JEFMS Journal

ABSTRACT:

A firm that combines entrepreneurship is often recognized as a critical contributor to economic growth, job creation, and development, as well as an essential component of economic vitality. This study investigates the moderating effect of firm size and age on the association between ambidexterity and financial performance. The idea is tested using a quantitative methodology in this study. The research instrument was a questionnaire that respondents filled out. The participants in this study are all MSME leaders in Tangerang City, Banten, Indonesia. For this study, 216 participants were chosen randomly, and data were analyzed using a structural equation model (SEM). Its results discovered that ambidexterity has a favorable and statistically significant effect on financial performance. In addition, firm age improves the association between all ambidexterity aspects (product exploration, product exploitation, market exploration, and market exploitation) and financial performance. However, company size has no moderating effect on the association between product and market exploitation and financial performance, only on the relationship between product and market exploration and financial performance. This research is contributing to the size of businesses with structural distinction through mechanisms underpinning resources and capabilities. In addition, the firm's age and expertise with contextual systems and processes, as well as the mechanisms underlying organizational learning, enable the company to maximize its performance. Although using MSMEs as the study's sample boosted internal validity, caution should be exercised when extending these findings to other industries, such as manufacturing.

KEYWORDS:

Ambidexterity, firm size, firm age, financial performance

REFERENCES:

1) Adler, P. S., & Heckscher, C. (2018). Collaboration as an Organization Design for Shared Purpose. In Toward Permeable Boundaries of Organizations? (Vol. 57, pp. 81–111). Emerald Publishing Limited. https://doi.org/10.1108/S0733- 558X20180000057004

2) Afandi, D. R., & Maha, M. P. (2020). Pengembangan Kinerja UKM: Penggunaan Platform Digital dengan Kemampuan Jaringan dan Ambidexterity. Jurnal Pengembangan Wiraswasta, 22(02), 93. https://doi.org/10.33370/jpw.v22i02.432

3) Agnihotri, R., Gabler, C. B., Itani, O. S., Jaramillo, F., & Krush, M. T. (2017). Salesperson ambidexterity and customer satisfaction: examining the role of customer demandingness, adaptive selling, and role conflict. Journal of Personal Selling & Sales Management, 37(1), 27–41. https://doi.org/10.1080/08853134.2016.1272053

4) Ahammad, M. F., Lee, S. M., Malul, M., & Shoham, A. (2015). Behavioral Ambidexterity: The Impact of Incentive Schemes on Productivity, Motivation, And Performance Of Employees In Commercial Banks. Human Resource Management, 31(2), 1–18. https://doi.org/10.1002/hrm

5) Ahmad, B., Da, L., Asif, M. H., Irfan, M., & Ali, S. (2021). Understanding the Antecedents and Consequences of Service- Sales Ambidexterity : A Motivation-Opportunity-Ability ( MOA ) Framework. Sustainability, 13, 1–19. https://doi.org/10.3390/su13179675

6) Ali, H. Y., Khan, M. K., & Asrar-Ul-Haq, M. (2019). Factors affecting the performance of women entrepreneurs in SMEs: A case study of Punjab, Pakistan. Journal for International Business and Entrepreneurship Development, 12(1), 67–82. https://doi.org/10.1504/JIBED.2019.103366

7) Almaqtari, F. A., Farhan, N. H. S., Yahya, A. T., & Homaidi, E. A. Al. (2020). Macro and socio-economic determinants of firms’ financial performance: empirical evidence from Indian states. International Journal of Business Excellence, 21(4), 488. https://doi.org/10.1504/ijbex.2020.108556

8) Andreeva, T., Garanina, T., Sáenz, J., Aramburu, N., & Kianto, A. (2021). Does country environment matter in the relationship between intellectual capital and innovation performance? Journal of Business Research, 136, 263–273. https://doi.org/10.1016/j.jbusres.2021.07.038

