Ambidextrous structures paving the way for disruptive business models: a conceptual framework

Disruptive innovation, as coined by Christensen (1997) in his seminal work The Innovator’s Dilemma, is a process that significantly transforms the demands on existing industries, disrupts or challenges previous key players, and creates radically new products, processes, or business models (Kammerlander et al. 2018; Kawamoto and Spers 2019). This process starts with the launch of a simpler, more convenient, or more affordable product or service but with inferior performance levels. Disruptive innovations, unlike radical innovations (Bouncken et al. 2018; Tiberius et al. 2021) or other discontinuous innovations (Robertson 1967; Utterback 1994), thus initially target niche markets that are not attractive to established companies. Over time, however, the innovation’s performance improves and appeals to an increasing share of mainstream customers. Eventually, customers switch to the more convenient or affordable alternative, driving incumbents out of the market (Christensen et al. 2018; Kumaraswamy et al. 2018; Schmidt and Scaringella 2020).

In line with this, an innovation itself is not inherently disruptive—an innovation’s disruptive potential and thus its economic value is achieved by commercialization through a suitable business model (Chesbrough 2007; Cozzolino et al. 2018; Kraus et al. 2020, 2022; de Groote et al. 2021). Consequently, disruptive innovations are “a business model problem” (Christensen 2006, p. 43). Companies seeking to compete at the level of disruptive innovation must explore a new, disruptive business model, adapting previously successful performance metrics, capabilities, and value networks (Ahuja and Lampert 2001; Habtay 2012; Kranz et al. 2016; Reuschl et al. 2022). In particular, they need to assimilate different activities for value creation, proposition, and capture—thus a company’s business model—than necessary for incremental innovations, which might conflict with the traditional way of doing business (Amit and Zott 2001; Chesbrough 2010; Teece 2010; Bouncken et al. 2021). This requirement is consistent with March’s (1991) organizational learning theory. While exploiting via an existing business model requires refinement and aims at efficiency, exploring via an emerging (disruptive) business model requires experimentation, risk-taking, and innovation (Strobl et al. 2020). Both strategies are essential yet compete for scarce financial, technological, and human resources. As a result, tensions arise between exploiting the prevailing business logic that has been successful in the past and exploring new disruptive opportunities (Govindarajan and Trimble 2005; Chesbrough 2010; Doz and Kosonen 2010). However, those companies that are able to achieve organizational ambidexterity by balancing exploitation and exploration may resolve these tensions (Lavie et al. 2010; O’Reilly and Tushman 2013; Andrade et al. 2021).

Driving disruption is one of the most challenging issues for incumbents due to the tensions arising from the conflict between traditional and disruptive business models. In fact, these tensions create barriers for incumbents that hinder them from engaging in disruptive activities (Andriopoulos and Lewis 2009; Chesbrough 2010; Schneider 2019). Towards our research goal of understanding how ambidextrous structures enable incumbents to reduce these barriers to disruptive business models, we screened the literature for the most prevalent factors impeding established companies.

From a variety of reasons why incumbents struggle to pursue disruptive business models, research on organizational inertia (e.g., Rumelt 1995; Mateu and March-Chorda 2016; Cozzolino et al. 2018) has highlighted five major barriers concerning asymmetric resource allocation (e.g., Assink 2006; Chesbrough 2010; Wan et al. 2015; Cozzolino et al. 2018; Chen et al. 2021), cultural inertia (e.g., Velu and Stiles 2013; Iranmanesh et al. 2021), rigid cognitive patterns (e.g., Rumelt 1995; Ahuja and Lampert 2001; DaSilva et al. 2013; Wan et al. 2015; Kammerlander et al. 2018), top management disinclination (e.g., Rumelt 1995; Christensen and Raynor 2003; Yu and Hang 2010), and structural barriers (e.g., Christensen and Raynor 2003; Yu and Hang 2010; Wan et al. 2015).

