Boards of directors and organizational ambidexterity in knowledge-intensive firms: Evidence from the UK Pharmaceutical Industry

We examine the relation between boards of directors’ knowledge heterogeneity and organizational ambidexterity (OA) (i.e. simultaneous exploration and exploitation) in knowledge-intensive firms (KIFs). Although the literature on OA has started to emphasize its antecedents, the role of the board remains unaddressed. This is an important omission, as boards have become increasingly involved in strategy-making. In turn, studies on boards have looked at their influence on either exploration- or exploitation-type strategies. Yet, KIFs particularly need to balance both exploration and exploitation to renew their knowledge base. We draw on knowledge-based perspectives to disentangle the benefits and costs of board knowledge heterogeneity for driving OA in KIFs. Our empirical analysis based on a longitudinal panel of UK pharmaceutical firms provides support for our hypothesized U-shaped relation. Our findings suggest that the benefits of knowledge heterogeneity only outweigh the costs beyond a particular threshold. Overall, our theoretical approach and allied findings advance the literature by introducing boundary conditions to the resource provision role of boards in KIFs. We discuss contributions for organizational learning, strategic leadership, and human resource management. We conclude with implications for theory and practice, as well as key opportunities for future research.