The value-rational organizational form as the context for
distributed ambidexterity
By
Paul S. Adler (University of Southern California)
Charles Heckscher (Rutgers University)
ABSTRACT
This article aims to advance our understanding of the context required to support
ambidextrous behavior distributed across a wide swathe of individuals, teams, and subunits within
the organization. In the management studies literature, ambidexterity is the ability simultaneously
to exploit existing capabilities and to explore new opportunities. Prior research has shown that
exploitation and exploration require very contrasting organizational contexts, and ambidexterity
therefore poses an organizational paradox. Most of the prior scholarship has focused on approaches
to ambidexterity that resolve this paradox by separating the two types of activity into different time
periods or different organizational subunits. Distributed ambidexterity, by contrast, requires that
the paradox be resolved by synthesizing the contrasting organizational requirements. Prior
research has offered only limited insight into how organizations can achieve this synthesis. We
offer a fuller theory based on a model of the value-rational organizational form. We show how this
form can be operationalized to support distributed ambidexterity by its distinctive values that
sustain shared purpose, norms that generate enabling systems, authority structures that afford
participative contingent centralization, and the development of T-shaped capabilities.
Acknowledgements
This paper has benefitted from comments by colleagues in the Organizations & Strategy
working group at USC, as well as Costas Andriopoulos, Julian Birkinshaw, Cris Gibson, Marianne
Lewis, and the reviewers.
The value-rational organizational form as the context for
distributed ambidexterity
Under the pressure of intensifying and globalizing competition, many firms have found that
they must compete simultaneously on multiple dimensions of performance. In particular, many are
under pressure to become ambidextrous—that is, to develop the ability both to exploit existing
capabilities and to explore new opportunities (building on March, 1991). As a result, management
scholars are paying increasing attention to the notion of ambidexterity. Evidence is accumulating
that, notwithstanding the considerable organizational challenges involved, some firms are indeed
able to become ambidextrous and that in some contexts this ability contributes to overall business
performance (Academy of Management Journal, 2006; Academy of Management Perspectives, 2013;
Katila & Ahuja, 2002; Lavie, Stettner, & Tushman, 2010; Lin, McDonough, Lin, & Lin, 2013; Lubatkin,
Simsek, Ling, & Veiga, 2006; Organization Science, 2009; Simsek, 2009; Simsek, Heavey, Veiga, &
Souder, 2009; Tushman, Smith, Wood, Westerman, & O'Reilly, 2010; Uotila, Maula, Keil, & Zahra,
2009).
Prior research has delineated several approaches to achieving organizational ambidexterity
(see discussion below and reviews by Lavie et al., 2010; Raisch & Birkinshaw, 2008; Simsek, 2009).
This paper focuses on the approach that relies on distributing ambidextrous behavior across a
broad swathe of individuals, teams, and sub-units the organization. This “distributed
ambidexterity” (DA) approach has also been called “contextual ambidexterity” because it relies on
creating a distinctive context that supports widespread ambidexterity (Gibson & Birkinshaw,
2004). The distributed approach is contrasted with “architectural” and “switching” approaches to
ambidexterity, which rely respectively on separating exploration and exploitation activities into
organizationally differentiated units and on alternating over time between these activities.
A long tradition of organizational scholarship inclines us to skepticism towards the idea of
DA, because exploration and exploitation have diametrically opposed requirements at both the
psychological and organizational levels, and combining these activities in the same people at the
same time therefore seems deeply paradoxical (Burns & Stalker, 1961; Ghemawat & Costa, 1993;
Hannan & Freeman, 1977). Paradoxes, argue Poole and Van de Ven (1989), can be resolved by
either separating or synthesizing the opposing terms, and DA demands a synthesis type of
resolution of the organizational paradoxes of ambidexterity—a resolution which on its face appears
far more challenging than the separation-type resolution afforded by the architectural and
switching approaches.
It is therefore noteworthy that a growing body of evidence finds that some organizations
can indeed distribute ambidextrous behavior widely and reap considerable performance benefits
from doing so (Andriopoulos & Lewis, 2009; Bodwell, 2011; De Clercq, Thongpapanl, & Dimov,
2014; Fiset & Dostaler, 2013; Gibson & Birkinshaw, 2004; Gotsi, Andriopoulos, Lewis, & Ingram,
2010; Güttel & Konlechner, 2009; McCarthy & Gordon, 2011; Napier, Mathiassen, & Robey, 2011;
Ramesh, 2013; Wang & Rafiq, 2014). A growing number of firms are experiencing competitive
pressures for simultaneous improvements in both their innovativeness and their efficiency, and
many seem to be responding to these pressures with efforts to create DA—encouraging
ambidextrous behavior by each subunit and member, for example, by pushing routine operational
functions to become not only more efficient but also more innovative, and by pushing research and
development functions to become not only more innovative but also more efficient.
While research has begun to address how individuals can resolve the individual
psychological challenges of ambidexterity (Adler & Chen, 2011; Bledow, Frese, Anderson, Erez, &
Farr, 2009; Bonesso, Gerli, & Scapolan, 2014; Eisenhardt, Furr, & Bingham, 2010; Good & Michel,
2
2013; Hafkesbrink, Bachem, & Kulenovic, 2012; Keller & Weibler, 2014; Mom, Van Den Bosch, &
Volberda, 2009; Moon, Quigley, & Marr, 2012; Rogan & Mors, 2014; Volery, Mueller, & von Siemens,
2013), we know far less about how to resolve the paradoxical organizational requirements of DA.
Gibson and Birkinshaw (2004) show that a climate that combines “trust and support” with
“discipline and stretch” leads to an ambidextrous combination of adaptability and alignment
(further support on this is offered by Ramesh et al. 2012); but we know little about the
organizational form that would engender and sustain such a climate. While several case studies
offer inductive insights into the nature of this organizational form (Andriopoulos & Lewis, 2009;
Gotsi et al., 2010; Güttel & Konlechner, 2009; Heracleous & Wirtz, 2014; Volery et al., 2013), so far
we lack a compelling theory-based account.
To fill this gap, we build on two strands of classical sociology: Parson’s structural-functional
theory of social structure and Weber’s theory of value-rationality. Parsons (1971) argues that any
viable social system must satisfy four key functional requirements: Latency (pattern-maintenance),
Integration, Goal attainment, and Adaptation. Within organizations, these functions are fulfilled by
four subsystems, respectively: shared values, relational norms, authority structure, and capabilities.
We show that the pursuit of ambidexterity poses a key paradox in each of these subsystems. We
then argue that the key to DA’s synthesis-type resolution of this four-fold paradox can be found in
Weber’s theory of value-rationality (Weber, 1978, Vol. 1, pp. 25 ff.). Value-rational action is a type of
action guided by “ultimate values,” rather than by tradition, affect, or instrumental pursuit of
material self-interest. We argue that an organizational form that institutionalizes valuerationality—that is, a form is which value-rationality has become the “taken-for-granted” type of
action—is capable of assuring a synthesis of the organizational paradoxes of DA in each of Parsons’
four subsystems.
Our main theoretical contribution is to specify the distinguishing features of this valuerational organizational form, and to show how these features can be operationalized so as to allow
the synthesis-type resolution of DA’s four main organizational paradoxes. More specifically, we
argue:
* Ambidexterity requires a paradoxical combination of values that celebrate simultaneously
creativity and efficiency. To reach the synthesis-type resolution of this paradox required by DA, the
value-rational form fosters an ethic of contribution. When this ethic is operationalized in the
organization’s culture and strategy, the result is a widespread sense of shared purpose that renders
meaningful and significant to all members the challenge of synthesizing creativity and efficiency.
* Ambidexterity paradoxically requires that interactional norms be simultaneously organic (to
support exploration) and mechanistic (to support exploitation). To reach the synthesis required by
DA, the value-rational form relies on the principle of substantive rationality. When this principle is
operationalized in a process we call “interactive process management and design,” both formal and
informal organizational systems are experienced as enabling rather than coercive or merely
ceremonial: in this context, mechanistic and organic norms no longer appear as “oil and water” but
instead can be synthesized to support DA.
* Ambidexterity requires an authority structure that affords a paradoxical combination of
individual autonomy (for exploration) and centralized control (for exploitation). To reach the
synthesis required by DA, the value-rational form ensures that authority—both dispersed and
centralized—is based on widely-acknowledged ability to contribute to the organization’s shared
purposes. When this form of authority is operationalized through negotiated chartering and matrix
structures, it allows for an authority structure that we characterize as “participative contingent
centralization,” and this type of authority structure can provide a foundation for DA.
* Ambidexterity requires a paradoxical combination of capabilities that are simultaneously broad
(for exploration) and deep (for exploitation). To reach the synthesis required by DA, the value-
3
rational form operationalizes the principle of contribution-oriented capability development, first,
by selecting people who already have this unusual combination of technical and social skills;
second, by leveraging their members’ commitment to the organization’s ultimate purposes so as to
steer individuals’ skill development paths towards such a combination; and third, by tailoring
compensation systems to encourage the mobilization of these skills. These techniques allow the
value-rational organization to cultivate a “T-shaped” synthesis of deep and broad capabilities that
supports DA.
The present paper’s basic goal is to establish the theoretical foundations for a basic
proposition: that if an organization chooses to rely on DA, it will perform best if it adopts the valuerational form as characterized here. We recognize that ambidexterity in general and the DA
approach in particular are surely not competitively valuable in all industry settings or at all stages
of firm growth (Carmeli & Halevi, 2009; Davis, Eisenhardt, & Bingham, 2009; De Clercq,
Thongpapanl, & Dimov, 2013; Ebben & Johnson, 2005; Junni, Sarala, Taras, & Tarba, 2013; Uotila et
al., 2009): while further research on this theme is surely important, it is outside the scope of the
present article. We recognize too that the value-rational organizational form may not be costeffective for organizations that are pursuing one-dimensional strategies that are focused on
exploration or exploitation alone, or for organizations that are pursuing separation-based
approaches to ambidexterity: these issues too are important but outside our scope.
