routines. However, this industry is subject to high innovation and transformation pressure. New propulsion systems are on the rise. Electric or HEVs pose a serious threat to the established car makers and their suppliers. New competencies and products are required to produce electric or hybrid electric cars. The analysed company earns its current profits with products for cars with conventional propulsion systems. It is difficult to anticipate how the market of propulsion systems will develop in the next ten to 20 years. It is not clear yet, if electric or hybrid electric systems will become widely accepted and if there are any alternatives like natural gas-powered engines, hydrogen-power or fuel cells. The company in our case study thus faces the dilemma of exploiting and exploring at the same time in order to earn its current revenues and to be able to survive in the future. The company employs approximately 3,000 people worldwide, generates sales of 500 million euro and is the world market leader in its segment. More than half of the employees work in the parent plant. This plant and three subsidiaries are located in Germany, other three in emerging market countries, one in Eastern Europe and one in the USA. The development from a medium-sized automotive supplier to a global company

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started in the late ‘80s with the establishment of a subsidiary in the USA. In the ‘90s, the German subsidiaries were founded for the extension of the technology base and the product range. The creation of the other subsidiaries outside Germany took place between 1999 and 2009. The company joined the internationalisation strategy of car manufacturers, provided local production facilities and used economies of scale in existing technologies. As part of the growth process, the processes of exploitation and exploration were more and more separated and geographically dispersed, using advantages of specialisation. Additionally, the company has to cope with internal change. Traditionally, it was governed by members of the founding family. The separation of the managing shareholder from the management led to a radical change in the TMT. Shared values, which had been taken for granted among family members and long-serving employees, have to be reflected and newly codified.

3.2 Methodology The case study combines different data collection methods [Eisenhardt, (1989), p.534]. Preliminary, we started with desk research and analysed company documents. Additionally, we conducted workshops with teams from different divisions to gain insights into the business situation of the company. Based on these preliminary studies, we conducted seven semi- structured expert interviews with senior management and heads of product development, technical sales, internal consulting and human resource management (HRM). In these interviews, the history of the company and its current market position were surveyed and the development of core competencies and ambidexterity derived. To analyse the conditions for ambidexterity at the employee level, 35 executives and professionals were surveyed in a Delphi-study. The first part of the Delphi-survey was in a self-administered questionnaire. The participants selected such competencies from the competence atlas (Heyse and Erpenbeck, 2004; Heyse, 2010), which were required for working in their unit and described their relationship network. After two months, we presented the results of the first survey to the participants and asked them again. In this second survey we interviewed the participants and asked them to find connections between the individual competencies and the organisational skills (core competencies, dynamic capabilities and ambidexterity). Participants were asked to reveal critical incidents (Flanagan, 1954), in which managers or employees showed the chosen competency and promoted by their behaviour processes of exploration or exploitation. In addition, the case study includes data collected in 2010 in an employee survey on the influence of transformational and transactional leadership behaviour (Bass, 1990; Bass and Avolio, 1994; Neuberger, 2002) on employees’ perception of their organisation. For this survey a standardised self-administered questionnaire was distributed to all 2,512 employees in the German plants, and 1,607 fully completed and usable questionnaires were returned, yielding a response rate of 64%. Transformational leadership was overall measured with six items comprising three themes: ‘intellectual inspiration’, ‘inspiring motivation’ and ‘individualised consideration’ (α = 0.909). Transactional leadership was measured with the dimensions ‘contingent reward’ and ‘Management by exception’ with in total six items (α = 0.918) (Bass, 1990; Neuberger, 2002). Additionally, general relationship between leaders and employees was measured with three items (α = 0.882). The dependent variables representing the perception of work environment and processes

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by employees were: human performance culture, which was measured with nine items (α = 0.857), perception of learning and employee-development possibilities, which was measured with three items (α = 0.849) and ‘satisfaction with the restructuring process’ and ‘no fear of job-loss’ both measured with one item. For data analysis we used a linear regression model with stepwise-enter.