Research on ambidextrous organizations has offered a variety of solutions for tackling these barriers, referring to the alignment of exploration and exploitation within an organization’s structure (e.g., Govindarajan and Trimble 2005; Csaszar 2013; Markides 2013; Kranz et al. 2016). The organizational structure defines how activities for task allocation, coordination, and monitoring are directed towards achieving organizational goals (Pugh 1990). Consequently, the organizational structure goes beyond mere structural decisions but involves orchestrating the alignment of people and processes, the reconfiguration of resources, and the embracement of an innovative culture (Gibson and Birkinshaw 2004; O’Reilly and Tushman 2008; Kranz et al. 2016; Iranmanesh et al. 2021). In the context of organizational ambidexterity, the literature frequently determines an organization’s structure based on the following characteristics: (1) people and culture (do exploitative and explorative businesses share a common culture and employee base?); (2) processes (do exploitative and explorative businesses share common processes?); (3) control and rewards (do exploitative and explorative businesses share the same control and reward systems?); (4) structural context (are exploitative and explorative businesses structurally separated or integrated?); (5) vision and values (do exploitative and explorative businesses share a common vision and common values?); (6) leadership (is the explorative business integrated into the existing hierarchies?); and (7) resources (do exploitative and explorative businesses share resources?) (Iansiti et al. 2003; O’Reilly and Tushman 2004; Markides and Oyon 2010; Reficco and Gutiérrez 2016; Sachsenhofer 2016; Chen et al. 2021). These characteristics indicate how integrated versus separated explorative and exploitative business models are within a firm’s structure (Siggelkow and Levinthal 2003; O’Reilly and Tushman 2011; Habtay and Holmén 2014). On the one hand, integration allows synergies to be leveraged between traditional and disruptive business models, enabling companies to share unique, long-established competencies and experiences as well as valuable resources (Markides and Charitou 2004; O’Reilly and Tushman 2004; Khanagha et al. 2018; Rohn et al. 2021). On the other hand, separation can prevent the disruptive business from being constrained by the dependencies and inertia of the traditional business (O’Reilly and Tushman 2004; Yu and Hang 2010). Through an idiosyncratic coordination of which characteristics to integrate and which to separate, the tensions between conflicting business models can be mitigated. Thus, the characteristics of an ambidextrous structure and the favorable condition for balancing explorative and exploitative business models they create may ultimately enable incumbents to reduce barriers to disruptive business models (Velu and Stiles 2013; Snihur and Tarzijan 2018; Domínguez Escrig et al. 2020; Iranmanesh et al. 2021).

A substantial body of literature advances the framework of ambidextrous organizations by elaborating various structural concepts that are distinguished by an individual combination of integrated and separated characteristics (O’Reilly and Tushman 2004; Markides and Oyon 2010). These include the well-established concepts of structural, temporal, and contextual ambidexterity, but several other approaches to ambidexterity have emerged from the literature to date. All these concepts, however, have developed quite independently and are not linked to the barriers to disruptive business models. With this study, we therefore aim to close this research gap by deriving a range of alternative structures that align exploration and exploitation, enabling incumbents to overcome barriers to disruptive business models.

