Strategic Renewal in Established Firms : Exploring Identity Processes in Structurally Ambidextrous Firms

The purpose of this thesis is to explore how organizational identity evolves over time in structurally ambidextrous firms. The research is based on a qualitative case study of an established firm operating in the media market in a Scandinavian country, and its three exploratory units that were separated to pursue innovation within technologies important for the future of the established firm. Based on data collected through 16 semi-structured interviews with key decision makers that were involved in the separation and reintegration events of the three exploratory units, I inductively developed a process model that illustrates how organizational identity of an ambidextrous firm evolves over time through three phases: 1. Creating space for new identity, 2. Forming distinct identity, and 3. Renewing old identity. By adopting a process approach, this study contributes to our understanding of how established firms can renew themselves and the different opportunities and challenges related to identity that may emerge over time. This study’s findings have several practical implications for managers involved in innovation and change efforts. The findings suggest that the bigger the gap between the established firm’s current identity and the identity needed to succeed with a new technology, the more separate an innovative unit should be kept, both in terms of physical location and degree of interactions with the established unit. In contrast, when the gap is not profound, the units may engage in much more interactions, share physical space, and exploit synergies from cooperation, while not compromising the innovative unit’s ability to pursue exploration. The findings further suggest that the more separate the exploratory is kept, both physically and operationally, and the more the unit manages to form an identity independent of the established unit as a result, the higher is the potential for renewal of the established firm’s old identity. However, in order to realize that potential, the exploratory unit must gain legitimacy in the eyes of the established unit and be perceived as the firm’s future, creating readiness in the established firm to redefine its old identity. As such, this study suggests structural ambidexterity as a specific managerial tool that can be used to achieve not only strategic renewal, but also identity renewal, of the established firm.nhhma