3.3 Facilitating structural ambidexterity In order to achieve ambidexterity, dual structures are created to counteract the conflict between the activities of exploration and exploitation (Konlechner and Güttel, 2009). The literature discusses how strong the separated units must be integrated (O’Reilly and Tushman, 2004; Hobus and Busch, 2011). In the examined case, a relative strong integration has been realised at different levels, for example, in the area of shared knowledge and values, and human resource development, which we outline briefly below.

3.3.1 Shared knowledge and values through the TMT In order to realise the benefits of sharing resources and knowledge within a company, it is necessary, that the units engaged in exploration are linked to those who have their focus on exploitation. This function is usually attributed to the TMT (O’Reilly and Tushman, 2007; Hobus and Busch, 2011). In this case study, mainly the CEO with his wide experience within the company took over this task. He bundled the information from all subsidiaries and was involved in the major projects directly or indirectly. He organised not only the exchange of knowledge in the TMT, but integrated unit chiefs and team leaders and promoted the exchange of knowledge among them. With his intense presence the CEO also made a substantial contribution to the development of common visions and values. To make sure, that these common values remain preserved, a mission statement was formulated. The focus of this mission statement was an orientation towards innovative technology, the shared values within the group as well as a human performance culture. Despite the strong similarities within the group, there were also significant differences between the subsidiaries and units. The company’s corporate culture had created enough freedom to let subcultures grow and specialise, which is a key feature of structural ambidexterity (Gilbert, 2006; Konlechner and Güttel, 2009). As suggested by Proposition 1, in this case the TMT took responsibility to integrate segregated units. It also involved HRM as outlined in the following paragraph.

3.3.2 Human resource development The human resources (HR) unit have contributed to the sense of commonality in the company, for example by international integrative HR development. Executives from units focusing on exploitation learned together with those from focusing on exploration and developed their leadership behaviour and personality. Another example of facilitating ambidexterity is an aligned career development. For example, some engineers began their careers in the research and development units and then switched to the customer-oriented product development units, then into units with focus on exploitation, e.g., in the quality

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management unit, production or foreign subsidiaries. Thereby, intensive networks have been formed among the various organisational units.

3.4 Facilitating contextual ambidexterity In the phase of steady growth there were increasing signs that the structural scopes for design were not sufficient to promote ambidexterity to the desired extent. In particular it was observed that there was a lack of communication between units focusing on exploration and exploitation, a perceived lack of appreciation in the areas of exploitation, a lack of information about strategic processes outside of the parent plant, a management culture that did not promote the development of employees, a lack of ‘lived’ corporate values in the middle management; the TMT did not receive information fast enough, and it was difficult to find qualified employees who wanted to change from units focusing on exploitation to units focusing on exploration. All in all, the TMT realised that long-term competitiveness appeared to be in danger. Several activities which aim to facilitate contextual ambidexterity have been initiated as outlined below.

3.4.1 Leadership style and culture Contextual ambidexterity requires a corporate culture, that promotes learning and that is shaped by high performance incentives and discipline, as well as mutual support, trust and a learning and error culture, in which employees can foster their personal development. A lack of such social components leads to high employee turnover and complicates the formation of contextual ambidexterity (Birkinshaw and Gibson, 2004). This aspect is also reflected by the results of this case study. Human performance culture, cooperation and loyalty were seen as especially important in the mission statement, as well as in the company’s corporate culture. To keep these elements of the culture alive, an initiative has been launched. The initiative communicates explicitly the prevalent values and the strategically significant processes, in which exploration and exploitation are of high importance. In addition, elements of transformational and transactional leadership have been combined to promote both the processes of exploration and exploitation. Codes of conduct have been developed, which should be examined in the future personnel selection process, in training and management feedback. We also proposed which training for employees could be useful here. A programme to support young leaders and boost their development has been planned, as well as mentoring systems. In document and interview analysis we found out that in most units clear goals for employees arose from the processes, workflows and routines. The compensation system was focused on exploitation. Therefore, the transactional leadership style was most common in the company. With regression analysis based on the employee survey data, we tested whether transformational leadership style could explain additional variance over ‘general leader-employee relationship’ and ‘transactional leadership’. We suggested that transformational leadership was appropriate for all units in the described situation. First, not only the employees of the R&D and the product development unit participated in exploration processes. Employees from many different units were in steady contact with the product development unit and participated in exploration innovation processes. We therefore hypothesised that exploration innovations could be fostered by