To collect relevant secondary data, we conducted a formal electronic database search based on our research objectives and conceptual boundaries (see Fig. 1). We used the Web of Science Core Collection (indexes: SCI-EXPANDED, SSCI, A&HCI, and ESCI) and EBSCO Host Business Source Premier (Sageder et al. 2018; Gregori and Parastuty 2021). Both databases offer access to reputable journals dedicated to the topic of disruptive innovation, such as the Journal of Product Innovation Management, Journal of Management Studies, and Academy of Management Perspectives (Kawamoto and Spers 2019). While many systematic reviews typically draw on a wide range of related search terms to include studies that refer to similar concepts such as radical or discontinuous innovation, we limited our literature sample to papers related to the search term “disrupt*” in combination with the search terms “business model*”, “ambidext*”, “organi?ation* structure*”, “explor*” and “exploit*” (see also Bouncken et al. 2015). Since established companies are primarily struggling with disruptive innovation, we seek to provide an overview of ambidextrous structures that promote disruptive business models rather than other forms of innovative business models. The terms are then searched in the title, abstract, and keywords of studies (Sageder et al. 2018; Gregori and Parastuty 2021). Moreover, we set the filters “peer-reviewed”, “academic journals”, “English language”, and “business economics” as subject areas to ensure the quality of the sample and to further limit the scope to relevant academic studies (Bouncken et al. 2015; Gregori and Parastuty 2021; Fernandes and Ferreira 2022). Following common practice (e.g., Petzold et al. 2019; Mueller et al. 2020), we additionally included articles from the leading practitioner-oriented journals MIT Sloan Management Review, California Management Review, and Harvard Business Review satisfying the above-mentioned inclusion criteria. We set the time limit to 1995, as the concept of disruptive innovation first appeared in the seminal work Disruptive Technologies: Catching the Wave by Bower and Christensen (1995). Thus, articles published between 1995 and 2022 are included in the literature review. The data collection yields a total of 1,013 results. The review strategy is explicitly outlined in Fig. 1.

In a first step, we removed 283 duplicates, book reviews, and conference papers from the sample. To identify relevant studies, we then extensively screened the titles and abstracts of the remaining 730 articles. We applied three exclusion criteria to eliminate mismatching articles from the search results: (1) we excluded all papers not relating to disruptive business models according to the definition outlined above; (2) we excluded all papers not relating to established companies; and (3) we excluded all papers that do not focus on organizational structures (see Fig. 1). This step excluded 605 articles. After that, we screened all 125 remaining articles in their entirety, which further excluded 89 articles satisfying the above-mentioned exclusion criteria. Finally, we conducted forward and backward reference searches and identified 22 articles not discovered through the formal database search (Cacciotti and Hayton 2015; Sánchez-Pérez et al. 2021). These are analogously screened to approve their fit with the review scope. The final literature selection comprises 58 articles addressing structural arrangements of established companies that resolve the tensions between traditional and disruptive business models. A detailed list of included literature is available in the appendix.

We synthesized the review findings to provide a comprehensive consolidation of which ambidextrous structures promote disruptive business models in established companies. Therefore, a qualitative data analysis technique is used to identify thematic consensus in the literature (Crossan and Apaydin 2010; Bouncken et al. 2015). We thematically analysed the review findings by examining the proposed organizational structures for gross similarities and discrepancies according to the principle of pattern matching (Yin 1994; Crossan and Apaydin 2010; Klang et al. 2014; Sánchez-Pérez et al. 2021). Specifically, we evaluated the findings to determine whether their patterns align with the following characteristics of an organization’s structure: (1) people and culture; (2) processes; (3) control and rewards; (4) structural context; (5) vision and values; (6) leadership; and (7) resources. The ambidexterity literature uses these characteristics to delineate the extent to which explorative and exploitative business models are integrated or separated within a firm’s structure (Siggelkow and Levinthal 2003; O’Reilly and Tushman 2004, 2011; Markides and Oyon 2010; Habtay and Holmén 2014). Along these characteristics, we contrasted the findings and reviewed the extent to which consensus is shared across studies to assess the differences between the proposed ambidextrous structures (Tranfield et al. 2003). Those structures whose patterns match across studies (i.e., which characteristics are described in the same way as being either integrated or separated) are combined into a thematic concept (Klang et al. 2014). This thematic analysis revealed different concepts of ambidextrous structures, which are either introduced, further developed, or supported by the literature. We then synthesized the findings within a framework by linking the concepts to the barriers to disruptive business models. The framework, finally, serves as the basis for discussing which structural characteristics may counteract the barriers incumbents are facing.

