Academic journal article Academy of Strategic Management Journal

The Impact of Absorptive Capacity, Organizational Inertia on Alliance Ambidexterity and Innovation for Sustained Performance

Academic journal article Academy of Strategic Management Journal

The Impact of Absorptive Capacity, Organizational Inertia on Alliance Ambidexterity and Innovation for Sustained Performance

Article excerpt

INTRODUCTION

Strategic alliances have been known as an important strategy to build competitive advantage and keep the company's position in the market (Golonka, 2013; Hamel et al., 1989). An alliance is seen as an initiative to acquire external resources while keep leveraging internal capabilities (Gulati, Lavie & Singh, 2008). This is important in the industries which have a high growth, dynamically changing and technology-intensive. The key to success in those industries is the speed of entry into market in the form of providing services with a lower level of complexity and faster than competitors.

The ICT industry is one of the industries experiencing disruption. This industry is characterized by rapid technological developments and increasingly complex customer needs, no company provides the same exact services and always needs complex resources to meet those needs (Golonka, 2013). The industry also requires intensive technology and knowledge, dynamic technological change and industry growth. Activities such as the creation of new knowledge are more important than improving existing knowledge, building long-term relationships and trusting among corporations is also important. Therefore, inter-company alliances are the primary concern in this industry. This phenomenon is also experienced by telecommunication operators such as Telkom Group. In developing ICT portfolio, Telkom Group like other telecommunication companies, also collaborate with different organizations. This collaboration is necessary to acquire new knowledge as well as develop the knowledge and capabilities already possessed. Therefore, Telkom Group requires an alliance ambidexterity to explore new knowledge from partners and simultaneously requires leveraging current knowledge. This capability is also important to drive innovation for sustained performance. (March, 1991; Tushman & O'Reilly, 1996; Rivkin & Siggelkow, 2007) explained that the company's competitive advantage can be achieved by the balance between explorative alliance and exploitative alliance.

As a state owned enterprise (SOE), Telkom Group has internal organizational factors that influence new competency exploration initiatives. Absorptive capacity is needed to explore new capabilities from partners. However, past success history as a monopolist will lead to the emergence of organizational inertia (Liao et al., 2008; Carillo & Gromb, 1998). The highly structured organizational of the corporate, divisional, subsidiary levels and the vast range of product portfolios indicate that the company is a large corporation. Inertia will increment with increasing size and age of the organization (Hannan & Freeman, 1984; Kelly & Amburgey, 1991; Liao et al., 2008).

In this study, we will investigate the influence of absorptive capacity and organizational inertia on achieving alliance ambidexterity. Few studies concerning on internal factors of organizational learning affecting the success of alliance. Previous studies are dominated by the investigations of external factors such as environmental dynamism and competitiveness (Jansen et al., 2005). Unlike absorptive capacity that produces alternatives and innovations as a result of organizational external exploration, inertia leads to the use of the old ways of achieving organizational goals (Liao, Fei & Liu, 2008). These two internal factors will be able to affect alliance ambidexterities which subsequently result in innovation and organizational performance (He & Wong, 2004).

It would be interesting to investigate the impact of alliance ambidexterity on innovation (Leung et al., 2013). Most studies focusing on analysing the consequences of alliance ambidexterity to performance. From previous researches, there are different results of ambidexterity to performance. Firstly, they express the supporting relation of ambidexterity and sales growth rate (Gibson & Birkinshaw, 2004; He & Wong, 2004; Lubatkin et al. …

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