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transformational leadership (Vera and Crossan, 2004; Jansen et al., 2009; Nemanich and Vera, 2009). Second, the mentioned employees worked under conditions of contextual ambidexterity. Therefore, a corporate culture that promoted learning and high performance incentives was important [Birkinshaw and Gibson, (2004), p.51], which could be fostered by transformational leadership behaviour. Third, even though not all employees in this company worked under conditions of contextual ambidexterity, transformational leadership behaviour was helpful for their work and performance. In change- or restructuring-processes transformational leadership could foster exploitation by motivating employees to overcome resistance and to adopt new institutionalised routines and could be helpful to reduce their fears in uncertain situations (Vera and Crossan, 2004; Nemanich and Vera, 2009). We postulated that all leadership behaviours would contribute to a positive perception of culture and processes important for ambidexterity; transformational leadership should explain additional variance in comparison to other leadership behaviours. Therefore, we tested the influence of transformational leadership on ‘learning and personal development’, ‘human performance culture’, ‘satisfaction with the restructuring-process’ and ‘no fear of job loss’ with a regression model (see Table 1). Leadership behaviour in general explained significant variance in perception of culture and processes. Transformational leadership behaviour explained in addition to ‘leader-employee relationship’ and ‘transactional leadership’ significant variance for the dependent variables ‘learning and personal development’ (0.041 change in R-square), ‘human performance culture’ (0.045 change in R-square), ‘satisfaction with the restructuring-process’ (0.018), but not for the absence of fear of job loss. Table 1

Regression model: influence of transactional and transformational leadership on employees (N = 1,607)

β for

transformational leadership

F-value for the complete equation

0.041

0.404**

97.96**

0.433

0.045

0.423**

126.13**

0.060

0.078

0.018

0.269**

31.04**

0.076

0.078

0.002

0.116 n.s.

5.80 n.s.

First step corrected R-square

Second step corrected R-square

Change in R-square

Learning and personal development

0.295

0.335

Human performance culture

0.388

Satisfaction with the restructuring process No fear of job loss

Dependent variables

Notes: **P < 0.01; n.s. = not significant; first step = transactional leadership and ‘leader-employees-relationship’; second step = transformational leadership; β = standardised beta-values.

The results show that ‘learning and personal development’ and a ‘human performance culture’, which are very important for exploration and contextual ambidexterity, can be fostered by transformational leadership style as well as ‘satisfaction with the restructuring process’ for which transformational leadership style is adequate in dynamic situations.

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Because of confidentiality reasons no differentiated statistical analysis of subunits mainly focused on exploration or exploitation was possible. We also found support for these results in expert interviews with executives. We asked, if transformational leadership behaviours like ‘intellectual inspiration’ could be motivating for employees to challenge routines permanently and thus reduce efficiency in units focusing on exploitation. Nearly all executives negated this negative effect and stressed the importance to give employees space for ideas and freedom of choice. In their opinion, the main problem was to motivate employees in many units focusing on exploitation to use this freedom and to take risks. We conclude that exploitation processes should be motivated and guided by compensation system and work flows, whereas exploration should be motivated by leadership behaviour promoting learning, mutual support and trust. As suggested by Proposition 2 leadership style and culture are able to facilitate the processes of exploitation and exploration. The study provides evidence for transformational leadership being of crucial importance for explaining the development of a learning culture and for employee satisfaction with change processes.

