Organizational Ambidexterity and Not-For-Profit Financial Performance
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University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Doctoral Dissertations Graduate School 8-2012 Organizational Ambidexterity and Not-for-profit Financial Performance Timothy Michael Madden [email protected] Follow this and additional works at: https://trace.tennessee.edu/utk_graddiss Part of the Strategic Management Policy Commons Recommended Citation Madden, Timothy Michael, "Organizational Ambidexterity and Not-for-profit Financial Performance. " PhD diss., University of Tennessee, 2012. https://trace.tennessee.edu/utk_graddiss/1419 This Dissertation is brought to you for free and open access by the Graduate School at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. To the Graduate Council: I am submitting herewith a dissertation written by Timothy Michael Madden entitled "Organizational Ambidexterity and Not-for-profit Financial erP formance." I have examined the final electronic copy of this dissertation for form and content and recommend that it be accepted in partial fulfillment of the equirr ements for the degree of Doctor of Philosophy, with a major in Business Administration. Anne D. Smith, Major Professor We have read this dissertation and recommend its acceptance: Franz W. Kellermanns, Alex Miller, Kenneth J. Levine Accepted for the Council: Carolyn R. Hodges Vice Provost and Dean of the Graduate School (Original signatures are on file with official studentecor r ds.) Organizational Ambidexterity and Not-for-profit Financial Performance A Dissertation Presented for the Doctorate of Philosophy Degree The University of Tennessee, Knoxville Timothy Michael Madden August 2012 Copyright © 2012 Timothy Madden All rights reserved. ii DEDICATION This dissertation is the result of many people’s efforts and support, and is therefore dedicated to my mother, for believing that I could be the first one in the family to graduate from college, graduate school, and a PhD, and never once asking if I knew what I was doing; to my father and stepmother, for encouraging me throughout the entire process; to my brothers, for keeping me connected to the rest of the world for four years; and to my wife Laura, for joining me on this path every step of the way. iii ACKNOWLEDGEMENTS This dissertation is the product of many shots of espresso and the unwavering support of many people. From my first day in the Organizations and Strategy PhD program, my dissertation chair, Anne Smith, heavily invested in my success at UT. Anne taught me that excellent research never happens alone; rather, it emerges from collaborative relationships with others. Franz Kellermanns also provided guidance and I am grateful for his continued leadership of the O&S PhD program. I would also like to thank my other committee members, Alex Miller and Ken Levine, for their time, advice, and input on this study. In addition to my committee, many UT faculty members, including Russell Crook, Dave Williams, Lane Morris, Debbie Mackie, Randal Pierce, and Cheryl Barksdale have all helped to shape my career over four years. Other mentors have also made a tremendous impact on my professional growth, including Bob Kolodinsky, who encouraged me to pursue a doctorate, Donde Plowman and Dennis Duchon who helped craft a PhD program that would endure in their absence, and Dave Woehr who patiently taught me why strong research methods are important. Thank you to all of you. The tireless administrative efforts of John Hoffman, Glenda Hurst, Elizabeth Ferguson, Michelle Molter, and Jeannie Goodman made this process immeasurably more manageable. I am also grateful for all of the other O&S doctoral students, including Dori Stiefel, Mark Collins, Karen Ford-Eickhoff (KFE), Josh Ray, Adam Smith, Mary Beth Rousseau, Blake Mathias, Kristen Day, Kyle Turner, and Nastaran Simarasl, for their help along the way. Finally, my wife Laura has been a daily source of love, energy, ideas, inspiration, and motivation throughout the entire process of earning my doctorate. Without her, this would not have been possible. We did it! iv ABSTRACT The purpose of this dissertation is to extend the concept of organizational ambidexterity (OA) into the domain of not-for-profit (NFP) organizations. These organizations are subject to many of the same demands as their for-profit counterparts, yet research has not been conducted on how NFPs manage the competing pressures of refining existing routines for efficiency with the need to grow and innovate. This dissertation includes two portions: a quantitative analysis of a large NFP-rating agency dataset and qualitative interviews with executive directors and managers from within the food banking industry to identify the processes in use at a sample of ambidextrous organizations. The quantitative study uses a financial outcome—fiscal performance—in order to assess the degree to which financial outcomes are affected by exploration and exploitation, two actions central to the ambidexterity paradigm. Results of this study indicate that although exploration and exploitation are related to fiscal performance within NFPs, the results vary greatly depending on the industry in question. The qualitative portion of the study indicates that three activities aid NFPs in engaging in exploration and exploitation: managing knowledge, retaining professional talent, and enabling leadership. This study concludes with implications for researchers and managers, as well as suggestions for future research extensions. v TABLE OF CONTENTS Chapter 1 – Introduction and Study Rationale ................................................................................ 1 Study Purpose ............................................................................................................................. 2 Assumptions ................................................................................................................................ 3 Overview of Methodology .......................................................................................................... 4 Contributions............................................................................................................................... 5 Organization of the Dissertation ................................................................................................. 7 Chapter 2 – Literature Review and Hypothesis Development ........................................................ 8 Specializing in Efficiency or Exploration ................................................................................... 9 Reconciling Efficiency with Exploration – Organizational Ambidexterity ............................. 12 Antecedents of Ambidexterity .............................................................................................. 14 Moderators of Ambidexterity ............................................................................................... 17 Outcomes of Ambidexterity .................................................................................................. 18 Synthesizing and Extending Organizational Ambidexterity ................................................. 20 Literature Review Conclusion .............................................................................................. 22 Chapter 3 – Methods and Context ................................................................................................ 23 Challenges in Assessing NFP Effectiveness ............................................................................. 28 The Rise of Not-for-profit Watchdog Organizations ................................................................ 31 Description of Charity Navigator.............................................................................................. 32 Study 1 Methods and Context ................................................................................................... 33 Research Design and Quantitative Analytic Techniques .......................................................... 34 Study 1 Variables and Description of Measures ....................................................................... 34 Organizational Efficiency (Exploitation) .............................................................................. 34 Organizational Capacity (Exploration) ................................................................................. 36 Controlling for Industry Differences .................................................................................... 37 Creating a Measure of Organizational Ambidexterity .......................................................... 38 Fiscal Performance................................................................................................................ 39 Control Variables .................................................................................................................. 39 vi Validity ................................................................................................................................. 40 Study 2 Methods and Context ................................................................................................... 41 Study 2 Data Collection ........................................................................................................ 43 Research Methods Summary ...............................................................................................