Authors contributed equally.
How do young firms manage product portfolio complexity? The role of absorptive capacity and ambidexterity
Article first published online: 30 MAY 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 33, Issue 13, pages 1516–1539, December 2012
How to Cite
Fernhaber, S. A. and Patel, P. C. (2012), How do young firms manage product portfolio complexity? The role of absorptive capacity and ambidexterity. Strat. Mgmt. J., 33: 1516–1539. doi: 10.1002/smj.1994
- Issue published online: 22 OCT 2012
- Article first published online: 30 MAY 2012
- Accepted manuscript online: 17 MAY 2012 09:21AM EST
- Manuscript Revised: 15 MAY 2012
- Manuscript Received: 30 JUL 2010
- product portfolio complexity;
- absorptive capacity;
- organizational learning
Building a complex portfolio of products can be beneficial for young firms due to increased sales growth and competitiveness. Yet, the benefits from product portfolio complexity (PPC) are often outweighed by rising costs, leading to an inverted U-shaped relationship between PPC and performance. Recent research has called for an increased understanding of how firms are able to better manage higher levels of PPC. We suggest that absorptive capacity and ambidexterity are vital to enhancing the benefits and mitigating the costs of increasing PPC. Using a sample of 215 young high technology firms, we find support for positive moderating effects of absorptive capacity and ambidexterity on the inverted U-shaped relationship between PPC and firm performance. Copyright © 2012 John Wiley & Sons, Ltd.