3.4.2 Competency management Because of their participation in various processes like research, production and sales and its strong networking, the employees working in the product development were, as in the case study of Güttel and Konlechner (2009), highly involved in both processes of exploration and exploitation. The investigation shows that several subunits and individuals in areas otherwise exploitative were in the same situation. The task of the HR unit was to integrate the competencies, which employees need for participating in exploitation and exploration processes, in a multi-job competency model (Mansfield, 1996), which could be applied to all organisational units and for all job families. Depending on whether an organisational unit has its focus on exploitation, exploration, or both, the employees need high manifestations of these competencies, which are important for the appropriate organisational learning modus. Managers should have an ambidextrous mindset and sufficient manifestations in all competencies, which are relevant for exploitation or exploration. Even though they can be specialised on processes with focus on exploration or exploitation, they need these competencies for developing employees, who have to participate in both learning modes, and to promote contextual ambidexterity. Managers of all units have to be able to lead and develop these employees in an appropriate manner. The competency-profiles of the employees in the various units showed some overlap, but there were also significant differences. Figure 1 gives an overview of competencies that are especially relevant for the learning modi exploration and exploitation. The competencies in Figure 1 are based on the competence atlas (Heyse and Erpenbeck, 2004; Heyse, 2010), the concept of metacompetencies (Briscoe and Hall, 1999) and self-responsibility (Kaschube, 2006) and are classified according to the case analysis. To participate in the relatively highly standardised operating procedures focusing on exploitation (Tushman and O’Reilly, 1996; Benner and Tushman, 2002) reliability, performance of one’s duty, resilience and willingness are of high importance. Competencies like personnel development, delegation, ability to act result-oriented, goal-oriented leadership, planning, analytical skills, and ability to work in a team and to cooperate seem to support exploitation as well as exploration, but in a different manner. Analytical skills help in exploitation processes to find mistakes and to make the processes

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more efficient. In the context of exploration and contextual ambidexterity, they help to be clear about the own status, to know if it is necessary to go in a new direction and to find possibilities for that in the company’s resource base or in the market. Figure 1

Competencies of employees (Briscoe and Hall, 1999; Heyse and Erpenbeck, 2004; Kaschube, 2006; Heyse, 2010) for coping with exploration or exploitation

The ability to cooperate is an important precondition for linking units focusing on exploitation, with those focusing on exploration. A system of delegation, a goal-orientated leadership and considerate planning help executives and employees to participate in structured processes and routines, integrating the targets of organisational units in different learning modi, and to work together. The two meta-competencies adaptability and self-awareness (Briscoe and Hall, 1999; Dimitrova, 2009) are important for both learning modes, however, they are essential for exploration processes. Self-awareness was viewed as a key competence to meet future challenges, on the individual level, as well as on the organisational level, e.g., to perceive new technologies and knowledge in the environment, and is thus very important to support absorptive capacity (Zahra and George, 2002). Self-responsible action (Kaschube, 2006) is defined by ‘general willingness to take responsibility’, ‘risk taking’, ‘self-initiative’ and ‘unconventionality’. The general willingness to take responsibility is required for both learning modes with high manifestation, while risk taking, unconventionality and self-initiative are more strongly related to exploration. Generally, self-responsible action was seen as a fundamental competence for all units, but with different manifestation. In product development self-responsible action was regarded as a necessary prerequisite for innovations. Because of a strong involvement of employees of this unit in processes like sales or construction and production, it was guaranteed that they did not neglect exploitation. Self-responsible action therefore seems to be an appropriate behaviour to increase learning rates in exploration, without compromising the efficiency of processes for utilisation of existing core competencies. Furthermore, self-responsible action appears to be a useful

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requirement for employees to deal with the uncertainty of exploration processes as well as to find a responsible balance between exploration and exploitation suiting each situation. Supporting self-responsible action of employees is seen as a key leadership role by experts. Managers should create a culture of trust and promote initiative, unconventional action, risk-taking and self-initiative. At the same time, however, they should develop a common understanding with the employees about the situations, in which agreements and consultations, due to the high risk for the unit or the company, are essential. As suggested by proposition 3, the staff in units with contextual ambidexterity needs a very wide competence profile to bring high performance contributions in the two ‘worlds’ (Güttel and Konlechner, 2009) of exploration and exploitation.