The paper proceeds as follows. We first define ambidexterity and explain the distinctive
features of DA in comparison with the other approaches to ambidexterity. We then introduce
Parsons’ structural-functional theory as a way to understand four key organizational paradoxes
entailed by ambidexterity. The core of the paper characterizes the value-rational organizational
form and shows how it offers a path towards a synthesis of each of these four paradoxes and
thereby enable organizations to achieve distributed ambidexterity. We illustrate these syntheses
with examples from prior research and from our research on one healthcare organization. A
Conclusion summarizes and identifies some implications for future research and practice.
THE CHALLENGES OF AMBIDEXTERITY
Ambidexterity is the ability to combine exploration and exploitation. These terms can be
understood as referring to goals, activities, abilities, or outcomes, depending on the context and the
author’s emphasis. Synthesizing a large body of organizational research, March (1991) posited that
exploration and exploitation represent two key tasks facing organizations. Exploration involves
search, variation, experimentation, and discovery, while exploitation involves refinement,
efficiency, selection, and implementation. Some scholars have interpreted exploitation as the
absence of learning and innovation: we agree with Gupta et al. (2006) that this view is less fruitful
than seeing exploitation as a distinct type of learning and innovation. The term ambidexterity has
been used to designate the ability to combine different stages of the innovation process (Duncan,
1976), incremental and discontinuous innovation (Tushman & O'Reilly, 1996), efficiency and
flexibility (Adler, Goldoftas, & Levine, 1999), alignment and adaptability (Gibson & Birkinshaw,
2004), and the ability to compete in mature and emerging markets (He & Wong, 2004). (For recent
reviews of this literature, see Lavie et al., 2010; Nosella, Cantarello, & Filippini, 2012; O'Reilly &
Tushman, 2013; Turner, Swart, & Maylor, 2013.) The common element here is the combination of
qualitatively and radically different goals and activities (Lavie et al., 2010).
The organizational paradox of ambidexterity: An initial characterization
The idea of and evidence for ambidexterity force us to reexamine a long-established
proposition in organizational theory asserting that exploration and exploitation are deeply
incompatible goals that must “trade-off” against each other, and that ambidexterity is therefore a
paradoxical notion. It is obvious that investments in exploration and exploitation activities will be
4
in a trade-off relation insofar as they must compete for scarce organizational resources; beyond
that, however, there is considerable debate as to whether and how organizations can mitigate that
trade-off and can successfully combine efforts towards both goals.
In the strongest version of the trade-off view, ambidexterity is a dangerous chimera,
because exploration and exploitation require such radically contrasting behavior patterns and
organizational forms—adhocracies versus bureaucracies (Mintzberg, 1979). In this view,
organizations should focus on one goal or the other: if they attempt both, they will achieve only
mediocrity in both and risk getting “stuck in the middle” (Abernathy, 1978; Holmqvist, 2009;
Porter, 1985; Thompson, 1967).
An accumulating body of empirical research challenges this view. As noted in the
Introduction above, a growing body of research finds that the ambidextrous pursuit of both goals
can, at least in some industry contexts, improve business performance. Moreover, most of these
studies find a positive rather than negative correlation between exploration and exploitation
intensity observed across firms, suggesting that many organizations are able to mitigate the tradeoff to at least some extent (Bierly & Daly, 2007; Jansen, Van Den Bosch, & Volberda, 2006; Katila &
Ahuja, 2002; Knott, 2002; Kristal, Huang, & Roth, 2010; Lin et al., 2013; Rothhaermel & Deeds,
2004).
These empirical findings are consistent with March’s argument. March acknowledged
tensions between the two goals, but did not see the trade-off as so severe as to necessitate a
dichotomous strategic choice. On the contrary, he argued that the firm’s overall performance would
be improved if it resisted the tendency to drift toward exploitation and instead pursued both types
of activity.
The DA approach to ambidexterity
Ambidexterity can be pursued in several different ways, and to understand DA’s distinctive
organizational challenges, it is helpful to situate DA alongside these other approaches. The various
approaches reflect the three generic strategies through which paradoxes can be resolved rather
than merely accepted (as presented by Poole and Van de Ven (1989)): temporal separation, spatial
separation, and synthesis.
Organizations can leverage temporal separation by switching, or alternating over time,
between the two types of activity (Chen & Katila, 2008; Duncan, 1976; Gupta et al., 2006; Lavie &
Rosenkopf, 2006). This might happen more regularly and deliberately for a whole organization
(Siggelkow & Levinthal, 2003) or for a product development project team as it progresses through
project phases (Andriopoulos & Lewis, 2009; Brown & Eisenhardt, 1997; Venkatraman, Lee, & Iyer,
2007). It may also happen in the more intermittent and disruptive form of punctuated equilibrium
(Lant & Mezias, 1992; Tushman & Romanelli, 1985).
The literature has identified three main approaches that leverage spatial separation. In the
functional approach, the output of some functional sub-units specializing in exploration (e.g. R&D,
product engineering, or marketing) becomes input for other, exploitation-oriented functional subunits (e.g. the manufacturing or operations) (Adler, 1995; Galbraith, 1973; Jansen, Tempelaar, Van
den Bosch, & Volberda, 2009; Jelinek & Schoonhoven, 1990; Lawrence & Lorsch, 1967). In the
network approach, the focal organization specializes in either exploration or exploitation, and
relies on network partners for access to the other type of capability; alternatively, the focal firm
orchestrates a network of partners some of which focus on exploration while others focus on
exploitation (Arikan, 2009; Boudreau & Lakhani, 2009; Grabher, 2002; Hagel & Brown, 2005;
Kauppila, 2010; Kristal et al., 2010; Lavie & Rosenkopf, 2006; Miles, Snow, Mathews, Miles, &
Coleman Jr, 1997; Rothaermel & Alexandre, 2009; Simsek, 2009). In the structural approach, subunits are dedicated to business lines that focus on either exploration or exploitation types of goals;
5
each of these business-line sub-units is largely self-sufficient in its array of dedicated functional
resources; these sub-units collaborate directly only in targeted, tactical activities; and the top
management team plays the integrative role (Benner & Tushman, 2003; Tushman & O'Reilly, 2002;
Tushman et al., 2010). In all these approaches, the top-management team plays a key role (Cao,
Simsek, & Zhang, 2010; Jansen et al., 2009; Lubatkin et al., 2006).
In contrast with these separation-based approaches, we focus on a synthesis path to
ambidexterity, where individuals, teams and subunits each continuously combine exploration and
exploitation rather than allocating each of the two activities to specialized roles or to different time
periods (Andriopoulos & Lewis, 2009; Gibson & Birkinshaw, 2004). This distributed ambidexterity
(DA) approach relies an intra-organizational context that encourages and facilitates such a dual
focus in individual behaviors and enables continual synthesis at all levels; as a result, this was
originally called the “contextual” approach by Gibson and Birkinshaw. We propose to re-name the
approach “distributed” so as to focus on the distinctive locus of ambidexterity in this approach: the
label “contextual” is not very evocative and the concept as originally developed confuses the focal
behavior with the context designed to induce it (Birkinshaw, 2014). The studies cited in the
Introduction above provide compelling evidence that DA can lead to significant performance
benefits, at least in some settings. This distributed approach to ambidexterity has been found in
supply chain dyads (Im & Rai, 2008), manufacturing operations (Adler et al., 1999), R&D functions
(Güttel & Konlechner, 2009; McCarthy & Gordon, 2011), and product design groups (Andriopoulos
& Lewis, 2009; Gotsi et al., 2010).
What organizational form can support the DA synthesis of exploration and exploitation?
The first effort to respond to this question was Gibson and Birkinshaw (2004), who argued that the
organizational challenges of DA can be met by creating a climate that combines trust and social
support with discipline and stretch (see also Allen, 2013). In positing these two dimensions, Gibson
and Birkinshaw were building on Ghoshal and Barlett’s (1997) account of the organizational
climate most likely to support innovation. And in doing so, they were reprising the Ohio State
“consideration” and “initiating structure” characterization of the two dimensions of effective
leadership (Stogdill & Bass, 1981), and restating Blake and Mouton’s “managerial grid” model of
this same theory (Blake & Mouton, 1964). (This two-factor model fell out of favor many years ago,
but more recent research shows that it holds up well to meta-analysis — see Judge, Piccolo, & Ilies,
2004.)
We aim to push the causal chain further back, to explore the organizational form that could
foster and support such a climate. To date, such research has proceeded inductively (most notably
Andriopoulos & Lewis, 2009; Gotsi et al., 2010; Güttel & Konlechner, 2009; Heracleous & Wirtz,
2014; Volery et al., 2013). The first step is to identify the specific organizational paradoxes that are
posed by ambidexterity: we do this in the following section, by mobilizing Parsons’ theory. The
sections after that will build on Weber’s theory of value-rationality to show how these paradoxes
can be resolved to achieve DA.
FOUR KEY ORGANIZATIONAL PARADOXES OF AMBIDEXTERITY
Parsons (1971) argues that any enduring social system—including organizations—must
satisfy four functional imperatives: Latency, Integration, Goal attainment, and Adaptation. He
argues further that in complex social systems, these functions are typically distributed across
differentiated subsystems. Within organizations, the key subsystems addressing the four function
are, respectively: the fiduciary systems that foster internalized values shared across the
organization; the interactional norms that set behavioral expectations for relationships among
people playing specialized roles; the authority structure of leadership and reporting relationships
6
that allows it to formulate and pursue goals; and the capabilities that allow the organization to
adapt to the external environment (Heckscher, 2009).
When there is strong alignment within and across these four subsystems, the behaviors that
people expect of each other are supported by shared values and norms, as well as by the authority
structure and capabilities mobilized by the organization. Under such conditions, activity can be
effectively coordinated and the organizational form is sustained. In contrast, where there is
misalignment, coordination is impaired and the organizational form is unstable and cannot
reproduce itself. We can use this four-system framework to synthesize the results of prior research
on the organizational paradoxes of ambidexterity.
