Organizational Learning Ambidexterity,Strategic Flexibility,and New Product Development

Although organizational ambidexterity has gained momentum in recent innovation research, previous literature still offers a confusing and partial picture about how to leverage ambidexterity for new product development because of two limitations. First, previous research mainly focuses on static resource endowment and thus offers little insight about how firms should dynamically reconfigure resource portfolios to leverage organizational ambidexterity. Second, conceptual confusion on the notion of the balance dimension of organization ambidexterity still exists. This study seeks to explore how firms should dynamically reconfigure resource portfolios to leverage organizational ambidexterity for new product development and to bring greater conceptual clarity to the notion of balance. By extending the static resource assumption, which is central to the extant debate in organizational ambidexterity literature, this research unpacks ambidexterity into a relative exploratory dimension and an interactive dimension. We further investigated the moderating effect of resource flexibility and coordination flexibility on the impacts of the two dimensions on new product development performance. Based on the dynamic resource management view and organizational learning theory, we proposed six hypotheses and collected data from 213 firms through a survey to examine the hypotheses. Our results indicate that relative exploratory dimension and interactive dimension have different effects on new product development. Specifically, the relative exploratory dimension has an inverse U‐shaped effect on new product development while the interactive dimension has a positive effect. Furthermore, we find that resource flexibility and coordination flexibility have positive moderating effects on the relationships between the two dimensions of ambidexterity and new product development performance. Our study contributes to the ambidexterity research in three ways. First, from a dynamic resource management view, this study extends previous ambidexterity research from a static view to a dynamic view by exploring the moderating effects of resource flexibility and coordination flexibility. Second, we extend the understanding on ambidexterity by bringing greater conceptual clarity to the notion of balance. Third, this research provides new evidence on the effects of ambidextrous learning on new product development performance in transition economy such as China, where ambidextrous learning is crucial for firms to adapt to a dynamic environment.     

Structural ambidexterity,transition processes,and integration trade‐offs: a longitudinal study of failed exploration

In order to overcome the exploration–exploitation paradox, structural ambidexterity literature suggests establishing differentiated units for exploitation and exploration with a carefully managed exploration–exploitation interface supporting cross‐fertilization without cross‐contamination. Recent research demonstrates the crucial role of integration mechanisms (i.e. how knowledge exchange between exploratory and exploitative units can be organized) and related transition modes (i.e. how exploratory innovations can ultimately be transferred back into the exploitative structures of core business) to deal with this challenge. However, a systematic account of the diverse tensions, risks, and trade‐offs associated with integration which may ultimately cause exploration failure is missing, so far. This paper presents a longitudinal process study uncovering the anatomy of an unsuccessful exploration of (green) technologies by a medium‐sized entrepreneurial firm. We investigated their transition processes to understand how the managers dynamically configured and reconfigured the exploration–exploitation interface over time. Our theoretical contribution lies in providing a framework of six integration trade‐offs (Exploratory‐complementary linking vs. contamination; Seeking legitimacy early on vs. frustration at discontinuation of innovation; Boundary spanning through job rotation vs. carrying over of old culture; Early vs. premature transfer; Reorganization vs. capability mutation; and Improved access to core business resources vs. resource starvation) linked to three phases in the transition process (before, at, and after transfer). We also highlight mechanism, pulling‐forward, and streamlining‐related failures linked to integration trade‐offs in resource‐constrained contexts. Our implication for R&D and top management is that the use of integration mechanisms for structural ambidexterity bears the risk of cross‐contamination between the exploitative and exploratory structures and are therefore inevitably linked to trade‐offs. To minimize negative side effects and prevent exploration failure, organizations have to consciously select, schedule, operationalize, and manage (re)integration mechanisms along the transition process. Our framework of integration trade‐offs systematically supports managers in their organizational design choices for integration mechanisms in the transition processes.     