9) Annosi, M. C., Casprini, E., Martini, A., & Ramón Torres, J. G. (2021). Post-acquisition knowledge management practices for exploration and exploitation: insights from a food service organization. Journal of Knowledge Management, 25(11), 129–148. https://doi.org/10.1108/JKM-10-2020-0784

10) Candraningrat, I. R., Abundanti, N., Mujiati, N. W., Erlangga, R., & Jhuniantara, I. M. G. (2021). The role of financial technology on development of MSMEs. Accounting, 7(1), 225–230. https://doi.org/10.5267/j.ac.2020.9.014

11) Caniëls, M. C. J., & Veld, M. (2019). Employee ambidexterity, high performance work systems and innovative work behaviour: How much balance do we need? International Journal of Human Resource Management, 30(4), 565–585. https://doi.org/10.1080/09585192.2016.1216881

12) Cannaerts, N., Segers, J., & Henderickx, E. (2016). Ambidextrous design and public organizations: a comparative case study. International Journal of Public Sector Management, 29(7), 708–724. https://doi.org/10.1108/IJPSM-12-2015-0210

13) Cenamor, J., Parida, V., & Wincent, J. (2019). How entrepreneurial SMEs compete through digital platforms: The roles of digital platform capability, network capability and ambidexterity. Journal of Business Research, 100(March), 196–206. https://doi.org/10.1016/j.jbusres.2019.03.035

14) Cenamor, J., Parida, V., Wincent, J., Stubner, S., Blarr, W. H., Brands, C., Wulf, T., Parida, V., Lahti, T., Wincent, J., Lubatkin, M. H., Simsek, Z., Ling, Y., Veiga, J. F., Josephson, B. W., Johnson, J. L., Mariadoss, B. J., Herzallah, A., Gutierrez-Gutierrez, L. J., ... Voss, Z. G. (2020). Ambidexterity and Public Organizations: A Configurational Perspective. Public Performance and Management Review, 30(4), 688–712. https://doi.org/10.1080/15309576.2019.1676272

15) Chang, C.-Y., Chang, Y.-Y., Tsao, Y.-C., & Kraus, S. (2022). The power of knowledge management: how top management team bricolage boosts ambidexterity and performance. Journal of Knowledge Management, 26(11), 188–213. https://doi.org/10.1108/jkm-10-2021-0753

16) Chin, W. W. (2010). How to write up and report PLS analyses. In Handbook of Partial Least Squares (pp. 188–194). https://doi.org/10.1007/978-3-540-32827-8_29

17) Choi, T., & Chandler, S. M. (2015). Exploration, Exploitation, and Public Sector Innovation: An Organizational Learning Perspective for the Public Sector. Human Service Organizations: Management, Leadership & Governance, 39(2), 139–151. https://doi.org/10.1080/23303131.2015.1011762

18) Chowdhury, M., Prayag, G., Orchiston, C., & Spector, S. (2019). Postdisaster Social Capital, Adaptive Resilience and Business Performance of Tourism Organizations in Christchurch, New Zealand. Journal of Travel Research, 58(7), 1209– 1226. https://doi.org/10.1177/0047287518794319

19) de Ruyter, K., Keeling, D. I., & Yu, T. (2020). Service-Sales Ambidexterity: Evidence, Practice, and Opportunities for Future Research. Journal of Service Research, 23(1), 13–21. https://doi.org/10.1177/1094670519878880

20) Doblinger, C., Wales, W., & Zimmermann, A. (2022). Stemming the downturn: How ambidexterity and public policy influence firm performance stability during economic crises. European Management Journal, 40(2), 163–174. https://doi.org/10.1016/j.emj.2021.06.002

21) Dominguez, N., & Mayrhofer, U. (2017). Internationalization stages of traditional SMEs: Increasing, decreasing and re- increasing commitment to foreign markets. International Business Review, 26(6), 1051–1063. https://doi.org/https://doi.org/10.1016/j.ibusrev.2017.03.010