(We should note that Parsons’ is not the only framework we could use for the purposes of
the theory we aim to develop in this article; but it has the advantages of theoretical depth,
generality, and parsimony. Moreover, its key constructs overlap with others in the organization
theory tool-kit: Latency/values corresponds to what much organizational research calls “culture;”
Integration/norms overlaps much of the conceptual territory of “organizational climate;” Goalattainment/authority and Adaptation/capabilities are widely acknowledged as key dimensions of
organization design (Galbraith, 2002; Jones, 2012). Andriopoulos and Lewis (2009) offer an
alternative to this interacting-subsystems model with their inductively derived nested-levels
model, which differentiates strategic intent, customer relations, and personal drivers.)
Let us rapidly review prior research on each subsystem and identify the key organizational
paradoxes associated with ambidexterity and the challenges facing the DA synthesis.
Values: Creativity versus efficiency. Much of the discussion of ambidexterity focuses on the
challenge of reconciling the distinctive values associated with exploration and exploitation.
Andriopoulos and Lewis (2009) describe it as the tension between the values of creativity and
discipline at the personal level and between breakthrough and profitability goals at the strategic
level. Gotsi et al. (2010) articulate nicely the paradoxical challenges posed for designers, who must
attend simultaneously to the creativity and the cost of their new product designs, and the
associated challenges for the organization, which must tailor its selection and socialization efforts
to instill the requisite paradoxical values and identities.
Norms: Organic versus mechanistic. The paradox of combining organic and mechanistic
relational norms is a common theme in prior research on ambidexterity, where exploration is
associated with organic norms and exploitation with mechanistic ones. Among the various
dimensions of the organic/mechanistic contrast (Burns & Stalker, 1961), research on ambidexterity
has focused on formalization and communication patterns. In terms of formalization, Tushman and
O’Reilly (1996) contrast the informality required for exploration and the formality that supports
exploitation, and Jansen et al. (2006), Mom et al. (2009), and Rogan and Mors (2014) argue that
formalization impedes exploration and facilitates exploitation. Regarding communication patterns,
Mom et al. (2009) hypothesize that a broad network of personal connections (a key feature of the
organic type) would support ambidexterity, in contrast with the more balkanized networks of the
mechanistic type that would better support exploitation. Rogan and Mors (2014) make a similar
argument concerning the intra-organizational ties likely to support managers’ ambidextrous
behavior. Mom et al. (2007) argue that bottom-up and horizontal knowledge flows (characteristic
of organic systems) are associated with exploration and that top-down flows (mechanistic) are
associated with exploitation. Andriopoulos and Lewis (2009) argue that loose coupling
communication patterns are required for exploration and tight coupling patterns for exploitation.
Authority: Individual autonomy versus centralized control. The literature on innovation
has frequently noted that creativity is higher where centralized control is weaker (Damanpour,
1991; McGrath, 2001) and where individual autonomy and the associated intrinsic motivation is
stronger (Amabile, 1983). Conversely, exploitation and efficiency are best supported by high levels
7
of centralized control (McGrath, 2001; Miles, Snow, Meyer, & Coleman Jr, 1978) and by low levels of
autonomy (Ostroff & Schmitt, 1993). In the scholarship on ambidexterity, Jansen et al. (2006) point
to the tension created by centralized control which supports exploitation but suppresses
exploration.
Capabilities: Broad versus deep. Much of the literature on exploration and exploitation has
noted the contrasting types of skills involved: exploration benefits from broad skills while
exploitation benefits from deep specialization (Bierly & Daly, 2007; Jehn, Northcraft, & Neale, 1999;
Leiponen & Helfat, 2010; Schildt, Maula, & Keil, 2005; Sidhu, Volberda, & Commandeur, 2004; Smith
& Tushman, 2005). Capabilities are not only a matter of skills: these skills must be mobilized in
order to activate their potentiality. This, in turn, implicates the compensation system, where there
are important tensions between compensation policies that support the development and
deployment of broad skills versus deeply specialized ones (Kretschmer & Puranam, 2008).
THE VALUE-RATIONAL ORGANIZATIONAL FORM
While ambidexterity poses deep organizational paradoxes in the values, norms, authority,
and capabilities subsystems, it is, we argue, possible for an organization to resolve these paradoxes
via synthesis if it adopts a value-rational organizational form. In this section, we first explicate
value-rationality as a type of social action and explain its essential role in distributed ambidexterity,
and then explain how value-rationality can constitute the basis of an organizational form. The
following section will discuss how this value-rational form can be operationalized and thereby
synthesize each of the four organizational paradoxes of DA.
Value-rational action and DA
Value-rationality is one of the four basic types of social action postulated by Weber,
alongside traditional, affectual, and instrumentally-rational action (Weber, 1978, Vol 1, pp. 25 ff.).
Action is traditional (traditionalistic would be a less ambiguous translation) when it is oriented by
habit and/or reverence for established patterns. It is affectual when it is oriented by emotional
attachments. It is instrumentally-rational when it is oriented to selecting the most efficient means
for achieving a given end of individual self-interest. It is value-rational when it is oriented toward
an “ultimate” end-value, some higher purpose (Wallace, 1990). Both instrumentally-rational and
value-rational forms of action are rational in their selection of means, whereas the other two are
not. Both value-rational and affectual forms are consciously oriented towards desired end-values,
whereas in the other two the end-values are taken-for-granted givens. (Note that the taken-forgranted end-value of instrumental-rationality is not always presented in the scholarly literature as
individual material self-interest; but Wallace (1990) quoting Weber (1978: p. 30, 331) makes a
convincing case that this is the logical implication of positing instrumental-rationality as a type unto
itself, rather than merely as a contingent feature of the other three types.)
We argue that the value-rational type of action is essential for DA. Exploration and
exploitation are, as March and others explain, essentially incommensurable: there is no common
metric (such as expected net present value) to which they could both be reduced and along which
proposed courses of action could then be compared. This incommensurability means that
individuals and teams aiming for ambidextrous behavior in pursuit of some ultimate value, some
higher purpose, need to make non-routine, situation-specific judgments about how, in the given
circumstances, exploration and exploitation goals relate to that ultimate value. Actors therefore can
never take the end-value of their actions as given, nor merely follow established roles and
procedures: they must continually orient their action by explicit reference to this ultimate
purpose—which puts them squarely in the category of value-rational action.
None of Weber’s three other types of social action fit the demands of DA. Traditionalistic
action is based on commitment to the status group and the status quo: as such, it can foster
8
stability, but not rigorous exploitation nor creative exploration, let alone the combination that
defines ambidexterity (Weber, 1978: vol. 1, p. 226 ff). Affectual action may inspire radical
exploration through emotional commitment, but it does not foster the sustained disciplined action
required for systematic exploitation (Pillai & Meindl, 1998; Weber, 1978: Vol. 2, Ch. III).
Instrumental rationality emerges where end-value can be taken-for-granted and attention devoted
entirely to the rational choice of means and intermediate goals, but ambidexterity requires that
end-values and their situation-specific meaning be constantly in view. Value-rationality, by
providing a context within which people can confidently engage a constant renegotiation of the
relation of multiple incommensurable priorities, appears best suited to the behavioral challenges of
DA.
Value-rationality as an organizational form
If distributed ambidexterity requires the value-rational type of action, then an organization
aiming for DA must find a way to institutionalize value-rationality—that is, it must make valuerational action the type that is taken for granted and seen as normal and appropriate. Indeed, each
of Weber’s four types of action can function as the modal type of action in—and thus as the
grounding for—a distinctive form of organization. Traditional action grounds the traditionalistic
form of organization. Affectual action grounds the charismatic form. Instrumentally-rational actions
grounds two complementary types—the legal-rational bureaucracy and the competitive market
(Weber, 1978: Vol. I, p. 36). Value-rationality, according to Weber, grounds the “collegial” form
(Delanty, 2003: p. 33). In other research currently underway, we are exploring the distinctive
performance potential of each of these forms; the present paper focuses on the role of the valuerational organizational form (we characterize this form now) in assuring DA (we explain this link in
the following section).
Reasoning deductively from Weber’s discussion of value-rational action and collegiality, we
can begin to identify the criteria that would qualify an organization as fitting the value-rational
organizational form. In the following section, we will discuss the specific mechanisms that would
allow an organization to meet these criteria. In presenting the criteria, we build on the Parsonian
framework introduced above and identify the defining features in each of the four subsystems
taken in turn. The following section offers more detail, but here we can summarize the basic
features succinctly.
Values: The values subsystem of the value-rational organizational form is characterized by
an ethic of contribution. This is the product of several features. First, value-rational action is
oriented to ultimate values, rather than to the instrumental goal of material gain. Thus, the valuerational organizational form is distinctive both in the salience of these ultimate values as
superordinate goals (Sherif, 1958) and in the content of these goals. Second, value-rational action is
rational—here, both end-goals and means for achieving them are subject to discussion based on
public standards of validity. This implies that the value-rational organizational form is quite
different from the charismatic form, where both ultimate values and the paths for achieving them
are shaped by affectual commitments rather than by rational dialogue. Third, if value-rational
action is to be institutionalized, ultimate values must guide every member’s actions, not only the
top executives’. The value-rational organization form is therefore one in which the organization’s
ultimate purposes are at the center of organizational life and in which all members share an
understanding of those purposes. Members identify with these purposes as their own: the purposes
are personally meaningful, and each member’s choices are guided by their own commitment to
these purposes. Fourth, value-rational action means that members use those ultimate values to
choose appropriate actions when faced with new and unforeseen circumstances. The value-rational
organizational form therefore formulates its ultimate values in such a way that members can
connect them to daily decision-making in contexts of change and innovation. Finally, a foundation in
9
value-rationality imparts a distinctive “values-driven” quality to the other three Parsonian
subsystems: they are shaped by the values subsystem more than vice-versa.
Norms: As Kalberg (2003) points out, for value-rationality to prevail, norms of “substantive
rationality” are necessary: that is, means must be evaluated constantly for both their efficiency and
their appropriateness to the ultimate end-goals. In the value-rational form, norms might be more or
less formalized as procedures, but whatever the extent of formalization, these procedures would
need to be designed and implemented with the organizations’ ultimate purposes constantly in view.
