Juggling Information Technology (IT) Exploration and Exploitation: A Proportional Balance View of IT Ambidexterity

Firms in the digital age often do not know whether they should focus on exploiting their existing information technology (IT) resources or focus on exploring novel IT resources. They are often told to maintain a perfect balance between IT exploitation and IT exploration. In this study, we show that firms do not need to have the same levels of IT exploitation and exploration simultaneously to improve organizational agility. IT ambidexterity can be achieved by proportional balance between IT exploitation and exploration without forcing the perfect balance between the two. With finite resources, the maximal agility is not associated the perfect balance between IT exploitation and exploration; instead, it is associated with the proportional balance between IT exploitation and exploration, and the optimal proportional balance could vary based on the firm’s total resources allocated for IT ambidexterity. Our findings on proportional balance between IT exploitation and exploration could profoundly influence how firms make IT investment decisions. Rather than pursuing a perfect balance between IT exploitation and IT exploration, firms should consider both their organizational characteristics and environmental conditions to identify optimal levels of proportional balance between the two. The current information systems (IS) literature treats information technology (IT) ambidexterity as a single aggregated construct, assuming perfect balance or simultaneously strong IT exploration and exploitation. Taking a different perspective, we propose that IT ambidexterity can be achieved through a proportional balance between its two dimensions, and the optimal balance depends on the specific context. Based on matched-pair data from a field survey of business and IT executives, we find a three-way interaction among environmental dynamism, IT exploration, and IT exploitation such that IT ambidexterity matters only in dynamic environments. More important, through polynomial regression and response surface analysis, we find that the proportionally balanced, rather than the perfectly balanced, combinations of IT exploitation and exploration maximize organizational agility. We further demonstrate how the effect of proportional balance of IT ambidexterity varies in stable and dynamic environments. This study offers a novel understanding: IT exploration and IT exploitation do not need to be equally strong to improve agility, and their proportional balance associated with maximal agi