22) Dranev, Y., Izosimova, A., & Meissner, D. (2020). Organizational Ambidexterity and Performance: Assessment Approaches and Empirical Evidence. Journal of the Knowledge Economy, 11(2), 676–691. https://doi.org/10.1007/s13132-018-0560- y

23) Ferreras-Méndez, J. L., Llopis, O., & Alegre, J. (2022). Speeding up new product development through entrepreneurial orientation in SMEs: The moderating role of ambidexterity. Industrial Marketing Management, 102(February), 240–251. https://doi.org/10.1016/j.indmarman.2022.01.015

24) Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104

25) Gamage, S. K. N., Ekanayake, E. M. S., Abeyrathne, G. A. K. N. J., Prasanna, R. P. I. R., Jayasundara, J. M. S. B., & Rajapakshe, P. S. K. (2020). A review of global challenges and survival strategies of small and medium enterprises (SMEs). Economies, 8(4). https://doi.org/10.3390/ECONOMIES8040079

26) Gasda, J. M., & Fueglistaller, U. (2016). Fostering individual-level ambidexterity in SMEs: A relational-contract perspective on informal external drivers of employees’ ambidextrous behavior. International Journal of Entrepreneurial Venturing, 8(3), 217–236. https://doi.org/10.1504/IJEV.2016.078963

27) Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Badan Penerbit Universitas Diponegoro. 28) Gieske, H., George, B., van Meerkerk, I., & van Buuren, A. (2020). Innovating and optimizing in public organizations: does more become less? Public Management Review, 22(4), 475–497. https://doi.org/10.1080/14719037.2019.1588356

29) Giotopoulos, I., Kontolaimou, A., Korra, E., & Tsakanikas, A. (2017). What drives ICT adoption by SMEs? Evidence from a large-scale survey in Greece. Journal of Business Research, 81, 60–69.
https://doi.org/https://doi.org/10.1016/j.jbusres.2017.08.007

30) Giovannetti, M., Cardinali, S., & Sharma, P. (2020). Sales technology and salespeople’s ambidexterity: an ecosystem approach. Journal of Business and Industrial Marketing, 36(4), 615–629. https://doi.org/10.1108/JBIM-01-2020-0034

31) Hair, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. . (2014). Partial least squares structural equation modeling (PLS- SEM). European Business Review2, 26(2), 106–121.

32) Hasan, F. S. M. A., & Almubarak, M. M. S. (2016). Factors influencing women entrepreneurs’ performance in SMEs. World Journal of Entrepreneurship, Management and Sustainable Development, 12(2).
https://doi.org/10.1108/WJEMSD-09- 2015-0037

33) He, X., Wu, X., Croasdell, D., & Zhao, Y. (2022). Dynamic capability, ambidexterity and social network—empirical evidence from SMEs in China. Journal of Small Business and Enterprise Development. https://doi.org/10.1108/JSBED-05-2020-0181

34) Herzallah, A., Gutierrez-Gutierrez, L. J., & Munoz Rosas, J. F. (2017). Quality ambidexterity, competitive strategies, and financial performance: An empirical study in industrial firms. International Journal of Operations and Production Management, 37(10), 1496–1519. https://doi.org/10.1108/IJOPM-01-2016-0053

35) Isichei, E. E., Emmanuel Agbaeze, K., & Odiba, M. O. (2020). Entrepreneurial orientation and performance in SMEs. International Journal of Emerging Markets, 15(6), 1219–1241. https://doi.org/10.1108/IJOEM-08-2019-0671

36) Kortmann, S., Gelhard, C., Zimmermann, C., & Piller, F. T. (2014). Linking strategic flexibility and operational efficiency: The mediating role of ambidextrous operational capabilities. Journal of Operations Management, 32(7–8), 475–490. https://doi.org/10.1016/j.jom.2014.09.007

37) Leong, C. K., & Yang, Y. C. (2020). Market competition and firms’ social performance. Economic Modelling, 91, 601–612. https://doi.org/https://doi.org/10.1016/j.econmod.2019.12.002