This substantive type of rationality contrasts with what Weber (1978: p. 85) called “formal”
rationality, which is operative when the course of action is decided in light of its conformance with
formalized rules and with clear calculations for assessing the most efficient way to achieve a given
goal. Substantive rationality does not preclude instrumental calculation, but it subordinates the
latter to the actors’ ultimate values (Biggart & Delbridge, 2004). (In the classic case of legal
reasoning, the distinction between formal and substantive rationality is between decisions based
on consistency with established canons of legal reasoning and decisions based on whether the
outcome is considered just.)
Authority: The concept of value-rationality does not preclude a role for authority in this
organizational form, but it requires a distinctive foundation for the legitimacy of that authority,
namely, the leader’s recognized ability to contribute to the end-goal. Authority in any stable system
needs legitimacy in the eyes of “followers” rather than being merely bestowed on leaders from
leaders further above them (Dornbusch & Scott, 1975); the value-rational form is distinctive in
locating the grounds for this endorsement in members’ recognition of the leader’s ability to
advance the organization’s ultimate purposes.
Capabilities: The value-rational organization is distinctive in deliberately fostering the
development of the capabilities required by the organization’s end-goals. Instead of leaving it to
employees to develop skills in whatever direction appears to them as instrumentally rational in
pursuit of their individual labor-market goals, the value-rational organization deliberately plans
their skill development to support their ability to contribute to the organization’s ultimate
purposes.
We have deduced these features of the value-rational form from theory, and the question is
therefore posed as to whether they can be operationalized. Weber himself doubted it. He saw valuerationality as the key feature of some small-scale “collegial” groups (Weber, 1978: Vol. I, p. 272 ff.),
but he was doubtful that value-rationality could be scaled up from such groups to large-scale,
purposive organizations under pressure to make “precise, clear, and above all, rapid decisions”
(Weber, 1978: Vol. I, p. 277). In his view, value-rationality lacked a feature essential for such scale,
namely “legitimate domination” and the associated capacity for imperative command. Indeed, as we
have just seen, under value-rationality, actors’ behavior is oriented above all by their personal
commitment to ultimate end-values; in a social order based on value-rationality, action is
coordinated among actors not by commands but by their shared commitment those end-values.
Such a social order is, therefore, a poor instrument for Herrschaft—for implementing the
dominating will of a master. More recent scholarship has often concurred (Mommsen, 1974;
Waters, 1989). The scale issue is not a major concern in the other, separation-based approaches to
ambidexterity, since there ambidextrous behavior is located within a top-management team: such
teams may indeed function as collegial groups. But Weber’s skepticism must somehow be met if
ambidextrous behavior is to be distributed widely across a larger organization’s levels and
functions.
Other sociologists have been more optimistic about the possibility of scaling up the valuerational form, thinking of it not as a form of administration sustaining Herrschaft, but as the form of
self-government by a collectivity. Although he did not use this term, Durkheim argued in effect that
10
value-rationality could function as the foundation of professional or occupational communities
(Durkheim, 1933 [1893]: second Preface). Later authors have claimed that value-rationality
functions as the central organizing principle of such large-scale collectivities as ideologically driven
political parties (Willer, 1967), constitutional states (Spencer, 1970), autonomous professional
organizations (Satow, 1975), and some “alternative” cooperatives (Rothschild-Whitt, 1979).
Heckscher and Adler (2006) extend this more optimistic account with a set of case studies that
highlight the emergence of the value-rational type in the contemporary corporate sector. Skeptics
counter that in these cases, true value-rationality is typically precarious: parties often succumb to
the “iron law of oligarchy” (Michels, 1966); constitutional states often become authoritarian when
their dominant powers are challenged (Schmitt, 1988); professions often become self-interested
monopolies (Brint, 1994; Waters, 1989); and collaborative enterprises often revert to hierarchical
domination (Freeman, 1970).
The key to overcoming this precariousness and to surmounting Weber’s skepticism is, we
submit, a series of innovations in “organizational technology”—new managerial techniques—that
have emerged since Weber’s time through a process of social innovation, and that operationalize
value-rationality and give considerably greater robustness to the value-rational organizational form
today. These techniques mitigate the scale constraints that concerned Weber, and thereby enable
DA. In the following section, we identify some of these innovations and show how they help resolve
the organizational paradoxes of DA. As will become obvious, some of these techniques have proven
useful beyond the context of DA: our contention, however, is that these techniques, implemented in
a sufficiently systematic manner, effectively operationalize value-rationality as an organizational
principle and thus enable DA. In the Conclusion, we discuss the boundary conditions for the
applicability of this value-rational form.
Before turning to the core of the paper, we should explain why we refer to the valuerational organization as an organizational “form.” The term form is often used loosely to designate
any of a range of basic organizational features (e.g. Child & McGrath, 2001). Used more rigorously, it
has been taken to refer to the “core,” less changeable features of an organization. Hannan and
Freeman (1984) use the term to refer to the features of an organization least amenable to
adaptation and therefore more pertinent to defining a “species” in their ecological-evolutionary
models. We embrace this idea, and the result is that our characterization of the value-rational form
leaves numerous features of organizations unspecified: the specific structural arrangements, for
example, as they differ between functional and structural approaches to ambidexterity, are better
addressed at a less abstract level of analysis. We differ from Hannan and Freeman, however, in how
to characterize form. Like us, they refer to Parsons: they focus on Parsons’ (1960) distinction
between technical, managerial, and institutional levels within organization, and then identify four
aspects of form. These are, from the innermost and least changeable aspects and going outward the
more peripheral and somewhat more changeable aspects, the organization’s goals, authority
structures, technologies, and market strategies. However, Hannan and Freeman make an
untheorized conceptual leap when they go from Parsons’ three levels to these four aspects of form.
We propose to give our characterization of organizational form a stronger theoretical foundation by
building more directly on Parsons’ structural-functional theory of social systems.
OPERATIONALIZING THE VALUE-RATIONAL ORGANIZATIONAL FORM TO
SYNTHESIZE THE PARADOXES OF AMBIDEXTERITY AND ENABLE DA
Our theoretical model is one in which each of the four features of the value-rational
organizational form moderates—and more specifically, helps to resolve via synthesis—one of the
key organizational paradoxes of ambidexterity and thereby fosters DA. Figure 1 displays the
argument in diagram form, showing for each of the four functions both the general principle and
their operationalizations. The paragraphs below explicate in turn each of the moderating paths. As
11
with other ideal-type formulations (Doty & Glick, 1994), our working assumption is that any given
organization will embody a mix of forms, of which the value-rational might be absent, dominant, or
present but overshadowed by other forms.
------------------ Insert Figure 1 about here -----------------In order to illustrate our argument, we will refer to some of the case studies in the
ambidexterity literature and also to a case study we have conducted on one healthcare organization
that has achieved a notable level of DA—Kaiser Permanente. By way of introduction, we offer some
background on this case. (Our account is based on Eaton, Konitsney, Litwin, and Vanderhorst
(2011); Kochan (2013); Kochan, Eaton, McKersie, and Adler (2009); Litwin (2010); Schilling et al.
(2010a); Schilling et al. (2011); Schilling et al. (2010b); Whippy et al. (2011) and the first author’s
field research since 2004.)
Kaiser Permanente as a case of DA
In the US healthcare industry, ambidexterity in general and DA in particular have become a
pressing priority (Bodwell, 2011). Healthcare delivery organizations—indeed, each of the units and
all the people working in them—are under increasing pressure to be more aggressive in exploiting
evidence-based practices that will drive improvement in cost and safety and in assuring patients
faster access and shorter hospital stays. Simultaneously, these organizations and their staffs are
also under pressure to adopt more rapidly radical innovations in their infrastructure (for example,
with electronic health records), to stay abreast of rapid and radical innovation in diagnostic and
treatment technologies, and to be flexibly responsive to the great variety of patient needs as well as
to the urgency of many of these needs.
One asset that the healthcare industry might leverage in attempting to meet these DA
demands is the widespread commitment to the ultimate value of assuring the patient’s health: this
creates a foundation of shared purpose that is characteristic of the value-rational model. However,
as it has been understood traditionally, this value orients medical personnel away from any concern
for economic efficiency—to the point where any consideration of cost has been considered
unethical (Angell, 1993): commitment to such a value undermines DA efforts. As a result, the
healthcare field is pressed to rethink medical values to make room for preventive care, for
population health outcomes, and for the responsible use of society’s limited economic resources
(Adler, Heckscher, McCarthy, & Rubinstein, 2015).
Moreover, the practice of medicine in the US has often diluted its dedication to the patient’s
health with strong elements of the guild-like traditionalism, as well as with self-interested incomemaximization (Adler et al., 2008). The guild-like elements have long been visible in the professional
loyalty that binds doctors together in defense of peers against criticism or interference by outsiders
and in the debilitating effects of status tensions in many interactions among physicians and
between physicians and nurses. The self-interest elements encourage doctors to multiply tests and
procedures to maximize their own income, even referring patients to imaging and surgery centers
in which they have an ownership stake (Lungren et al., 2013). Increasingly, external stakeholders
are using financial incentives to “drive” changes in behavior among healthcare delivery
organizations and professionals; in the process, however, these efforts often reinforce self-interest
orientations and yield little of the needed ambidexterity (Cromwell, Trisolini, Pope, Mitchell, &
Greenwald, 2011; Jha, Joynt, Orav, & Epstein, 2012).
Kaiser Permanente (“Kaiser” for short) is one healthcare organization in the US that has
long sought to encourage doctors to practice medicine in a more value-rational, collaborative, and
ambidextrous way (McCarthy, Mueller, Wrenn, & Fund, 2009). Kaiser is the largest healthcare
provider and one of the largest healthcare insurance companies in the country: as of 2013, it had
nearly 9 million health plan members, 167,300 employees, 14,600 physicians, 35 medical centers,
12
and 431 medical offices. It is organized as a consortium of the (not-for-profit) Kaiser Foundation
Health Plan (insurance), the (not-for-profit) Kaiser Foundation Hospitals, and a set of affiliated
regional Permanente Medical Groups (which are for-profit physician partnerships or professional
corporations that do business almost exclusively with Kaiser).