The Mediating Role of Strategic Orientations on the Relationship between Ambidexterity‐Oriented Decisions and Innovative Ambidexterity

Building on upper echelon theory and strategic process theory, this article analyzes the relationship between ambidexterity‐oriented decisions and innovative ambidexterity. While ambidexterity‐oriented decisions embrace the capability of top management teams to manage contradictory strategic directions, namely adaptability and alignment, innovative ambidexterity captures the ability of firms to simultaneously develop discontinuous and incremental innovations. In addition to the direct relationship between ambidexterity‐oriented decisions and innovative ambidexterity, it is argued that innovation orientation and cost orientation denote two cultural implementation mechanisms that mediate this effect. Using two top‐executive data sets collected in the United States (n = 83) and India (n = 78), the empirical analysis shows that innovation orientation and cost orientation partially mediate the direct influence of ambidexterity‐oriented decisions on innovative ambidexterity, thus further explaining how formulated decisions made by the top management team nurture ambidextrous innovation behavior. Hence, this article extends prior literature that emphasizes a positive influence of top managers on innovation through incorporating an organizational ambidexterity perspective. Second, this study contributes to ambidexterity literature through integrating strategic process theory. While ambidexterity‐oriented decisions primarily relate to strategy formulation, innovation orientation and cost orientation are associated with strategy implementation. The results show that both strategic subprocesses are vital in enabling ambidextrous innovation behavior. Third, an operationalization for the ability of top management to balance adaptability‐ and alignment‐oriented decisions is provided based on prior literature.     

Vertical and Horizontal Cross‐Ties: Benefits of Cross‐Hierarchy and Cross‐Unit Ties for Innovative Projects

Social networks are an important driver for successful innovation, both at the individual level as well as the organizational level. Recent research has also shaped that networks within teams can enhance performance. Innovative project teams are embedded in an organizational context, however, and teams typically consist of people with expertise from diverse backgrounds, and from different units. Team members may have ties to other teams, business units, and hierarchical levels. Although it seems clear that such ties can influence team performance, remarkably little research has focused on what is here referred to as vertical and horizontal cross‐ties. Previous research may have ignored the possibility that vertical and horizontal bridging ties may have different performance outcomes. Although the literature suggests that diversity of input, or horizontal cross‐unit ties will benefit team performance and innovativeness, there is reason to believe that ties to higher levels in the organization might have an effect on project team performance and innovativeness too. This article in particular studies the role of vertical cross‐hierarchy ties. In an exploratory analysis combining quantitative and qualitative results, it is distinguished between horizontal cross‐unit and vertical cross‐hierarchy ties and their contribution to new business development (NBD) project performance, thereby making a substantial contribution to both academic literature and managerial practice. Our study is based on a multiple case‐study approach of several NBD project teams in a large European financial service provider. Our results show that successful innovation project teams are characterized by a large number of cross‐unit ties in combination with a large number of cross‐hierarchical ties compared with less successful project teams. Additionally, proof is found that vertical cross‐hierarchy ties should be concentrated rather than scattered across project members.     

Formal integration archetypes in ambidextrous organizations

Research suggests that organizational ambidexterity, an organization's capacity to pursue both exploratory and exploitative activities, is critical to firm innovation and performance. Extant research primarily emphasizes several firm‐level informal integration mechanisms, such as creating a common vision and relying on social integration, for integrating structurally ambidextrous units. Research has largely ignored, however, the formal mechanisms by which organizations have integrated such units. In this inductive study, using archival and interview data from organizations in Silicon Valley, we address this gap by identifying the formal integration archetypes that enable core business units to collaborate with new venture units to incubate new businesses. The four integration archetypes that enable collaboration vary along two key dimensions: who initiates new ventures and when collaboration is solicited. We identify formal administrative and resource mechanisms that enable such collaboration. We combine the disparate literatures of temporal and spatial separation of ambidextrous structures, and demonstrate how these must be combined at the business unit and new venture levels of analysis to achieve integration. The practical contribution of this study lies in identifying suitable contexts in which each of these archetypes can be utilized by practitioners for reintegrating new venture projects developed in separate structures.     

Managing the Exploitation/Exploration Paradox: The Role of a Learning Capability and Innovation Ambidexterity