The identified literature offers several concepts on how to resolve the barriers arising from conflicting business models, referring to the alignment of exploration and exploitation within an organization’s structure. A considerable amount of research refers to three concepts that are particularly well-known in the domain of ambidexterity: structural, temporal, and contextual ambidexterity (Nickerson and Zenger 2002; Gibson and Birkinshaw 2004; O’Reilly and Tushman 2004). Our thematic analysis of the literature, however, revealed four additional concepts that enable the parallel existence of traditional and disruptive business models: separation, integration, phased integration, and dynamic ambidexterity (Bower and Christensen 1995; Markides and Charitou 2004; Habtay and Holmén 2014). We found that these concepts can be categorized along their form of alignment of the exploitative and explorative business model. In precise, three forms are present in the literature: a structural alignment which structurally coordinates the conflicting business models (Tushman and O’Reilly 1996), a temporal alignment which dynamically aligns both business models (Nickerson and Zenger 2002; Siggelkow and Levinthal 2003), and a contextual alignment which arranges the organizational context so that exploitative and explorative models can be pursued on an individual level (Gibson and Birkinshaw 2004). Table 1 lists the concepts sorted by their form of alignment and demonstrates their theoretical basis.

As Table 1 shows, our systematic literature review identified seven different concepts of ambidextrous structures. In line with theory, our review findings describe these concepts in terms of specific characteristics, including an organization’s structural context, people and culture, control and rewards, processes, resources, leadership, and vision and values (Siggelkow and Levinthal 2003; O’Reilly and Tushman 2004, 2011; Markides and Oyon 2010; Habtay and Holmén 2014). What distinguishes the different concepts is how they align exploitation and exploration along the characteristics. Thus, the structural decision of which characteristics to integrate versus separate to minimize tensions between traditional and disruptive business models is critical. By this means, ambidextrous structures have the potential to create a favorable condition for balancing integration and separation of conflicting business models, thereby enabling companies to decrease barriers to disruption. We outline the seven identified concepts and their characteristics in detail in Fig. 2.

Our study demonstrates that the integration or separation of the concepts’ characteristics determine how the tensions between traditional and disruptive business models are handled, which in turn affects whether the barriers are reduced. The framework in Fig. 3 conceptualizes this relationship by linking the seven concepts of ambidextrous structures and their characteristics to the barriers to disruptive business models identified in the literature. This framework serves as the basis for discussing which characteristics are best suited to decrease the different barriers of asymmetric resource allocation, cultural inertia, rigid cognitive patterns, top management disinclination, and structural barriers.

Our study has a few shortcomings to be addressed in future research. First, our research goal in this study focuses on decreasing barriers to disruptive business models rather than increasing enablers of disruptive business models. A combined approach, focusing on barriers and enablers, could thus create a more holistic perspective on how established companies can leverage disruptive business models. Second, the study only considers the most prevalent barriers to disruptive business models identified by the literature. In addition to the five barriers outlined, other factors such as infrastructural constraints (Assink 2006; Chesbrough 2010) and financial expectations (Assink 2006; Velu and Stiles 2013; Vorbach et al. 2017) might prevent established companies from engaging in disruptive opportunities. Future studies could therefore complement our findings by providing a systematic overview of these additional barriers. Third, we recognize that our sample may be limited, with potentially relevant research findings being disregarded due to our quality criterion of “peer-reviewed journal articles” for inclusion in our systematic literature review. Through the additional search strategy of including practitioner-oriented articles as well as backward and forward reference searches, however, our study should comprehensively reflect extant knowledge on ambidextrous structures leveraging disruptive business models in established companies (Bouncken et al. 2015; Gregori and Parastuty 2021). Last, which structure is appropriate for a company depends on a multitude of internal and external factors, such as the heterogeneity of the market (Khanagha et al. 2018) or the “disruptiveness” of the new business model (Markides 2013), that were not investigated in this study. Thus, there is still limited empirical evidence about the optimal conditions for the respective ambidextrous structure to be successful, which offers a promising avenue for future research.