The challenge of DA in the healthcare industry has also shaped the experience of nonphysician personnel at Kaiser and the unions that represent most of them. Unions are an essential
part of Kaiser’s business, going back to its earliest years, and Kaiser has developed a
labor/management partnership that is unique in its scale and ambition (Kochan et al., 2008;
Kochan, Eaton, McKersie, & Adler, 2009). Most of Kaiser’s non-physician, non-managerial
employees are unionized, and many of Kaiser’s “members”—the patients covered by Kaiser’s
insurance plan and treated by Kaiser staff—are also unionized. As a result, and unlike many other
employers in the US, it is difficult for Kaiser to ignore or attack unions without risking both internal
organizational turmoil and damage to their reputation in the target market. Conversely, however,
the unions see that using their power in confrontational ways risks destroying Kaiser, and that,
compared to other employers, Kaiser pays and treats its workers relative well. The parties
recognized this interdependence in a landmark partnership agreement that was included in the
collective bargaining contract in 1997. The collaboration enabled by this partnership has become
central to Kaiser’s efforts to meet its ever-intensifying DA challenges, providing a foundation for
combining top-down initiatives by specialized technical staff (e.g. for new computerized medical
records) with “bottom-up” input and involvement by a broad range of personnel (for local
improvement projects), as well as with extensive lateral learning (so that similar locations can
share lessons learned). (For more critical views of the partnership as class capitulation, see Borsos
(2013) and Early (2011).)
The following paragraphs show how the value-rational organizational form affords a
synthesis resolution of the organizational paradoxes of DA, and we use the Kaiser case to illustrate
the corresponding management techniques. Deploying these various managerial techniques, Kaiser
has indeed seen dramatic improvements in both exploration and exploitation dimensions. Kaiser
performs near the top of the rankings of healthcare delivery organizations in many of the key
operational metrics (Schilling et al., 2010a; Whippy et al., 2011), and has developed an impressive
capacity for radical innovation (Nelson, 2010). Surveys of worker attitudes conducted jointly by
union and management show improved worker morale, too, with widespread support for the
partnership process and its outcomes (which have, in recent years, included wage and benefit gains
as well as growth in union membership) (Kochan, 2013).
Values
The key organizational paradox of DA in the values dimension is the ability of an
organization to sustain values that honor simultaneously creativity and efficiency. The valuerational organizational form does this by stabilizing an ethic of contribution—of contribution to the
organization’s ultimate value, to its social purpose—thereby creating an end-goal that is
superordinate to the intermediate goals of creativity and efficiency. The salience of this shared
purpose can then motivate and guide exploration and exploitation efforts, as well as the DA effort to
synthesize these two. Several management techniques have evolved since Weber’s time that
operationalize such an ethic of contribution and thereby create a context that supports DA.
Some of these techniques help focus internal discussion on the external customers’ needs.
These needs are, of course, a necessary (although not sufficient) component of our concept of
ultimate value. These techniques have blossomed in recent decades as companies orient
themselves away from manufacturing products and towards providing integrated solutions. This
solutions-orientation encourages firms to develop tools to understand better their clients’ needs
and to maintain their members’ focus on those needs (Brady, Davies, & Gann, 2005; Galbraith,
13
2002). These techniques help the organization orient itself to the creation of the “use-values”
required by customers rather than only to the creation of the “exchange-value” that returns as
material gains for investors. To repeat the qualification noted above: while these techniques, like
others discussed below, have sometimes proven useful beyond the context of DA, our contention is
that these techniques, implemented in a sufficiently systematic manner, effectively operationalize
value-rationality as an organizing principle.
Other techniques help orchestrate a broader variety of voices in the strategy discussion. For
value-rationality to be truly rational, the ultimate values themselves, like the means of achieving
them, must be subject to discussion based on public standards of validity (Habermas, 1992). In this
respect too, history has overtaken Weber. Where Weber assumed that value-rationality relied on
non-rational commitments—Nietzschean acts of will (Hennis, 1988)—to the ultimate values,
Habermas and later scholars have identified a range of techniques for making value-rational
discourse more thoroughly rational through an elaboration and operationalization of the “ideal
speech situation” (Habermas, 2001). In the practical world of industry, we find the strategy
process—defining, implementing, monitoring, and adjusting strategy—sometimes taking a
dialogical and deliberative form that corresponds closely to Habermas’s model. A range of
techniques are now available to support this strategy dialogue both within the organization, as
participative strategy processes (Forester, 1999), and beyond the organizational boundaries, in the
form of multi-stakeholder strategy dialogues (Roloff, 2008; Zadek, 2008).
A third set of techniques aims to ensure that strategy and shared purposes orient the daily
work of everyone in the organization rather than leaving these as the purview of top management.
We are referring to techniques such as the Balanced Scorecard (Kaplan & Norton, 2001), Quality
Function Deployment (Akao, 2004), and Hoshin Kanri (Cole, 1999), which articulate complex value
priorities in ways that allow everyone to connect them to their daily work.
This constellation of techniques can operationalize an ethic of contribution and therefore
engender a shared commitment to the organization’s ultimate purpose. The importance of
anchoring values around shared purpose and operationalizing such an ethic of contribution has
surfaced in several studies of ambidexterity. Smith and Tushman (2005) make the case for the
importance of shared vision and purpose to ambidexterity, writing: “Shifting to the superordinate
level (the organization) and linking to the overarching frame reinforces the cooperation between
contradictory agendas and enables teams to better make trade-offs.” (We note that shared vision
may or may not support DA depending on the content of that vision and on whether the
participants are rationally committed to it.) Andriopoulos and Lewis’ (2009) inductive study of new
product development consultancies identified tensions at both the strategic and personal levels
regarding key values. These consultancies achieved DA by “cultivating a paradoxical vision” of the
firm’s strategy—one that embraced both creative breakthrough (representing here the exploration
dimension) and commercial success (representing exploitation)—and in individual designers’
identities as “practical artists” rather than pure creatives or pure business people. In a related
paper, Gotsi et al. (2010) highlight the roles of selection, mentoring, and constant communication—
communication that reiterates the theme of embracing these paradoxes—in socializing employees
and helping them internalize identities and values that enable DA. For example, in one firm, project
reviews after each project reiterate the DA goals: “We try to do a review after every project, and
there are three things that need to be satisfied. One is,
did the studio make money? The secondary
reason is, did we make the world a better place with this design? And the third thing is, did we help
our client make money?” (p. 797). Such socialization is part of the fiduciary role that Parsons
attributes the Latency function and the associated values subsystem.
Kaiser illustration. Kaiser illustrates the key role of an ethic of contribution in creating a
shared purpose that can facilitate the synthesis of exploration and exploitation values. Somewhat
controversially, Kaiser’s doctors are expected to consider not only patient outcomes but also the
14
economic consequences of their treatment decisions. Where many doctors in private practice long
refused any role in controlling healthcare expenditures, Kaiser’s doctors participate in that effort.
Kaiser aims to encourage DA—here in the form of a synthesis of health and cost goals—among its
doctors, and these doctors’ sense of shared purpose enables them to pursue this synthesis.
This synthesis effort is supported by numerous forums where Kaiser’s physicians discuss
the meaning of this complex, multi-dimensional value-commitment. Doctors outside Kaiser are
often left to make their own cost versus quality tradeoff choices in the diagnostics and treatments
they order; increasingly often, they are penalized financially for ordering the more expensive
option even when that option promised better clinical results. At Kaiser, in contrast, there is a
strong commitment that these choices will not degrade clinical outcomes; however, where there is
an equally effective option that is less expensive, doctors are encouraged to consider it. For
example, Kaiser does its own research on the clinical equivalence of generic medications and
disseminates those results to its doctors. These cost/quality choices and the associated research are
discussed in weekly or monthly meetings of physicians at the medical-office building level, in
monthly meetings of physicians in their specialty departments, and in bi-monthly off-site retreats
for doctors from the entire service area. As one doctor expressed it: “At Kaiser there will be no
cost/quality tradeoffs. But we must be good stewards of our members’ dollars.” Where doctors
elsewhere are the targets of extensive “drug detailing” efforts by pharmaceutical companies, Kaiser
banned drug detailing in its facilities. Conversely, when Kaiser’s doctors choose a questionable path
of diagnosis or treatment, they are likely to receive a call from a colleague asking for a peer-to-peer
discussion of their choices. (The process is called “academic detailing”: see, for ex., Postlethwaite,
Shaber, Mancuso, Flores, and Armstrong (2007).) Kaiser thus carefully cultivates an ethic of
contribution.
The operationalization of an ethic of contribution and the institutionalization of valuerationality at Kaiser have also benefitted from the definition of the “Value Compass” in 2010
(Whippy et al., 2011). The Value Compass operationalizes several of the key features of valuerational organizational form. First, it defines the shared purposes of the organization in use-value
terms, that is, in terms that identify the specific contributions of Kaiser to society—“Best quality,
best service, most affordable, best place to work”—rather than only in financial, exchange-value
terms expressing instrumental material advantage. The Compass shows these four goals at its four
points, with “patient and member focus” at the center. Second, these goals were not dictated by top
management; instead, they were jointly defined through intensive dialogue among and between
management and unions (Kaiser Permanente & Coalition of Kaiser Permanente Unions, 2012).
Finally, people at all levels are engaged in working out how they can translate the top-level Value
Compass goals into their local work processes, giving them a unity of purpose in their daily work
and their daily improvement efforts.