Some researchers have proposed that practices facilitating learning and knowledge transfer are particularly important to innovation. Some of the practices that researchers have studied include how organizations collaborate with other organizations, how organizations promote learning, and how an organization's culture facilitates knowledge transfer and learning. And while some have proposed the importance of combining practices, there has been a distinct lack of empirical studies that have explored how these practices work together to facilitate learning and knowledge transfer that leads to the simultaneous achievement of incremental and radical innovation, what we refer to as innovation ambidexterity (IA). Yet, a firm's ability to combine these practices into a learning capability is an important means of enabling them to foster innovation ambidexterity. In this study, learning capability is defined as the combination of practices that promote intraorganizational learning among employees, partnerships with other organizations that enable the spread of learning, and an open culture within the organization that promotes and maintains sharing of knowledge. This paper examines the impact of this learning capability on innovation ambidexterity and innovation ambidexterity's effect on business performance. The resource‐based view (RBV) of the firm is used to develop a conceptual foundation for combining these practices. This study empirically examines whether these practices constitute a learning capability by analyzing primary data gathered from 214 Taiwanese owned strategic business unit (SBUs) drawn from several industries where innovation is important. The results of this study make four important contributions. First, they demonstrate that the combination of these practices has a greater impact on innovation ambidexterity than any one practice individually or when only two practices are combined. Second, the results demonstrate a relationship between innovation ambidexterity and business performance in the form of revenues, profits, and productivity growth relative to competitors. Third, the results suggest that innovation ambidexterity plays a mediating role between learning capability and business performance. That is, learning capability has an indirect impact on business performance by facilitating innovation ambidexterity that in turn fosters business performance. This study also contributes to our understanding of ambidexterity literature in a non‐Western context, i.e., Taiwan.     

Market orientation,job satisfaction,product quality,and firm performance: evidence from China

This article examines the processes by which market orientation (MO) affects performance using a cross‐level approach. The results of a survey of 2,754 employees from 180 firms in China show that organization‐level MO culture leads to unit‐level MO behavior, which improves employee‐level job satisfaction and then product quality, which in turn fosters organizational performance. In particular, MO behavior fully mediates the effects of MO culture on employee satisfaction, product quality, and organizational performance. Leadership quality strengthens the effect of MO culture on unit‐level MO behavior. Moreover, MO behavior enhances firm performance indirectly through employee job satisfaction and product quality. Copyright © 2008 John Wiley & Sons, Ltd.     

IT competency and firm performance: is organizational learning a missing link?

Many companies have developed strategies that include investing heavily in information technology (IT) in order to enhance their performance. Yet, this investment pays off for some companies but not others. This study proposes that organization learning plays a significant role in determining the outcomes of IT. Drawing from resource theory and IT literature, the authors develop the concept of IT competency. Using structural equations modeling with data collected from managers in 271 manufacturing firms, they show that organizational learning plays a significant role in mediating the effects of IT competency on firm performance. Copyright © 2003 John Wiley & Sons, Ltd.     

Ecological investigation of firm effects in horizontal mergers

Using an ecological lens, we extend strategic management and industrial organization theory to investigate the performance effects of horizontal mergers. We theorize that firms differ in their ability to benefit from horizontal mergers; that the products involved in the merger differ in their ability to attain and sustain any increase in performance above their premerger level; and that resource niches in which each product competes differ in terms of competitive constraints. We then test these predictions using longitudinal data specified at the product–market level, a unit of analysis that is less influenced by aggregation bias than are industry, firm, and even line-of-business level data. Our findings demonstrate how organizational ecology, when coupled with strategic management and industrial organization economic theories, can enrich our understanding of horizontal mergers. Copyright © 2001 John Wiley & Sons, Ltd.     

From Internal to Network Labor Markets? Insights on New Promotion Processes from the Call Center Industry

Research on network forms of organization suggests that “business units” may be a more useful analytical unit than “firms” in understanding restructuring of internal labor markets. We find evidence for this proposition by analyzing promotion opportunities in 1760 call centers in sixteen countries. We find substantial differences in promotion opportunities internal to the unit versus elsewhere, related to the use of explicit versus tacit knowledge in performance evaluation, distinctions between unit‐specific and general‐firm knowledge, and network‐bridging organizational characteristics.     

Equity‐based incentives and collaboration in the modern multibusiness firm

Research summary : This paper examines the role of equity‐based incentives in fostering cross‐business‐unit collaboration in multibusiness firms. We develop a formal agency model in which headquarters offers equity and profit incentives to business‐unit managers with the objective of maximizing total expected firm returns. The resulting compensation contract provides a rich mechanism for aggregating value from collaborative interactions across business units, aligning managers' efforts with the firm's growth prospects and organization structure and managing the dual risks in profits and firm market value. The inclusion of equity incentives elicits higher levels of own‐unit and collaborative efforts over the profits‐only contract. Our results suggest that equity‐based incentives are most beneficial when profitability is uncertain relative to long‐term growth prospects, in firms pursuing related diversification strategies, and in periods of rising equity markets. Managerial summary : Equity‐based compensation such as restricted stock grants and options are increasingly common, not only for CEOs and other top executives, but also for business unit managers and other non‐C‐suite employees. The paper studies the role of such “global” incentives in enabling multibusiness firms to benefit from cross‐unit collaboration. Results from our model show that managerial contracts that include appropriate levels of equity incentives, in addition to profit‐based incentives, generate higher own‐unit and collaborative efforts. We also find that equity incentives are likely to be most beneficial for large firms in high‐growth sectors, for firms pursuing a related diversification strategy, and in periods of rising stock markets. The model can also provide useful guidance on designing return‐maximizing compensation contracts for business unit managers in different firm, organizational, and industry contexts. Copyright © 2015 John Wiley & Sons, Ltd.     

