Integrating Shared and Vertical Leadership Perspectives as Drivers of Ambidexterity and Firm Performance
Journal
European Association of Work and Organizational Psychology Conference 2023
Type
conference paper
Date Issued
2023-05
Author(s)
Abstract
Extended Abstract
Research goals: This study shows how combining horizontal and vertical leadership can reduce the complexity of leadership in the new world of work. Today, leadership skills from all team members are needed to react dynamically and solve complex challenges. Research has shown that horizontally sharing leadership roles and tasks among team members leads to positive organizational effects, predominantly on innovation. However, ambidexterity research indicates that organizations must focus on both innovation and efficiency to succeed in the long run. Therefore, the research goal of this study is to explore under which conditions a shared leadership can foster not only innovation but ambidexterity to increase sustained performance. By integrating insights from ambidexterity and shared leadership research, the study aims to shed light on the under-theorized shared leadership–performance link.
Theoretical background: Building on paradox theory, it is hypothesized that the imbalance towards innovation (exploration) promoted by an empowering shared leadership (SL) climate can be counterweighted by combining it with leadership conducive to efficiency (exploitation): vertical closing leadership (CL) climate. The reasoning for the hypotheses ensues from two paradoxes discussed in organizational research. First, the performing paradox states that embracing competing strategies and goals, namely innovation and efficiency, simultaneously requires exploration and exploitation. Supporting this notion, ambidextrous leadership research shows that the combination of opening leadership behavior (e.g., giving room for new ideas) and closing leadership behavior (e.g., monitoring goal attainment) fosters ambidexterity. Second, the organizing paradox refers to competing designs and processes that lead to tension between empowerment and direction. This closely aligns with the paradox between empowering shared leadership and directive vertical leadership. According to paradox theory, paradoxes should be viewed and embraced as complementary and enriching, not as contradictory. Based on prior research suggesting that SL promotes exploration, it is thus argued that CL moderates the relationship between SL and ambidextrous behavior by fostering exploitation. Drawing on ambidexterity research, it is further hypothesized that the resulting ambidexterity positively influences firm performance.
Methodology: The hypotheses were tested in a sample of over 26,000 employees in 180 German companies from four industries, collected from 2019 to 2020. Data was collected from three different sources in each organization to address concerns of common source bias: two unique sub-groups of employees evaluated leadership and ambidexterity measures, whereas top management teams assessed firm performance. Multiple regression analyses were conducted to test the hypotheses.
Results: The findings support the proposed indirect positive effect of an empowering shared leadership climate on firm performance, which is amplified when moderated by a guiding vertical closing leadership climate. SL is positively associated with ambidextrous behavior, an effect that increases when vertical CL is included as a moderator. This study uncovers and proposes a novel underlying mechanism by introducing ambidextrous behavior as a mediator in the SL–performance link.
Limitations: The sample consisting of German-speaking companies may limit the generalizability to other cultural contexts. Moreover, the cross-sectional nature of the data precludes causal inference.
Conclusion: The study unveils CL as an essential lever for the positive effect of an SL climate on firm performance through fostering ambidextrous behavior. By drawing on paradox theory, this study provides a new theoretical perspective to the SL–performance discussion, thereby connecting two research streams that were priorly independent. Based on the findings of this study, it can be concluded that, on the one hand, the autonomy inherent in SL enables teams to realize the full potential present in a team's variety of leadership skills, hence fostering innovation. However, on the other hand, it must be complemented by CL to guide teams' efficiency. This breakdown of innovation promotion through SL and efficiency promotion through vertical CL reduces the complexity and ultimately leads to increased ambidexterity and, consequently, higher firm performance. These findings hold important implications for companies suggesting that they must embrace the paradox of SL and vertical CL to strive in demanding environments.
Relevance for the Future of Work: The complexity prevalent in contemporary organizations has increased beyond the scope of single leaders, pointing to the limits of traditional leadership theories focused on vertical influence. By suggesting a fruitful combination of shared and vertical leadership as a driver of organizational ambidexterity, this study offers a new leadership approach to tackle challenges in the changing world of work.
