The interactive effects of entrepreneurial orientation and capability-based HRM on firm performance: The mediating role of innovation ambidexterity

This paper explores critical questions about the antecedents and performance outcomes of innovation ambidexterity. Specifically, while prior research has acknowledged that entrepreneurial orientation (EO) and HRM can each influence ambidexterity, little is known about whether and how EO and HRM interact to affect innovation ambidexterity and whether innovation ambidexterity is a mechanism through which EO and HRM together contribute to firm performance. Building on the dynamic capability view of ambidexterity and the interplay of EO and HRM, we propose that (1) the interaction between EO and capability-based HRM facilitates innovation ambidexterity, and (2) its relationship with firm performance is mediated by innovation ambidexterity. A sample of 264 industrial firms from China is used to test our theoretical model. The results provide support for the significant effects of the interaction between EO and capability-based HRM on innovation ambidexterity. Further, the results suggest innovation ambidexterity acts as an effective mechanism through which EO and capability-based HRM together contribute to firm performance. The theoretical and managerial implications of our findings are also discussed.