38) Li, W., Liu, K., Belitski, M., Ghobadian, A., & O’Regan, N. (2016). e-Leadership through strategic alignment: An empirical study of small- and medium-sized enterprises in the digital age. Journal of Information Technology, 31(2), 185–206. https://doi.org/10.1057/jit.2016.10

39) Magnusson, J., Koutsikouri, D., & Päivärinta, T. (2020). Efficiency creep and shadow innovation: enacting ambidextrous IT Governance in the public sector. European Journal of Information Systems, 29(4), 329–349. https://doi.org/10.1080/0960085X.2020.1740617

40) Maine, J., Florin Samuelsson, E., & Uman, T. (2022). Ambidextrous sustainability, organisational structure and performance in hybrid organisations. Accounting, Auditing and Accountability Journal, 35(3), 734–769. https://doi.org/10.1108/AAAJ-12-2019-4338

41) Mascareño, J., Rietzschel, E. F., & Wisse, B. (2021). Ambidextrous leadership: opening and closing leader behaviours to facilitate idea generation, idea promotion and idea realization. European Journal of Work and Organizational Psychology, 30(4), 530–540. https://doi.org/10.1080/1359432X.2021.1872544

42) Mu, T., van Riel, A., & Schouteten, R. (2022). Individual ambidexterity in SMEs: Towards a typology aligning the concept, antecedents and outcomes. Journal of Small Business Management, 60(2), 347–378. https://doi.org/10.1080/00472778.2019.1709642

43) Naradda Gamage, S. K., Ekanayake, E. M. S., Abeyrathne, G., Prasanna, R., Jayasundara, J., & Rajapakshe, P. S. K. (2020). A Review of Global Challenges and Survival Strategies of Small and Medium Enterprises (SMEs). In Economies (Vol. 8, Issue 4). https://doi.org/10.3390/economies8040079

44) Nguyen, T. T., Mia, L., Winata, L., & Chong, V. K. (2017). Effect of transformational-leadership style and management control system on managerial performance. Journal of Business Research, 70, 202–213.
https://doi.org/https://doi.org/10.1016/j.jbusres.2016.08.018

45) Nurwendi, W., & Haryadi, D. (2022). Peran Ambidexterity Organisasi Sebagai Variabel Intervening Dalam Meningkatkan Kinerja Pemasaran UMKM Di Masa Covid-19. IQTISHADUNA: Jurnal Ilmiah Ekonomi Kita, 11(1), 47–64. https://doi.org/10.46367/iqtishaduna.v11i1.513

46) Page, S. B., Bryson, J. M., Crosby, B. C., Seo, D., & Stone, M. M. (2021). Ambidexterity in Cross-Sector Collaborations Involving Public Organizations. Public Performance and Management Review, 44(6), 1161–1190. https://doi.org/10.1080/15309576.2021.1937243

47) Parida, V., Patel, P. C., Wincent, J., & Kohtamäki, M. (2016). Network partner diversity, network capability, and sales growth in small firms. Journal of Business Research, 69(6), 2113–2117.
https://doi.org/https://doi.org/10.1016/j.jbusres.2015.12.017

48) Prasanna, R., Jayasundara, J., Naradda Gamage, S. K., Ekanayake, E. M. S., Rajapakshe, P. S. K., & Abeyrathne, G. (2019). Sustainability of SMEs in the Competition: A Systemic Review on Technological Challenges and SME Performance. Journal of Open Innovation: Technology, Market, and Complexity, 5(4). https://doi.org/10.3390/joitmc5040100

49) Rey-Biel, P., Sheremeta, R., & Uler, N. (2018). When Income Depends on Performance and Luck: The Effects of Culture and Information on Giving. In Experimental Economics and Culture (Vol. 20, pp. 167–203). Emerald Publishing Limited. https://doi.org/10.1108/S0193-230620180000020006

