The Role of Ambidexterity in Managing Buyer-Supplier Relationships: The Toyota Case

Abstract

Most ambidexterity theories deal with managing exploration-exploitation trade-offs among business units within firms or between alliance partners, but these theories remain yet to be extended to the buyer-supplier relationship level. Through an in-depth case study of the Toyota Motor Corporation, we illustrate how buying firms can simultaneously achieve short-term and long-term benefits with their long-standing suppliers. Taking two inherently different activities as a starting point-mass production with its focus on exploitation and product development with its focus on exploration-we show that the deliberate use of ambiguity and explicitness can function as a countervailing mechanism against overemphasizing either exploration or exploitation. We also show that structural separation and structural integration are two organizational systems that can be used by buying firms to help suppliers realize ambidexterity in their operations. Finally, we argue that "requisite security" can help to motivate suppliers to address the paradoxical tensions deliberately created by buying firms.