Contextual ambidexterity in the subsidiary: how exploration and exploitation interact to drive subsidiary strategic initiatives and innovation

This chapter examines the capacity of multinational subsidiaries to engage in innovation and to generate strategic initiatives. Research to date captures how explorative trajectories (and the subsidiary management championing them), are credited with pioneering new innovative ideas; yet less attention has been paid to complementarity in the simultaneous pursuit of more exploitative behaviour. Adopting an ambidexterity lens as our theoretical framing we examine how the interaction of exploitation and exploration strategies may explain why some subsidiaries are better at generating strategic initiatives than others. Findings, based on a sample of 258 subsidiary managers, reveal that high-performing subsidiaries in the sample (denoted as those that scored high on both exploitation and exploration/entrepreneurial orientation) were significantly more likely to generate strategic initiatives when compared with the average subsidiary within our model. Finally, our chapter provides new insights on nested innovation within MNEs, intra-organisational networks and on harnessing the potential for subsidiary-driven innovation.