50) Sahi, G. K., Gupta, M. C., & Cheng, T. C. E. (2020). The effects of strategic orientation on operational ambidexterity: A study of indian SMEs in the industry 4.0 era. International Journal of Production Economics, 220. https://doi.org/10.1016/j.ijpe.2019.05.014

51) Şener, S., Savrul, M., & Aydın, O. (2014). Structure of Small and Medium-Sized Enterprises in Turkey and Global Competitiveness Strategies. Procedia - Social and Behavioral Sciences, 150, 212–221. https://doi.org/https://doi.org/10.1016/j.sbspro.2014.09.119

52) Severgnini, E., Vieira, V. A., & Cardoza Galdamez, E. V. (2018). The indirect effects of performance measurement system and organizational ambidexterity on performance. Business Process Management Journal, 24(5), 1176–1199. https://doi.org/10.1108/BPMJ-06-2017-0159

53) Solano Acosta, A., Herrero Crespo, Á., & Collado Agudo, J. (2018). Effect of market orientation, network capability and entrepreneurial orientation on international performance of small and medium enterprises (SMEs). International Business Review, 27(6), 1128–1140. https://doi.org/https://doi.org/10.1016/j.ibusrev.2018.04.004

54) Solís-Molina, M., Hernández-Espallardo, M., & Rodríguez-Orejuela, A. (2018). Performance implications of organizational ambidexterity versus specialization in exploitation or exploration: The role of absorptive capacity. Journal of Business Research, 91, 181–194. https://doi.org/https://doi.org/10.1016/j.jbusres.2018.06.001

55) Soriano, D. R., & Castrogiovanni, G. J. (2012). The impact of education, experience and inner circle advisors on SME performance: insights from a study of public development centers. Small Business Economics, 38(3), 333–349. https://doi.org/10.1007/s11187-010-9278-3

56) Sudarti, K., Fachrunnisa, O., Nurhidayati, N., & Adhiatma, A. (2019). The Role of Organizational Ambidexterity to Increase Innovation Speed And Marketing Performance of SMEs. Fokus Ekonomi : Jurnal Ilmiah Ekonomi, 14(2), 250–268. https://doi.org/10.34152/fe.14.2.250-268

57) Sugiyono. (2019). Metode Penelitian Kuantitatif, Kualitatif dan R&D. Bandung:Alfabeta.

58) Sung, C.-Y., Kim, K.-C., & In, S. (2016). Small and medium-sized enterprises policy in Korea from the 1960s to the 2000s and beyond. Small Enterprise Research, 23(3), 262–275. https://doi.org/10.1080/13215906.2016.1269665

59) Tsai, H. T., & Ren, S. (2019). Antecedents of strategic ambidexterity in the context of internationalisation: a panel study of Taiwan Small and median-sized enterprises. Technology Analysis and Strategic Management, 31(8), 986–1001. https://doi.org/10.1080/09537325.2019.1582764

60) Voss, G. B., & Voss, Z. G. (2013). Strategic ambidexterity in small and medium-sized enterprises: Implementing exploration and exploitation in product and market domains. Organization Science, 24(5), 1459–1477. https://doi.org/10.1287/orsc.1120.0790

61) Wang, C., & Hu, Q. (2020). Knowledge sharing in supply chain networks: Effects of collaborative innovation activities and capability on innovation performance. Technovation, 94–95, 102010.
https://doi.org/https://doi.org/10.1016/j.technovation.2017.12.002

62) Yu, T., Patterson, P. G., & de Ruyter, K. (2012). Achieving Service-Sales Ambidexterity. Journal of Service Research, 16(1), 52–66. https://doi.org/10.1177/1094670512453878

63) Yunis, M., Tarhini, A., & Kassar, A. (2018). The role of ICT and innovation in enhancing organizational performance: The catalysing effect of corporate entrepreneurship. Journal of Business Research, 88, 344–356. https://doi.org/https://doi.org/10.1016/j.jbusres.2017.12.030