Norms
The key organizational paradox of DA in the norms dimension is how to maintain the
mechanistic norms needed to ensure efficient exploitation without undermining the organic norms
needed for creative exploration. Mechanistic norms are needed to ensure reliable coordination
between specialized roles, while organic norms are needed to ensure that ideas flow freely among
people. The value-rational organizational form relies on the principle of substantive rationality to
resolve this paradox. This principle of substantive rationality can be operationalized if actors at all
levels manage their interdependencies through a combination of (a) direct negotiation and dialogue
aimed at deciding how best to pursue their shared goals, and (b) formal procedures that are
themselves the product of direction negotiation and dialogue aimed at deciding which procedures
might best support such shared goals. We call this combination “interactive process management
and design.” This interactive process generates norms—both mechanistic and organic ones—that
15
are widely experienced as “enabling” rather than as coercively imposed or merely ceremonial
(Adler, 1999a; Adler & Borys, 1996, building on Gouldner's (1954) distinction between
representative, punishment-centered, and mock bureaucracy). Such norms afford the value-rational
organization the DA capability for disciplined exploitation without impairing creative exploration.
In a small, collegial group, such as a top-management team, interactional norms can remain
informal without losing too much efficiency; but across a larger collectivity, coordination requires
more formalized norms. This formalization was a major factor motivating Weber’s skepticism: he
feared that formalization would be the occasion for specialized staffs to impose standardized
procedures on the operating core. Formalization would thus undermine the salience of the
organization’s ultimate values, replacing the ethic of contribution with a bureaucratic ethic of
instrumental-rational conformance, and replacing substantive rationality with formal rationality.
Since Weber’s time, however, management techniques have been developed to side-step
this danger by fostering collaboration in the process of formalization itself. Protocols such for
kaizen, process mapping, brainstorming, participatory meeting management, decision-making with
multiple stakeholders, and project management now allow the value-rational organization to
mobilize sizeable cross-functional and cross-organizational teams towards both managing their
current interdependencies and designing formal systems that can facilitate that management. The
formalization of these protocols generates systems—both formal and informal—that are
experienced as enabling—facilitating the fluid movement of people among projects in order to
bring specialized knowledge to bear at the right times and places, and the fluid formation of project
teams, consistent with the demands of DA (see for ex. Geraldi, 2009; Mom et al., 2009). Such norms
facilitate DA by providing a platform for the deliberate and continual renegotiation of working
relations in combining exploration and exploitation; they make it possible for people to adjust their
expectations of each other as task demands shift (Juillerat, 2010).
Andriopoulos and Lewis capture the idea of this enabling synthesis in their
characterization: “Well-defined development process that empowers contribution” (2009: p. 714).
In one organization they studied, a director says: “I think that the answer is to develop the right
kind of flexibility, first of all, so that you can customize the process to address the particular client
problem, and then secondly, just to communicate well enough within the team to make the new
criteria and milestones clear in every case.” And in another: ”I see the structure of the process, I
understand the process, and how I can contribute to the process…We don’t want to say, ‘this is our
process, just memorise it’. It’s like a living body… it keeps changing.” These characteristics
correspond precisely to the model of enabling systems proposed by Adler and Borys (1996).
What is at stake here is therefore not so much the extent of formalization but the type—
whether it satisfies norms of substantive rationality by its visible connection to the ultimate
purposes and as a result, whether it gives an enabling quality to organizational systems, both
formal and informal. Our argument is consistent with the finding in Mom et al. (2009) that while
formalization has no direct effect on individual managers’ ambidexterity, the interaction of
formalization with connectedness and with participation in cross-functional efforts both have
positive effects.
Kaiser illustration. The fabric of norms at Kaiser exemplifies several features of the valuerational model and the operationalization of the substantive rationality principle. While Kaiser
physicians are managed under relatively formalized procedures, Kaiser’s leadership has sought to
ensure that these systems are experienced as enabling collaboration rather than as coercive
bureaucratic constraints. Clinical guidelines illustrate the point. Where many doctors in private
practice chafe under the bureaucratic constraints of medical guidelines imposed by government or
insurance companies, Kaiser’s doctors collaborate with their Kaiser peers and with other clinical
and non-clinical personnel to define guidelines. When the activity is entirely within purview of a
16
medical specialty, the relevant group of doctors will develop these guidelines themselves or review
and adapt nationally-established guidelines. When the activity involves multiple specialties and
other staff, these guidelines are developed and refined with input and participation of a broader
range of occupations (Whippy et al., 2011).
The labor/management partnership, too, both in its strategic and operational forms has
shaped norms to support DA. As a labor relations strategy, the partnership helps Kaiser meet its DA
challenges through its reliance on norms of “interest-based bargaining” (McKersie et al., 2008).
Interest-based bargaining is a nice example of how substantive rationality can be operationalized
and institutionalized through interactive process management and design. Under these norms,
management and labor negotiate to find areas where they can find common ground and craft winwin solutions that create a bigger pie (“integrative” bargaining). In situations where there are no
win-win solutions, they bargain over the relative shares of the pie (“distributive” bargaining).
Taking the integrative part seriously means that the union gets deeply involved in helping shape
the organization’s goals as well as its operations. Taking the distributive part seriously means that,
even as they engage with management on these issues, unions work to preserve and strengthen
their capacity for independent action.
As an operations strategy, labor-management partnership has led to the creation of “unitbased teams,” where unionized staff, management, and physicians cooperate in examining every
step of the work process to analyze why, when, and how people perform their tasks, and to ask if
there might be a more efficient and effective way to operate (Cohen, Ptaskiewicz, & Mipos, 2010).
This team-based innovation effort also embodies substantive rationality, as these unit-based teams
work on improvements that they see as most relevant to their work, choosing targets that
contribute in some way to one of the over-arching strategic priorities defined by the Value
Compass. (The collective bargaining agreement protects union members from being laid off as a
result of any of these improvement efforts: where changes in services or technology have made jobs
redundant, the agreement provides relatively generous provisions for retraining and a commitment
to doing whatever is feasible to find employment elsewhere within Kaiser.) By 2013, over 80% of
departments at Kaiser had at least one such team. Working in these teams, physicians have been
challenged to give up their hierarchical, status-based authority and to work collaboratively with
nurses, technicians, cleaners, and administrators (Cohen et al., 2010). In 2013, about a quarter of
these teams were focused on improving service quality, about a quarter on reducing costs without
impairing quality, and about 10% on improving clinical performance through prevention and
disease management.
Authority
The key organizational paradox of DA in the authority dimension is in assuring the local
autonomy required for creative exploration at the same time as the centralized control required for
efficient exploitation. The former calls for “distributed” leadership (Cullen & Yammarino, 2014) and
the latter for hierarchical leadership (Von Krogh, Nonaka, & Rechsteiner, 2012). The value-rational
organizational form synthesizes these demands by enacting the principle that authority—whether
local and distributed or centralized and hierarchical— should be based on widely-acknowledged
ability to contribute to the organization’s shared purposes (as suggested by Aime, Humphrey,
DeRue, & Paul, 2013). This principle can be operationalized by ensuring that activities are
chartered appropriately and that structures are appropriately matrixed. Under these conditions,
the value-rational organization’s authority structure can take a form we call “participative
contingent centralization”: here authority in exploratory decision-making is participative by being
distributed, while authority in exploitation decision-making is participative by ensuring that
hierarchy operates participatively, and the locus and extent of centralization are contingent on how
best to serve the shared purposes. If members share the higher purposes of the organization (with
17
the help of the Latency/values subsystem), the resulting form of hierarchy (needed for the
efficiency and exploitation) will not be experienced as alienating and will not undermine creative
exploration, but instead will be experienced as “autonomy-supporting” (Deci & Ryan, 1987) and
will enable DA.
Much of the scholarship in our field would be skeptical of the concept of participative
centralization, assuming that centralization and participation are polar opposites (e.g. McCaffrey,
Faerman, & Hart, 1995). However, as these constructs have been defined more precisely in
organizational research, they are not opposites. Centralization is assessed by ascertaining the
lowest hierarchical level at which a decision can be made without prior consultation with a
superior (Pugh & Hickson, 1976). Participation is assessed by ascertaining the lowest hierarchical
level at which real influence on the decision is exerted (Hage & Aiken, 1970). Centralization and
participation are thus better conceptualized as independent, orthogonal dimension of the authority
structure. The value-rational organization is, we argue, high on both dimensions.
Adler et al. (1997) describe various management techniques supporting participative
contingent centralization at the NUMMI auto assembly plant, and these techniques’ impact on the
firm’s ambidexterity. This study documents the coexistence and mutually supportive relationship
between (a) a distributed form of leadership operative in the shop-floor and engineering teams
aiming for radical innovation (in that setting, radical innovation took the form of major model
changeovers), (b) a participative form of hierarchical authority where shop-floor personnel, both
directly and through their union, had strong upward influence over centralized, organization-wide
policies, and (c) a process of negotiating the charters of the various exploration- or exploitationoriented teams in light of their possible contributions to the shared purpose of “producing highquality, low-cost cars.” This participative contingent centralization supported a high degree of
ambidexterity—both distributed and other types—evidenced in the organization’s remarkable
combination of efficiency and flexibility.
The matrix type of authority structure is a second key innovation in management technique
that has operationalized contribution-base authority and thereby facilitated participative
contingent centralization and DA. DA requires that contributors attend simultaneously to the
efficient exploitation of established functional expertise and to creative exploration of new
capabilities and new products. When organizations attempt to orchestrate such synthesis efforts by
relying on the familiar monocratic hierarchy of authority, the result is typically an overemphasis on
just one of these priorities, usually exploitation. DA, therefore, often requires a matrix structure
with multiple dimensions of accountability, where the locus of authority on one dimension versus
others is contingent on the nature of the decisions that need to be taken (Galbraith, 1994). Matrix
structures, however, are notorious for the challenging “organizational politics” engendered by their
multiple reporting relationships, and as a result, these structures are difficult to sustain and
organizations have suffered many implementation failures (Burns, 1989; Larson & Gobeli, 1987).
Nevertheless, competitive pressures have pushed firms to persist in trying to master these
challenges, and in many firms today matrix is a taken-for-granted condition; indeed, there has been
an evolution over time toward matrix structures with more than two dimensions (Galbraith, 2008;
Heckscher, 2007; Strikwerda & Stoelhorst, 2009). The key to mastering these implementation
challenges lies in a value-rational commitment to shared purpose and the ethic of contribution: it is
this shared purpose that enables individual contributors, functional managers, and project
managers to search together for synthetic resolutions of the competing priorities of exploration and
exploitation.
