The role of a local network in achieving contextual ambidexterity in foreign subsidiaries operating in Brazil – a multi-level analysis

Abstract

Purpose This study aims to examine how knowledge acquired from a network built on trust and commitment can increase the management team’s effectiveness (MTE) in implementing an ambidextrous subsidiary. Design/methodology/approach An online survey was conducted with top managers of foreign subsidiaries operating in Brazil. A total of 289 valid respondents were statistically evaluated using the partial least squares-structural equation modeling technique to test the model and hypotheses. A multilevel analysis research methodology was applied because the conceptual model relates constructs at the micro (political behavior and management team effectiveness) and macro (improved external ties [IET] and contextual ambidexterity [CA]) levels. Findings Subsidiaries need to improve the MTE to achieve CA. The authors found that the local network built on trust and commitment facilitates access to differentiated knowledge. Unique knowledge reduces conflicts amongst team members and enhances explorative and exploitative activities to reach CA. Practical implications The authors suggest that top managers can increase decision-making effectiveness by using trust and commitment to building a robust local network with selected stakeholders. Privileged knowledge allows attaining constructive political behavior (PB) and leverages exploitative and explorative activities. Originality/value The novelty resides in three aspects. First refers to linking CA and foreign subsidiaries in Brazil. Second, suggesting that IET has a double effect, as a moderator between PB and MTE, and concurrently has a direct effect on CA. Third, suggesting that capturing valuable resources from a local network built on the pillars of trust and commitment. Fourth, the authors examine the influence of differentiated knowledge on MTE.