Does ambidexterity consistency benefit small and medium-sized enterprises’ resilience?

ABSTRACT

This article examines the relationship between strategic consistency in ambidexterity and the resilience outcomes of Small and Medium-Sized Enterprises (SMEs) after stressful and disruptive events. The underlying approaches taken by the majority of previous studies have focused on the role of strategic consistency as an advantage or disadvantage for firms when it comes to achieving resilience. We propose a model that contributes to the strategic management literature by considering that the relationship between strategic consistency and performance is not a straightforward one. Several constraints play a decisive role in how ambidexterity consistency affects SMEs’ resilience when these organizations, which may have different internal weaknesses, face extreme external events. Through a sample of 2,766 firms, we provide evidence of an inverted U-shape relationship between ambidexterity consistency and SME resilience outcomes under a context of scarce slack resources as the last global financial crisis.

KEYWORDS:

• Ambidexterity consistency
• resilience
• SMEs
• slack resources

Acknowledgments

We would like to thank Jeremy Dawson and Iván Arribas for their help.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ See, Conz and Magnani (2020), Duchek (2020), Hillmann (2020), Hillmann and Guenther (2020), Linnenluecke (2017), and Williams et al. (2017) for recent reviews.

² We follow the classical work of Duncan (1976), where ambidexterity is considered as the organization’s ability to pursue exploratory and exploitative activities simultaneously and efficiently. Although some SMEs may achieve punctual equilibria between exploration and exploitation, our definition does not include them.

³ In SMEs, ambidexterity relies on a set of organizational and managerial processes (Cao et al., 2009; Lubatkin et al., 2006).

⁴ Strategic fit describes the alignment between a firm’s strategy and the environmental threats and opportunities (Lawton et al., 2012; Zajac et al., 2000).

⁵ For instance, divesting a strategic business unit or obtaining short-run financing from a parent company to level operational instabilities (Weaven et al., 2021). Smallbone et al. (2012) highlight that SMEs are considered highly susceptible to external shocks because, in comparison to larger firms, they have more limited internal resources, cannot spread their risks across a competitive arena, and have less bargaining power with external actors, e.g., finance providers.

⁶ Note that there can be more degrees of SC, for example, intermediate positions between A¹ and A² or A¹ and A³.

⁷ This is a majority approach used in studies that explore ambidexterity through Likert scale measurements and surveys with surviving businesses (Osiyevskyy et al., 2020; Smallbone et al., 2012).

⁸ This is a limitation of our consistency measure for these firms, to the extent that OA during the crisis is only measured in one year if they ceased to be active in 2010, two years if they ceased to be active in 2011, and three years if they ceased to be active in 2012.

⁹ According to Dawson (2014, p. 14), due to the inevitability of shared variance between the independent, moderated, and interaction terms, it is generally recognized that R² is not an ideal metric for measuring the size of an interaction effect. Instead, it would be more helpful to examine the variation of Cohen’s f ² = (R²_{Model 7d –} R²_{Model 7c}) / (1 – R²_{Model 7d}).

¹⁰ Cohen’s f ² = (R²_{Model 7d –} R²_{Model 7a}) / (1 – R²_{Model 7d}).

¹¹ According to Sun et al. (2010), effect sizes must be interpreted by comparing them directly with prior effect sizes in the related literature (for example, Iborra et al., 2020; Mayr et al., 2017). In addition, it should be noted that as Tonidandel and LeBreton (2011, p. 8) explain, “a large effect in one situation can be pretty meaningless, while a tiny effect in a different situation could be extremely important from a practical standpoint. Any interpretation of a particular effect needs to take the specific context into account.”

¹² As can be seen in Figure 1, firms’ consistency is at its maximum when firms follow the path from t-1 to t, ending in A¹. And the same is true when they go in the opposite direction, i.e., going from A¹ to t, and ending in the t-1 bullet.

¹³ For example, although a firm can decrease its labor costs, sales will decline heavily, and so the reduction of the numerator must surpass the decrease of the denominator.

¹⁴ We acknowledge the reviewers for their advice on this point.

Additional information

Funding

This work has received financial support from Generalitat Valenciana AICO/2021/309.