The Impact of Top Management Team’s Innovation Orientation on Organizational Ambidexterity in Transitional Economies: Evidence from Bosnia and Herzegovina

Organizational ambidexterity plays an essential role in understanding how firms compete and prosper in dynamic environments. However, our understanding of the antecedents and effects of organizational ambidexterity is primarily derived from studies conducted in developed economies, while transitional economies with their unique characteristics and challenges are less well understood. Grounded in upper echelon theory, this paper contends that the innovation orientation of a firm’s top management team (TMT) impacts organizational ambidexterity and firm performance. Drawing on a dataset of 192 small and medium-sized companies from Bosnia and Herzegovina, and estimating several OLS regressions, we find evidence that TMT’s innovation orientation negatively impacts firm performance in transitional economies. Further, we see that the impact of the TMT’s innovation orientation on the balance dimension of organizational ambidexterity is inverted U-shaped. Organizational innovation culture leverages this relation. Intriguingly, we found that in transitional economies, organizational ambidexterity was not correlated with firm performance, but its components exploration and exploitation were, albeit in opposite directions. Overall, our work ads nuanced insights to the antecedents and effects of organizational ambidexterity in transitional economies.