Research goals: This study shows how combining horizontal and vertical leadership can reduce the complexity of leadership in the new world of work. Today, leadership skills from all team members are needed to react dynamically and solve complex challenges. Research has shown that horizontally sharing leadership roles and tasks among team members leads to positive organizational effects, predominantly on innovation. However, ambidexterity research indicates that organizations must focus on both innovation and efficiency to succeed in the long run. Therefore, the research goal of this study is to explore under which conditions a shared leadership can foster not only innovation but ambidexterity to increase sustained performance. By integrating insights from ambidexterity and shared leadership research, the study aims to shed light on the under-theorized shared leadership–performance link.
Theoretical background: Building on paradox theory, it is hypothesized that the imbalance towards innovation (exploration) promoted by an empowering shared leadership (SL) climate can be counterweighted by combining it with leadership conducive to efficiency (exploitation): vertical closing leadership (CL) climate. The reasoning for the hypotheses ensues from two paradoxes discussed in organizational research. First, the performing paradox states that embracing competing strategies and goals, namely innovation and efficiency, simultaneously requires exploration and exploitation. Supporting this notion, ambidextrous leadership research shows that the combination of opening leadership behavior (e.g., giving room for new ideas) and closing leadership behavior (e.g., monitoring goal attainment) fosters ambidexterity. Second, the organizing paradox refers to competing designs and processes that lead to tension between empowerment and direction. This closely aligns with the paradox between empowering shared leadership and directive vertical leadership. According to paradox theory, paradoxes should be viewed and embraced as complementary and enriching, not as contradictory. Based on prior research suggesting that SL promotes exploration, it is thus argued that CL moderates the relationship between SL and ambidextrous behavior by fostering exploitation. Drawing on ambidexterity research, it is further hypothesized that the resulting ambidexterity positively influences firm performance.
Methodology: The hypotheses were tested in a sample of over 26,000 employees in 180 German companies from four industries, collected from 2019 to 2020. Data was collected from three different sources in each organization to address concerns of common source bias: two unique sub-groups of employees evaluated leadership and ambidexterity measures, whereas top management teams assessed firm performance. Multiple regression analyses were conducted to test the hypotheses.
Results: The findings support the proposed indirect positive effect of an empowering shared leadership climate on firm performance, which is amplified when moderated by a guiding vertical closing leadership climate. SL is positively associated with ambidextrous behavior, an effect that increases when vertical CL is included as a moderator. This study uncovers and proposes a novel underlying mechanism by introducing ambidextrous behavior as a mediator in the SL–performance link.
Limitations: The sample consisting of German-speaking companies may limit the generalizability to other cultural contexts. Moreover, the cross-sectional nature of the data precludes causal inference.
Conclusion: The study unveils CL as an essential lever for the positive effect of an SL climate on firm performance through fostering ambidextrous behavior. By drawing on paradox theory, this study provides a new theoretical perspective to the SL–performance discussion, thereby connecting two research streams that were priorly independent. Based on the findings of this study, it can be concluded that, on the one hand, the autonomy inherent in SL enables teams to realize the full potential present in a team's variety of leadership skills, hence fostering innovation. However, on the other hand, it must be complemented by CL to guide teams' efficiency. This breakdown of innovation promotion through SL and efficiency promotion through vertical CL reduces the complexity and ultimately leads to increased ambidexterity and, consequently, higher firm performance. These findings hold important implications for companies suggesting that they must embrace the paradox of SL and vertical CL to strive in demanding environments.
Relevance for the Future of Work: The complexity prevalent in contemporary organizations has increased beyond the scope of single leaders, pointing to the limits of traditional leadership theories focused on vertical influence. By suggesting a fruitful combination of shared and vertical leadership as a driver of organizational ambidexterity, this study offers a new leadership approach to tackle challenges in the changing world of work.
Language
English
Event Title
EAWOP Conference
Event Location
Katowice
Event Date
25.05.2023
Division(s)
Contact Email Address
lena.rudolf@unisg.ch