Business model innovation towards sustainability: the role of integration between ambidexterity and family governance.

Paolo Di Toma^1,*,+, Cecilia Correggi²,

¹University of Modena and Reggio Emilia, Department of Communication and Economics;

²University of Modena and Reggio Emilia, Department of Economics “Marco Biagi”

*[email protected]

Extended abstract

This paper addresses how firms undertake business model innovation paths that enhance the sustainability of their business. More specifically, it focuses on the integration of governance processes and ambidextrous strategies as an antecedent of sustainability-oriented business model innovation processes. Previous literature suggests that business model innovation impacts organisational sustainability and influences organisational resilience and processes (Carayannis et al., 2014; Carayannis et al., 2015; Lüdeke-Freund, et al., 2018). However, little research has investigated how the interplay between governance processes and ambidextrous strategies can lead the process of business model innovation down the path of sustainability.

In recent years, organizational ambidexterity has emerged as a key construct for understanding the ability of firms to compete and outperform in markets characterized by significant differences and constraints as to technology, efficiency, and pace of innovation (O’Reilly and Tushman, 2013; Raisch and Birkinshaw, 2008; Raisch, et al., 2009). Organisational ambidexterity refers to the capability of firms to simultaneously pursue exploitation and exploration strategies (Gibson and Birkinshaw, 2004; He and Wong, 2004; O’Reilly and Tushman, 2011; Raisch and Birkinshaw, 2008). by resolving the tensions between conflicting processes, structures and cultures within the same firm (Tushman and O'Reilly, 1996:24). The challenges firms face in global and dynamic environments make the ability to pursue ambidextrous strategies increasingly crucial to achieve above-average performance (Dolz et al., 2019). Findings from the cumulative research are broadly convergent in claiming that ambidexterity has a positive impact on short-run performance (Junni et al., 2013). Moreover, they also emphasize the positive role it plays on firms' ability to survive in the long run, as ambidextrous firms show a superior ability to respond to disruptive business models and new technologies (Birkinshaw et al., 2016; Hill and Birkinshaw, 2014). However, only recently scholars begun to investigate the link between ambidextrous strategies and improved sustainability performance of firms (Gomes et al., 2020).

Previous research was mainly concerned with understanding how firms balance tensions and demands that seem conflicting (Nosella et al., 2012). The antecedents of organizational ambidexterity were investigated (Raisch and Birkinshaw, 2008) to shed light on how both internal factors, such as organizational structures, human resource management systems, or the performance of leadership by top managers (Garcia-Granero, 2018; Jansen et al., 2008; Jansen et al., 2009; Patel et al., 2013; Prieto et al., 2012) and contextual factors (Gibson and Birkinshaw, 2004; Zimmermann et al., 2018) impact the simultaneous pursuit of exploration and exploitation strategies. Unfortunately, the effects on the sustainability performance so far have been mainly neglected by previous research.

In addition, the extant research also delved into the different spatial, temporal, and contextual options with which firms deal with the tensions between the conflicting demands of exploration and exploitation (Lavie et al., 2010; Raisch et al., 2009). For instance, some firms keep the organisational units that engage in exploration strategies separate from those engaged in exploitation activities (Jansen et al., 2009), or resort to partnerships to acquire from outside activities that are complementary to internal activities to pursue exploration and exploitation strategies (Lavie and Rosenkopf, 2006; Wassmer et al., 2017). Again, the development of individual ambidexterity may be promoted within organisations (Gibson and Birkinshaw, 2004) or the different options may be combined or implemented sequentially (Luger et al., 2018; Ossenbrink et al., 2019).

Although a substantial body of literature has accumulated over the years, scholars have observed the persistence of shortcomings and pointed out to a prevalence of studies that investigated ambidexterity with a static approach. Therefore, more recently, research has been carried out from a process perspective to overcome the limitations of the previous literature in investigating the interaction and nexus between exploration and exploitation (Andriopoulos and Lewis, 2009; Raisch and Zimmermann, 2017; Zimmermann et al., 2017). In this view, among others, the relationship of mutual adaptation over time, according to changes in the environment (Luger et al., 2018) and the mechanisms and patterns of interaction that allow for the expansion of exploration activities while maintaining exploitation operations (Raisch and Tushman, 2016) have been investigated.

Research on family businesses has also paid increasing attention to organisational ambidexterity in recent years. It provides useful and recognised lenses for understanding the strategies in family businesses as they emerge from the complex interplay between the family and entrepreneurial dimensions in the running of the business (Van Doorn et al., 2022).

An increasing body of literature recognizes ambidexterity as a key driver to continuously nurture innovation processes and also to develop organisational capabilities which enable business model innovation (Khanagha et al., 2014; Ricciardi, Zardini & Rossignoli, 2016; Teece, 2018). However, significant gaps in its theoretical understanding still remain (Allison et al., 2014). The nexus with governance processes was substantially neglected by previous studies, although it is crucial for understanding the distinctiveness of family firms' behaviour and the heterogeneity of their performance (Stubner et al., 2012).

This research was carried out by using a single case study approach and investigates how and why, in a family business engaged in food production, the interaction between governance processes and ambidexterity increased the sustainability performance of the business model innovation.

We adopt a process perspective to investigate how and why ambidexterity and governance interact in the flow of the entrepreneurial process (Hjorth et al., 2015; Langley, 1999) and influence business model innovation towards sustainability. This research focuses on the iteration, over time, of the intentions and behavior that unfold in the entrepreneurial process and deep delves into the interplay of ambidexterity and governance processes. We challenge traditional one-way perspectives and investigate the mutual conditioning and adaptation that leads, along the entrepreneurial process of the family firm, to the ability to innovate the firm's business model while increasing its sustainability actions and performance.

Finally, we overcome approaches that conceptualize the family governance as monolithic. According to Kammerlander et al (2020), family membership diversity has different effects on firms’ decisions to pursue exploration versus exploitation activities. Therefore, we investigated the variety and differences in behaviour and goals that characterize individually the family members involved in governance processes.

This research contributes to advancing the theoretical understanding of how family businesses orient their business models towards sustainability performance. It provides new insights into the role of ambidexterity and its nexus with governance processes as an antecedent of business model innovation processes oriented towards improving corporate sustainability performance. The findings of this research also contribute to advancing the theoretical understanding of how family businesses embark on entrepreneurial paths that improve sustainability performance.

Keywords 

Sustainable business model innovation, ambidexterity, family governance, sustainability performance.

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