Effects of ambidextrous and specialized R&D strategies on firm performance: The contingent role of industry orientation

Innovative firms must decide whether they should specialize in either exploratory or exploitative R&D or adopt an ambidextrous R&D-strategy (pursue both). This study extends research on exploration/exploitation by explaining how the effects of ambidextrous and specialized R&D-strategies on a focal firm’s performance are influenced by the R&D-strategies adopted by other firms in its industry. Comparing a firm’s R&D-strategy with those of its intra-industry peers enables us to identify how the performance-enhancing advantages of ambidextrous and specialized R&D-strategies change across industries and which R&D-strategy is optimal for the firm. Our framework and longitudinal analysis of 32,526 observations indicate that an R&D-strategy that is similar to that of the rest of the industry decreases firm performance, whereas an R&D-strategy that differs from the industry’s dominant R&D-strategy enhances performance. The study also explains the mechanisms through which certain industry environments reduce the need to be ambidextrous and help specialized firms enhance their performance.