Surviving Industry Convergence: Ambidexterity via Internal Development, Alliances and Acquisitions

Abstract

Industry convergence (IC), the blurring of boundaries between previously separate industries, is a pervasive phenomenon. The emergence of new products, resources and competitors as a result of IC poses a threat to firm survival. Importantly, IC differs from other contexts of technological change that bear their origin in an emerging technology that may substitute or make obsolete an existing technology. Yet, little is known about how firms may survive IC. We theorize that the degrees to which firms explore or exploit using their growth modes (i.e. internal development, alliances and acquisitions) by emphasizing an ambidextrous posture may affect their likelihood of survival. We hypothesize that a high degree of exploration in internal development and alliances and a high degree of exploitation in acquisitions positively affect the likelihood of firm survival. Our hypotheses received strong support in a sample of 231 firms from a period of IC between the telecommunication equipment and data networking industries between 1989 and 2003. Our study opens a new research frontier on IC by proposing a novel theoretical approach based on examining the ambidexterity within and across growth modes to better understand firm outcomes during IC. It also contributes to research on growth modes.