Heracleous and Wirtz (2014) offer a nice description of this kind of matrixed participative
centralization at Singapore Airlines. Here, the organization’s ambidexterity depended in part on the
efforts of a centralized product innovation department. While this department centralized the
firm’s larger exploration investments, its centralization had a strongly participative flavor because
18
the department’s teams were staffed primarily by people from the line organization, some of whom
spent two or three years on rotation here and some of whom worked on shorter-term or part-time
assignments. The work of these teams was organized in a matrix fashion, linking the product
innovation staff and the various line functions.
Participative centralization may also underlie the results of several studies showing that
transformational leadership contributes importantly to DA within top-management teams (Jansen,
George, Van den Bosch, & Volberda, 2008; Nemanich & Vera, 2009). Measured as a combination of
intellectual stimulation, inspirational motivation, individualized consideration, and idealized
influence, transformational leadership appears to overlap to a considerable degree with our
construct of value-rational authority. The exception is the “inspirational motivation” component,
which, from our Weberian viewpoint, seems underspecified because it could refer either to an
affectually-based charismatic inspiration or to a value-rational type of inspiration. Future research
might usefully seek to clarify which aspects of transformational leadership support DA and whether
value-rationality is a better predictor.
Kaiser illustration. To facilitate the pursuit of DA and the achievement of its diverse goals,
Kaiser has created a sizable “Performance Improvement” staff, which functions in a matrix
relationship with their line management client groups (Schilling et al., 2010a). Indeed, Kaiser’s
authority structure is extensively matrixed. Managers and non-managerial personnel have learned
to accommodate themselves to the unusual degree of organizational complexity required to ensure
that both exploitation and exploration tasks are kept constantly in view.
The labor-management partnership helps Kaiser meet its DA challenges by supporting
participative contingent centralization across the wider organization. First, the unit-based teams
afford important opportunities for distributed leadership and engage aggressive innovation efforts:
leadership within these teams is determined by contribution, not by hierarchical position. Second,
these teams are chartered through an explicit negotiation process that is anchored in the Value
Compass: the teams negotiate with goals with management and union sponsor as a function of their
ability to advance one or more of the Value Compass goals (Kaiser Permanente Labor Management
Partnership, 2015). And third, to the extent that decisions need to be centralized, a hierarchy of
joint labor/management committees governs decision-making, from the national, to the regional,
and down to the facility level. While this centralized structure has undoubtedly added
organizational overhead, it ensures that the decisions made centrally by higher-level decisionmakers are seen as legitimate by lower levels in the organization. The union coalition’s partnership
with management in joint pursuit of the Value Compass goals reassures members that that these
centralized decisions are oriented towards the organization’s ultimate purposes. This legitimacy
has enabled Kaiser to undertake several potentially highly controversial moves without major
internal conflict, including several major cost-cutting initiatives, some of which involved large-scale
redundancies (which, thanks to advance planning and partnership, were handled by retraining and
reemployment).
Capabilities
The key organizational paradox of DA in the capabilities dimension lies in combining within
individuals and teams the specialized depth of skills required for exploitation and the breadth
required for creative exploration. The value-rational organizational form resolves this paradox by
systematically cultivating “T-shaped” skills (Iansiti, 1993; Leonard-Barton, 1995). T-shaped
technical skills—deep knowledge in one’s own specialty combined with breadth of knowledge of
the related technical specialties—facilitate the emergence of the “common ground” that is critical to
learning from and collaborating with others (Puranam, Singh, & Chaudhuri, 2009). These technical
skills must be buttressed by complementary interactional skills and social skills to enable effective
cross-functional teamwork (Cordero, 1999; Kang & Snell, 2009). The value-rational form thus
19
rejects the older idea of “expertise” (described by Weber in his treatment of formal rationality in
bureaucracy), in which specialized knowledge is applied separately and autonomously by each
actor to problems within his or her domain (or “office”). The value-rational form requires that one’s
specialized knowledge be combined with others’ with an intentional focus on the common purpose.
The value-rational organizational form builds these capabilities through both personnel
selection and skill formation. As concerns selection, the value-rational organization aiming to build
DA capabilities selects people with the appropriate T-shaped skills and teamwork propensities—
insofar as this unusual combination is available. A vast portfolio of techniques (and an associated
field of scholarship—industrial/organizational psychology) has emerged since Weber’s time to
assist organizations in selecting personnel who fit such demands (see, for ex., Schmidt & Hunter,
1998). The importance of selection to successful DA is visible in Gotsi et al.’s (2010) study. One
interviewee noted: “We normally look for a person who is very rounded in skills, very
communicative, and very creative” (p. 795). Here people are “recruited not only by the criteria of
how excellent their performances and their credentials are in their areas of expertise, they are
recruited because […] they have a combination of some form of design and business” (p. 795).
As concerns skill formation trajectories, the value-rational organization does not leave it
entirely to individual employees to decide for themselves based on their individual instrumentalrational career advancement goals. Value-rational organizations leverage the ethic of contribution
and the salience of shared purpose to orient this skill formation process towards the organization’s
purposes, instituting management processes that encourage members both to deepen and to
broaden their skills through a planned sequence of project experiences and cross-functional
assignments.
Organizations such as Toyota achieve considerable DA by mobilizing this sense of shared
purpose to assure their workers’ buy-in to the firm’s formalized, comprehensive, and long-term
skill-development policies (Adler, 1999b; Brown & Reich, 1997). Both management and shop-floor
personnel are systematically rotated through various departments, progressively broadening and
deepening their skills. Andriopoulos and Lewis (2009: p. 714) show the importance to DA of
systematic T-shaped skill formation. They quote a creative director from one of their firms on the
importance of “teaching people how to switch from one side to the other because it is realistic, and
as a business, we cannot stay in business if they don’t do their timesheets, or if they don’t fill their
reports out because this is not an art studio where we can sit around and paint all day.” Gotski et al.
underscore the importance of mentoring in further developing these distinctive skill sets, quoting a
senior vice president of engineering saying, “I spend a lot of time telling people that it is wonderful
idea, now put it in the machine and make something useful” (2010: p. 716).
A host of new management techniques have arisen in the past few decades to identify and
plan for the development of various work-related competencies (Dubois, 1998, 2010; McClelland,
1973). Today, we have many information-technology tools that support all aspects of competency
mapping, diagnosis, development planning, and monitoring (Draganidis & Mentzas, 2006).
Information technology also contributes more directly to the organizational capabilities required
by value-rational DA when it is deployed in the organization’s operating core to stretch outward the
trade-off frontier between cost-efficiency and flexibility, reducing minimum efficient scale and
reducing the gap between customization and mass production by deploying mass customization
techniques (Pine, 1993).
To ensure that skills are developed and deployed in this T-shaped direction, DA requires a
distinctive compensation approach that rewards DA-oriented skill formation by simultaneously
rewarding creativity in exploration tasks, disciplined consistency in exploitation tasks, and flexible
collaboration with others in pursuit of ambidexterity. Here, compensation is based both on the
entire organization’s progress towards its purposes and on the individual’s contribution to that
20
progress. The value-rational organization may differentiate compensation among individuals based
on performance, but it does not do so through the usual pay-for-performance approach, which
rewards people for meeting fixed targets set by higher authorities. Instead, the key criterion is the
individual’s contribution to the complex, multidimensional organizational purposes, thus both
leveraging and buttressing the organization’s ethic of contribution. Organizations have developed
innovative ways to assess and reinforce orientation to teamwork and to helping others (Gittell,
2000; Rubinstein & Kochan, 2001). Just “doing a good job” is not sufficient; individuals are
stretched to think and act beyond their jobs and to avoid the dysfunctions of inappropriate
bureaucratic rule-following. Because formal supervisors cannot be aware of the entire range of
activities of their subordinates when these latter are engaged on multiple projects and contributing
on cross-cutting dimensions, value-rational organizations use systems such as 360-degree feedback
to develop and validate reputational information (Bracken, Timmreck, Fleenor, & Summers, 2001;
Peiperl, 2001).
Kaiser illustration. Physicians are responsible collectively for the management of the
regional Permanente Medical Groups. As a result, a considerable proportion of them acquire
sophisticated management, business, and leadership skills. Doctors new to Kaiser go through a
three-year probationary period during which they are regularly evaluated and coached not only on
their technical competence but also on their collegial relations with other doctors, the respect they
show for other staff and patients, and their willingness to contribute ideas and effort to improving
the organization’s performance. Managers, including physicians who take on managerial
responsibilities, undergo regular 360 assessments.
More generally, all staff categories, from physicians to janitorial personnel, have been
drawn into partnership activities, and in particular, into the work of unit-based teams, where they
have developed new skills in problem-solving, leading meetings, analyzing work processes,
identifying improvement opportunities, presenting cogent arguments in team meetings and in
bigger forums, energizing others to get involved, dealing with conflicting views and divergent
interests, and understanding the business side of Kaiser and the economics of healthcare. Kaiser
has considerably expanded their internal training programs to support the development of these
new skills. Kaiser has also invested enormous resources to create an IT infrastructure—”KP
Healthconnect”—that supports both cost efficiency and flexible responsiveness to the individual
patient’s needs (Mohrman & Kanter, 2012). Litwin (2010) shows that this technology infrastructure
yields greater performance outcomes where it is associated with higher levels of employee
involvement through Kaiser’s labor-management partnership.
To support its DA goals, Kaiser also implements distinctive compensation policies. Unlike
independent practitioners who once predominated in the US healthcare delivery system, Kaiser’s
physicians are salaried members of a group practice. Recent years have seen a shift in payment
systems for Kaiser’s physicians, away from straight salary towards more performance-based pay—
but designed nevertheless to buttress the value-rational ethic of contribution. Some 30% of the
physician’s salary is “at risk,” but that component is based entirely on patient satisfaction and
clinical outcomes, not on cost or on physicians’ “utilization” rates. Any costs savings the medical
group makes (relative to the targeted overall cost-per-patient over the year) are reinvested in
medical equipment and programs.
