The impact of dynamic ambidexterity on the performance of organizations: Evidence from corporate venture capital investing in North America.

• CVC firms develop additional expertise in pursuing both exploitation and exploration activities. • Dynamic sequential ambidexterity increases firm performance. • Simultaneous ambidexterity in CVC investing increases firm performance in times of crisis. • The frequency of changing both exploitative and explorative activities increases firm performance. • The interaction between balanced and simultaneous ambidexterity reinforces firm performance. The purpose of this paper is to study the evolution of corporate investors' exploitation-exploration allocations and their long-term performance outcomes. The sample consists of 243 North American firms pursuing corporate venture capital (CVC) investments from 1993 to 2017. The results show that dynamic sequential ambidexterity promotes higher firm performance than balanced or simultaneous forms of ambidexterity. Alternating pursuit of exploitation and exploration characterized by a regular frequency of change over time enhances corporate investors' financial performance. The results suggest that CVC firms develop additional expertise in pursuing both exploitation and exploration activities over time which helps to enhance their performance. The findings also show that in times of crisis, the combined use of both exploration and exploitation in CVC investments enables firms to enhance their financial performance. The results are robust to alternative measures of financial performance and to endogeneity concerns. This paper provides insights to policymakers and managers of firms that are investing in CVC activities. [ABSTRACT FROM AUTHOR]