The Role of Ambidexterity and Vacillation on Firms' Innovation: an Inter-firm Network Perspective

Abstract

This article examines the underexplored balancing between exploration and exploitation in inter-firm network dimension by applying an ambidexterity and vacillation behavior and how this impacts on different firm’s innovation performances. We propose reconciliation between exploration and exploitation within a network of inter-firm ties, by matching two specific structural network embeddedness positions that are centrality and structural holes. We observe how a firm reconciles exploitation and exploration in their inter-firm networks by adopting two different behaviors, ambidexterity and vacillation. According to the former a firm statically assumes in the same time a network position characterized by high level of centrality and structural holes. Following the second behavior, a firm dynamically shifts from network positions characterized by high level of centrality/ structural holes to strong centrality/structural holes positions. By observing a network of inter-firm relationships between 3125 firms for ten years (2001-2010) in the biopharmaceutical industry, we empirically show how ambidexterity and vacillation behaviors positively impact the innovation performance of the firm, both from a new product and patent propensity point of views.