Communities of Practice versus Organizational Climate: Which One Matters More to Dispersed Collaboration in the Front End of Innovation?*

Dispersed collaboration provides many benefits such as members' closeness to local cultures and markets and reachability of talent worldwide. Hence, it is no surprise that dispersed collaboration is frequently being used by product development teams. A necessary but not sufficient condition for innovation performance is the sharing of tacit, non‐codified and explicit, codified knowledge by the team. Situated learning theory, however, predicts that tacit knowledge sharing will be largely prevented by “decontextualization.” Therefore, increasing usage of dispersed collaboration will decrease levels of tacit knowledge—crucial to innovation and organizational performance—in the business unit. This research investigates the moderating role of mechanisms believed to enable tacit knowledge transfer in the front end of innovation. Using data from 116 business units, the moderating role of communities of practice and organizational climate on the relationship between the proficiency of dispersed collaboration and front end of innovation performance is investigated. Encouragement of communities of practice is found to moderate the relationship between proficiency of dispersed collaboration and front end of innovation performance on the business unit level. More specifically, proficiency of dispersed collaboration is not related at all to front end of innovation performance in business units with low support for communities of practice; but a positive relationship exists in business units with high support for communities of practice. This study does not provide support for the moderating effect of organizational climate on the relationship between proficiency in dispersed collaboration and front end of innovation performance. However, supportiveness of climate has a significant direct effect on front end of innovation performance. The findings of this study suggest that managers should simultaneously invest in increasing proficiency in dispersed collaboration and supporting communities of practice. Either one by itself is insufficient. Because of its significant direct effect, managers should also nurture an open climate favoring risk taking, trust, and open interaction.     

Beyond the retention—acquisition trade-off: Capabilities of ambidextrous sales organizations

Sales organizations aim to grow their firms' business by acquiring new customers while retaining their existing ones. Although customer acquisition and retention are complementary processes, they involve different sales process capabilities that often compete for investments. However, firms that succeed in effectively combining these capabilities are “ambidextrous” and will enjoy superior growth and profits. Although developing ambidexterity is a fundamental sales management task, it has received little attention in research. Based on the Motivation-Opportunity-Ability framework we identify a set of organizational sales capabilities that can help sales organizations' joint management of acquisition and retention capabilities, and explain their influence drawing on Job Demands-Resources (JD-R) theory. Survey and time-lagged archival performance data from 174 firms provide an empirical test of the conceptual model and hypotheses developed. Results confirm that incentive management, cross functional cooperation, and the interaction of cross functional cooperation and sales training capabilities are positively correlated with sales organization ambidexterity. In addition, we find a positive correlation of customer prioritization on ambidextrous selling. Results confirm that firms with high levels and aligned acquisition and retention capabilities enjoy superior organic growth. However, contrary to expectation, increases in profit growth are only accomplished if acquisition capabilities are high.     

Social capital,strategic relatedness and the formation of intraorganizational linkages

This paper investigates the evolutionary dynamics of network formation by analyzing how organizational units create new interunit linkages for resource exchange. Using sociometric techniques and event history analysis, this study predicts the rate at which new interunit linkages are created between a newly formed unit and all the existing units in a large multinational organization. Two important constructs: social capital, derived from the literature on social structure and network formation, and strategic relatedness, derived from research on diversification and the resource‐based view of the firm, are used to explain the rate of new linkage creation. Results show that the interaction between social capital and strategic relatedness significantly affects the formation of intraorganizational linkages. Copyright © 2000 John Wiley & Sons, Ltd.     