Non-managerial personnel under the Partnership agreement share in Kaiser’s net revenues
based on bonus plans regionally negotiated. The bonuses pay out equal amounts to all the region’s
employees based on whether the region has met targets that are negotiated between unions and
management and that reflect a mix of variables from the various points on the Value Compass, such
as attendance, safety, service, and clinical outcomes. Starting with the 2012 collective bargaining
agreement, these bonuses are also based on the health status of Kaiser’s own personnel.
21
CONCLUSION
This paper aimed to specify an organizational form suited to distributed ambidexterity. We
showed that ambidexterity poses paradoxes in each of the four basic organizational subsystems
suggested by Parsons—values, norms, authority structure, and capabilities. We argued that these
paradoxes could be resolved by synthesis if action is based on what Weber called value-rationality.
We pointed to ways in which, notwithstanding Weber’s own skepticism, a robust organization
could be built around value-rationality through the deployment of managerial techniques—
developed since Weber’s time—that help institutionalize value-rationality as the appropriate form
of action.
The core of the paper showed how such a value-rational organization could support DA by
allowing the organization to reach a synthesis of each of the key organizational paradoxes of
ambidexterity. First, the paradox in values subsystem lies in DA’s need for values that
simultaneously celebrate both creativity and efficiency. When values that continuously orient
members to the organization’s ultimate purposes are institutionalized as an “ethic of contribution”
in the organization’s culture, strategy content, and strategy process, the result is a sense of shared
purpose that encourages all members to see these ultimate values as superordinate, and to embrace
the challenge of synthesizing the subordinate goals of creativity and efficiency.
Second, in the norms subsystem, DA paradoxically requires simultaneously organic and
mechanistic norms of interaction and communication. We argued that formalized procedures can
be designed under norms of substantive rationality through various forms of “interactive process
management and design,” and that under these conditions, the result is a set of norms that are
widely experienced as enabling in the pursuit of the common goals, thus synthesizing the virtues of
organic and mechanistic systems to support DA.
Third, in the authority subsystem, DA requires a paradoxical combination of local autonomy
and centralized control. We argued that the value-rational organization could ensure that
authority—whether dispersed or centralized—was based on a widely-acknowledged ability to
contribute to the organization’s shared purposes, and that the resulting pattern of “participative
contingent centralization” would enable DA.
Finally, in the capabilities subsystem, DA requires a paradoxical combination of deep and
broad individual skills. We argued that value-rational organizations could aim to recruit people
with this unusual combination, and leverage their members’ desire to contribute to the
organization’s shared purposes to steer individuals’ skill formation paths towards the development
a T-shaped combination of breadth and depth that supports the DA effort.
We offered illustrations of each of these causal paths from prior literature and from Kaiser
Permanente. Clearly however, our arguments need empirical testing: we see that as an important
next step. Our theory suggests two basic models to be tested: first, controlling for various
exogenous factors, distributed ambidexterity should be more likely to be achieved where
organizations more closely resemble the value-rational form; and second, where organizations
attempt to build distributed ambidexterity, and conditional on an external context that rewards the
results of ambidexterity, business performance should be better where this strategy is associated
with the adoption of the value-rational organizational form.
As concerns the boundary conditions that limit the applicability of the value-rational form,
the key issue is the balance between the performance benefits and the “organizational overhead”
costs of this form relative to alternative forms. We anticipate that its implementation would prove
less cost-effective in organizations pursuing one-dimensional strategies where alternative forms
would offer greater net benefits. The causality might, of course work in reverse too: if an
22
organization can implement a value-rational form, this might incline it to adopt a strategy that
leverages DA.
In a more speculative vein, future research might also consider whether the value-rational
form, rather than being just one organization design option among several, represents instead an
evolutionary advance beyond those others. In this perspective, if a social innovation process has
yielded management techniques that allow organizations to institutionalize value-rationality,
perhaps this organizational form might become an efficient solution to the challenges facing a
broader range of organizations, including ones whose primary strategic goal is more narrowly
focused on either exploitation or exploration.
Limitations
Our account of the value-rational organizational form needs to be expanded by closer
consideration of it overhead costs and intrinsic risks. Without a clearer understanding of these
downsides, our model risks being treated as a utopian panacea. It is clear even from the account
that we have offered that the value-rational form depends on reliable mechanisms for establishing
and updating reputations, but we know that these mechanisms are vulnerable to opportunistic
manipulation. The high level of participation in value-rational organizations requires considerable
meeting time, but such meetings are costly and burdensome. The value-rational form requires
openness to diversity, difference, and disagreement, but it offers little assurance these will not
explode the collectivity or seal the organization off from the outside world as a closed sect.
Our theorizing is also limited in that we have not addressed the individual cognition,
motivation, emotion, or behaviors implicit in our causal model. An important next step in the line of
research we have proposed would be to develop a multi-level model that allows us to see how the
value-rational organizational form shapes individual behaviors, and then how these individual
behaviors aggregate to generate ambidextrous outcomes. Andriopoulos and Lewis (2009) nestedlevels approach seems like a fruitful path in that endeavor. Moreover, in building this multi-level
theory, it would be useful to differentiate more finely among the various ways in which the
paradoxes of exploitation and exploration can be synthesized. Smith and Lewis (2011). For
example, we could differentiate three types of organizational tensions—dilemma, paradox, and
dialectic: dilemma takes us back to a pure trade-off relationship, but the psychological experience of
a DA synthesis will surely differ depending on whether DA takes the form of a persistent paradox
lived in ongoing tension or a dialectical integration sufficient unto itself.
More generally, our argument has functioned at a fairly high level of abstraction, and the
effective achievement of DA likely depends on more concrete features of the organization, such as
specific organizational structures or leadership styles. Future research should explore the ways in
which value-rationality interacts with some of these more concrete features to enable
ambidexterity.
Extending to other approaches to ambidexterity
O’Reilly and Tushman make a compelling argument that DA is unlikely to generate radically
discontinuous innovations: if that is the goal of the exploration, some other ambidexterity approach
would probably be more suitable, one allowing for greater structural differentiation and
specialization (O'Reilly & Tushman, 2013). Nevertheless, the achievement and maintenance of
value-rationality may be important to these other approaches. The locus and degree of
collaboration varies across these approaches; but in all of them, all the relevant actors must feel
confident that others will be oriented to their shared ultimate purpose even in circumstances that
cannot currently be defined or predicted—and the value-rational organizational form offers this
advantage.
23
Let us review the other ambidexterity approaches in turn, to see how the value-rational
form might contribute to their success. In the functional approach, the firm needs a sense of shared
purpose across functionally-differentiated subunits, such as R&D and operations (e.g. Lovelace,
Shapiro, & Weingart, 2001): the R&D unit must be willing and able to anticipate downstream issues
(such as “manufacturability”), and the operations units must be willing and able to embrace rather
than resist the disruption occasioned by the introduction of new designs. In the network approach,
the focal firm needs a shared purpose with its various network partners, particularly when
achieving an ambidextrous result is a priority (Kauppila, 2010) (MacDuffie & Helper, 2006). In the
structural approach, ambidexterity requires a shared purpose within the top-management team to
combine the efforts of exploitation and exploration business lines (e.g. Jansen et al., 2008; Tushman
et al., 2010). It seems likely that achievement of the desired ambidexterity depends in any these
approaches on the institutionalization of value-rationality as the modal form of action among the
relevant actors.
Beyond ambidexterity
Our argument has focused on the achievement of distributed ambidexterity; we have just
noted that it might also be extended to other approaches to ambidexterity; however, it might also
be extended further, to situations where the organization faces multiple heterogeneous demands
that do not fit the exploration/exploitation frame. For example, many organizations today are
under pressure both to offer higher quality products to their customers and to reduce their
environmental footprint. More generally, many organizations are under pressure to satisfy the
demands of more diverse stakeholders. In current scholarship, these challenges have been
addressed by the literature on “hybrid” organizations in institutional theory (Greenwood, Raynard,
Kodeih, Micelotta, & Lounsbury, 2011) or hybrid identities (Albert, Ashforth, & Dutton, 2000).
One lesson from this identity literature is that, insofar as organizations aim to create a
hybrid identity that synthesizes the heterogeneous identities and their associated institutional
logics, the organization must contend not only with the internal managerial challenges that have
been the focus of the present paper, but also with external legitimacy challenges. Each of the
constituent identities and logics will typically require some degree of supra-organizational
legitimacy, and the success of the organization in hybridizing internally will be influenced by these
broader field-level actors and factors. Kaiser provides a nice example: the success of this
organization’s ambidexterity efforts hinged considerably on Kaiser’s ability to enroll a range of
external, field-level actors so as to legitimate its efforts, such as the medical profession, patientrights groups, and the relevant state agencies. Scott, Ruef, Mendel, and Caronna (2000) explore
some facets of this struggle, and future research might explore how appeals to value-rationality
acquire legitimacy in this broader, field-level transformation.
Practical hurdles facing value-rational organization
While the value-rational organizational form seems in principle ideally suited to the
challenges of DA, its practical implementation faces considerable hurdles. Perhaps most
fundamentally, it depends on maintaining the salience of the shared higher purpose when, in the
real world of business, market competition often unravels any sense of shared purpose among
firms, and wage-cost pressure often unravels any sense of shared purpose within firms. It is hardly
surprising, then, that the stabilization of the value-rational organization form is difficult and not yet
complete in any for-profit business setting that we know of.
We remain, however, guardedly optimistic. The performance benefits of value-rational
organization and the DA it can support are considerable, at least in settings where simultaneous
improvement in exploration and exploitation capabilities are valued by markets: that much seems
clear from the research cited above. Precisely because value-rational organization is difficult to
24
create, organizations that do manage to create it can benefit while their competitors struggle to
replicate it.
25
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Figure 1: A conceptual model of how the value-rational organizational form has been
operationalized and how it supports distributed ambidexterity
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