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Conclusions

The observations of the case study confirm that both structural and contextual ambidexterity is needed to maintain the competitiveness of an organisation. To cope with the highly dynamic situation of internal and external change the organisation needs: individual units, which are almost entirely devoted to exploration or exploitation and a variety of units in all divisions, which operate and integrate both exploration and exploitation. At this stage we would like to highlight the crucial role of individual competencies to cope with organisational ambidexterity. Even if ambidexterity in organisations should not be understood as a collection of diverse tasks of individuals, but emerges in the interaction of interfaces and a variety of units across an organisation, we wanted to put emphasis on the high requirements on individual competencies of managers and employees. Both groups have to cope with the particular perspective of contextual ambidexterity with frequently changing requirements and make decisions independently, e.g., take responsibility in terms of the organisation, take risks, break and rewrite rules and routines, etc. Further research is needed into how the various units interact with each other to promote the competitiveness of the organisation. In addition, it is essential to investigate which competencies are needed for which tasks, e.g., which tasks require strong meta-competencies and high levels of responsibility in order to balance exploration and exploitation, and whether or not an excessive number of employees working with high levels of self-responsibility rather pose a threat to relatively stable processes of exploitation (Kaschube, 2006). Working on a balance of exploitation and exploration is a new job demand not only for executives but also for employees without supervisor function. This demand may be described as a specific form of contextual performance going beyond standard requirements of task performance. To accomplish this new task a broad set of skills is needed, especially meta-competencies (Briscoe and Hall, 1999; Dimitrova, 2009). Self-awareness is viewed as a key competence to meet future challenges, on the individual level, as well as on the organisational level, e.g., to perceive new technologies and knowledge in the environment, and a skill to act self-responsible. Self-responsible action therefore seems to be a behaviour, which can be supported in production-oriented enterprises to increase the learning rates in exploration, without compromising the efficiency of processes utilising the existing core competencies. These skills mentioned above should be promoted by HRM. Currently, personnel psychology is not able to give a

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definite answer to the question whether it is possible to learn balancing exploration and exploitation, e.g., in work group trainings, or whether it should be a skill included in selection processes. In addition to the competency requirements ambidexterity needs a broad range of different leadership behaviours, with transformational leadership behaviour explaining a discrete variance, which has been confirmed in our study. Several questions still need further research, for example: is the importance of transformational leadership behaviour dependent on the amount of required ambidexterity in special work-groups? Transformational leadership should be helpful in encouraging employees to engage in exploration processes, whereas transactional leadership might be more helpful in units concentrating on exploitation. How much flexibility in leadership style is needed if an appropriate balance of exploration and exploitation is to be achieved? The limitations of this paper lie in the explanatory power of the suggested HR practices. We provided specific details of facilitating ambidexterity through an HR programme and illustrated it by the case study. We provided evidence that transformational leadership explains additional variance. Thus leadership style and culture are important. However, we were not able to proof if the mentioned practices and initiatives have led to higher performance. It is also a matter of time. It will last a couple of years till evidence of the change in leadership style and culture can be studied in the analysed company. But causal ambiguity will last. It is difficult to single out the effect of each single HR practice on ambidexterity. In order to facilitate ambidexterity we recommend selecting a bundle of the suggested HR practices aligned upon the particular needs of the organisation. It is necessary to run various activities simultaneously to be able to cope with the high requirements of an ambidextrous organisation.

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