Playing a double game? Pursuing innovation through ambidexterity in an international acquisition program from the Arabian Gulf Region

Acquisitions represent a strategy for enhancing competitive responsiveness in the global management of technology and innovation. Even more than single and domestic acquisitions, cross‐border acquisition programs present opportunities for firms seeking to sustain innovation. Yet, scant attention has been paid to the innovation dynamics of pursuing multiple, international acquisitions. We remedy this gap by investigating a multinational logistics firm enacting a multi‐decade program of cross‐border, technology intensive acquisitions and achieving dual competencies in (1) innovation and ambidexterity, (2) the exploration and exploitation capabilities of ambidexterity, and (3) tight and loose integration approaches. We determine that the firm relied on contextual, temporal, and structural manifestations of ambidexterity in acquisition integration. Findings illuminate the processual nature of an international acquisition program and suggest how ambidexterity benefits the acquisition of both innovation and innovative capabilities, when a firm applies a portfolio of tight‐to‐loose integration approaches.     

The direct and indirect effects of core and peripheral social capital on organizational performance

Research summary : In this paper we adopt a core‐periphery approach to specify the direct and indirect effects of social capital on organizational performance. We suggest that social capital deriving from stable task relationships between organizational members has a direct positive effect on organizational performance. Said effect depends, in both strength and functional form, on whether actors involved in stable dyads are located at the core or at the periphery of the organization. We also argue that core and peripheral social capital affect performance indirectly by moderating the organization's ability to leverage its human capital to improve performance. Results from a 48‐year study of the National Basketball Association support our arguments and bear important implications for strategic human resource practices and organizational performance in competitive settings. Managerial summary : Stable work relationships among employees generate trust, more efficient work routines, common understanding and thus higher organizational performance. These benefits depend on the location of such stable relationships in the organization. Relational stability among core organizational members has an immediate, strong impact on performance, an effect that plateaus as stability grows. Stable relationships between core and peripheral members have instead a weaker, yet linear effect on performance. The location of stable relationships is also critical to leverage the talent of core employees, whose contribution to performance is stronger when relational stability is high in the organizational core, yet hindered by stable relations between core and periphery. Such findings provide relevant implications for strategic human resource management, in particular for choices regarding team composition and managing stars. Copyright © 2015 John Wiley & Sons, Ltd.     

Supportiveness of Organizational Climate, Market Orientation, and New Product Performance in Chinese Firms

Most knowledge development efforts in new product development have focused on Western economies and companies. However, due to its size, rapid growth rate, and market reforms, China has emerged as an important new context for new product development. Unfortunately, current understanding of the factors associated with new product success in China remains limited. We address this knowledge gap using mixed methods. First, we conducted 19 in‐depth interviews with managers involved in new product development in 11 different Chinese firms. The qualitative fieldwork indicated that firm behaviors and employee perceptions consistent with the phenomena of market orientation and the supportiveness of organizational climate both are viewed as important drivers of the new product performance of Chinese firms. Drawing on the marketing, management, and new product development literature this study develops a hypothetical model linking market orientation, supportiveness of organizational climate, and firms' new product performance. Direct relationships are hypothesized between both market orientation and supportiveness of organizational climate and firms' new product performance, as well as a relationship between supportiveness of organizational climate and market orientation. Data to test the hypothetical model were collected via an on‐site administered questionnaire from 110 manufacturing firms in China. The hypothesized relationships are tested using structural equation modeling. Results indicate a positive direct relationship of market orientation on firms' new product performance, with an indirect positive effect of supportiveness of organizational climate via its impact on market orientation. However, no support is found for a direct relationship between the supportiveness of a firm's organizational climate and its new product performance. These findings are consistent with resource‐based view theory propositions in the marketing literature indicating that market orientation is a valuable, nonsubstitutable, and inimitable resource and with similar propositions in the management literature concerning organizational culture. However, this study's findings also indicate that in contrast to a number of organizational culture theory propositions and empirical findings in some consumer service industries, the impact of organizational climate on firm performance in a new product context is indirect via the firm's generation, dissemination, and responsiveness to market intelligence. These results suggest that an effort to improve firms' new product performance by enhancing the flow and utilization of market intelligence is an appropriate allocation of resources. Further, this study's findings indicate that managers should direct at least some of their efforts to enhance a firm's market orientation at improving employee perceptions of the supportiveness of the firm's management and of their peers. This study indicates a need for further research concerning the role of different dimensions of organizational climate in firms' new product processes.     

