Ambidexterity within a multinational context: how organisations can leverage explorative and exploitative reverse innovation

Abstract

Organisational ambidexterity allows firms to maintain a competitive advantage. In today's globally competitive environment, characterised by dispersed knowledge and diversified markets, ambidexterity assumes an even more important connotation from a geographic perspective. In this context, emerging economies (EEs) play a vital role as sources of innovators and market disruptors. This has resulted in the emerging phenomenon of reverse innovation (RI) and the rethinking of firms' multinational R&D and innovation strategies. The present study aims to answer how RI can be incorporated into multinational R&D strategies to bring about organisational ambidexterity on a firm level by balancing explorative and exploitative innovative activities across advanced economies (AEs) and EEs. With primary data collected through semi‐structured interviews with thirty R&D executives and senior managers, we find that RI can occur in the form of complete products and smaller innovative contributions toward developing new products that arise from the multinational collaboration between headquarters of organisations, their subsidiaries, and partners. We also find that multinational enterprises use both exploration and exploitation in EEs as the foundation for RI. Finally, we propose four distinct explorative and exploitative RI types that multinational enterprises can pursue to balance their ambidextrous activities across geographies. These four types of innovation are comprised of reverse product innovations and reverse flows of innovative contributions, each of explorative and exploitative nature.