The Locus of Innovation: The Effect of a Separate Innovation Unit on Exploration,Exploitation, and Ambidexterity in Manufacturing and Service Firms

This paper investigates the effects of having a separate innovation unit on exploration, exploitation, and ambidexterity in manufacturing and service firms according to traditional paradigms of the innovation management discipline that innovation units should be organized in a separate department. Many manufacturing firms have such a unit while few service firms do. This paper sets out to investigate the advantages of having such a unit for exploration, exploitation, and ambidexterity, and whether there are differences between manufacturing and service firms that could help explain why such units are present or absent. The literature suggests that a separate innovation unit has a positive effect on exploration and ambidexterity in manufacturing firms. However, the effect on improving operational activities, that is, exploitation, is unclear. If exploration and exploitation are two ends of a continuum, as the literature suggests, more exploration comes at the cost of exploitation. On the other hand, others have suggested the possibility of an orthogonal relationship, where a separate unit can simultaneously enhance exploration and exploitation. In this paper, the Dutch Community Innovation Survey (CIS) is used to investigate these relationships for manufacturing and service firms, with a question added to the survey regarding the locus of innovation within each firm, that is, mostly within a dedicated innovation unit or dispersed throughout the firm. Our findings show that a separate innovation unit increases exploration, exploitation, and ambidexterity in both manufacturing and service firms. It thereby provides support for the orthogonal view of ambidexterity. A separate unit enhances the ability to exploit and be ambidextrous equally in service and manufacturing firms, but has a weaker positive effect on exploration, and exploratory and ambidextrous performance in service firms. This finding implies that both manufacturing and service firms benefit from having a separate innovation unit, with the advantages being greatest for manufacturing firms. In service firms, such an innovation unit alone may not be sufficient, as such units are expensive to maintain, while they contribute less to ambidextrous performance than in manufacturing firms. Based on the latter finding, future studies should make a distinction between the ability to be ambidextrous in creating exploratory and exploitative innovations, and ambidextrous performance, the ability to gain financially from engaging in both types of activities simultaneously.     

A Study of the Performativity of the “Ambidextrous Organizations” Theory: Neither Lost in nor Lost before Translation

Ambidextrous organizations succeed both in incremental and discontinuous innovation. However, there is little direct empirical evidence on how managers implement the principles of the “ambidextrous organizations” theory to dynamically align the structure and culture of ambidextrous organizations. Our study does not focus on analyzing the factors that give rise to organizational ambidexterity but focuses on analyzing whether the factors suggested by prior theorizing on “ambidextrous organizations” are implemented by managers in their daily practice as suggested by prior theorizing. Accordingly, this study does not investigate the traditionally conceptualized gap between academic theorizing and managerial practice since “ambidextrous organizations” theory can be characterized as rigorous and relevant. We investigate whether the “ambidextrous organizations” theory is implemented as suggested by prior theorizing and whether successful implementation is subject to managing in the way that scholars' prior theorizing suggests. Based on qualitative and quantitative data from two longitudinal case studies, we find that managers overlooked the process dimension in evaluating the required degree of ambidexterity. Furthermore, the organizational structure and culture for incremental innovation did not differ from the structure and culture for discontinuous innovation alongside the expected dimensions. Finally, the discontinuous innovation business unit had to be reintegrated to ensure sustained growth. During the reintegration processes, organizational capabilities mutated. We linked our findings on the processes and performativity of ambidextrous organizing to extant theories and developed the rationale for the observed novel phenomena of innovation myopia, second‐order competency traps, and capability mutations.     

Aligning Knowledge Assets for Exploitation,Exploration, and Ambidexterity: A Study of Companies in High‐Tech Parks in China

There is little research that has explored the effects of how knowledge assets are aligned with each other in exploitation and exploration innovation strategies. This study uses alignment theory to explore the effects of aligning knowledge assets on facilitating a firm's ability to pursue ambidexterity, which is defined as the simultaneous pursuit of explorative and exploitative innovation strategies. We also explore the relative influence of organizational and human capital in fostering an exploitation innovation strategy on the one hand, and an exploration innovation strategy on the other. Using a primary survey sample of 127 companies in two high‐tech parks in China, we found that greater reliance on relatively more organizational capital versus human capital has a significantly positive impact on the success of an exploitative innovation strategy. The amount of organizational capital relative to the amount of human capital has a stronger positive association with exploratory innovation strategy when social capital is greater. We also found that the combination of organizational, human, and social capital fosters ambidexterity, i.e., the simultaneous pursuit of exploration and exploitation. This study extends alignment theory and examines the effects of aligning these knowledge assets on a firm's ability to foster organizational ambidexterity.