Managing organizational identity in the e-commerce industry: An ambidexterity perspective

Information & Management 50 (2013) 673–683

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Information & Management journal homepage: www.elsevier.com/locate/im

Managing organizational identity in the e-commerce industry: An ambidexterity perspective Zheng Wang *, Jinsong Huang, Barney Tan National University of Singapore, Information Systems, 13 Computing Drive, Singapore, Singapore

A R T I C L E I N F O

A B S T R A C T

Article history: Received 5 September 2012 Received in revised form 31 December 2012 Accepted 7 May 2013

In the e-commerce industry, organizations should maintain an enduring and stable organizational identity to gain long-term success while also adapting quickly to the increasingly volatile environment in order to ensure profitability and survival. These ongoing paradoxical challenges concerning the management of organizational identity have been left unaddressed in existing literature. Drawing upon the literature related to organizational ambidexterity and organizational identity, this paper proposes two theoretical frameworks for systematically examining the ways in which organizations, especially those in the e-commerce industry, should manage their organizational identities by leveraging four balancing forms of organizational ambidexterity. Based on these two models, we comprehensively analyzed the case of D.com, which is China’s most successful online ticket vendor. Our study not only contributes to the field of knowledge surrounding organizational identity and ambidexterity but also provides a detailed means for practitioners to manage organizational identities at both the strategic and operational levels within the e-commerce industry. ß 2013 Elsevier B.V. All rights reserved.

Keywords: Organizational identity Ambidexterity E-commerce Case study

1. Introduction Extensive research has been conducted in the area of organizational identity over the past 50 years [5,19,22]. Organizational identity has been defined as the enduring characteristic of an organization that maintains its the distinctiveness and uniqueness [2]. The majority of existing studies have focused on exploring the significance and construction of organizational identity and the means by which an organization may generate identity change [22,8,12,63]. Despite the great interest in organizational identity demonstrated through this research, we found that few studies examined the ways in which an organization may manage organizational identity in the wake of business expansion, given that organizations have consistently sought to continue business expansion practices that may cause identity changes for organizations [8]. In the e-commerce industry, such expansion is more frequent and rapid due to the volatile and fast-changing environment to which firms must constantly adapt in order to survive [40]. As a result, e-commerce firms are increasingly pressed to manage their organizational identities under such environmental conditions. More importantly, e-commerce transactions have grown dramatically in recent years, and this growth is expected to continue, as e-

* Corresponding author. Tel.: +65 9858 5816. E-mail address: [email protected] (Z. Wang). 0378-7206/$ – see front matter ß 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.im.2013.05.002

commerce transactions are likely to soon be characterized by double-digit annual growth rates [25]. In 2007, business-toconsumer (B2C) e-commerce and online retail sales in the United States reached $175 billion and were projected to grow to $335 billion by the end of 2012 [44]. Therefore, it is even more important for e-commerce organizations to manage their organizational identities in this type of fast-changing environment in which business expansion happens frequently. Despite this urgency, however, some organizations in the ecommerce industry have failed to manage their organizational identities [53]. This phenomenon has two primary causes. First, the rapid growth of e-commerce requires that organizations constantly expand their business into multiple areas. In this context, environmental characteristics change quickly and may not be easily grasped by insiders and outside constituents, and these organizations may consequently find it difficult to manage organizational identity [2,63]. In this way, the issue of identity ambiguity associated with organizational identity can blur the business objectives of these organizations [8]. Second, when adopting an e-commerce model, additional effort and dedication on the part of the organization are required to establish customer trust and to further manage organizational identity in response to the nature of e-commerce, which separates an organization from its customers by a spatial boundary [9]. Therefore, organizations in the e-commerce industry have faced ongoing challenges in adapting to the need for rapid business expansions (i.e., profitability) while also managing to gain a

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well-established organizational identity (i.e., sustainability). Thus, this paper aims to uncover the process of managing organizational identities in the e-commerce industry and to identify the important challenges that often accompany this process. We argue that organizations in the e-commerce industry must possess ambidextrous capabilities to balance profitability and sustainability. Ambidextrous organizations are ‘‘capable of simultaneous, yet contradictory, knowledge management processes, exploiting current competencies and exploring new domains with equal dexterity.’’ ([3], 696 pp.) Placing more importance on one factor over another tends to have serious consequences for organizations. For example, Symbian, a mobile operating system developer, specialized in the design of computing platforms for mobile phones. Before June 2008, Symbian had established partnerships with a wide range of mobile phone companies, including Panasonic, Nokia and Sony Ericsson, and it had managed to stay profitable for a very long period. However, due to the company’s profit-driven initiative and lack of strategies for managing its organizational identities (i.e., few customers were made aware of Symbian), Symbian began to fade from the market when the BlackBerry and the iPhone entered the market and projected strong identities to their employees and customers. Therefore, organizations must possess ambidexterity to adequately manage these two conditions well. Given the limited research related to managing organizational identities in the wake of the business expansion that has been considered a common phenomenon in e-commerce industry, our research question is as follows: How may organizations in the e-commerce industry manage organizational identity through ambidexterity? 2. Theoretical background 2.1. Organizational identity Organizational identity is commonly defined as an organization’s members’ collective understanding of the characteristics presumed to be central, permanent and distinctive to the organization [2]. ‘‘An organization’s members’’ refers to insiders and outside constituents [31]. Prior studies break down organizational identity into the categories of internal identity and external identity [63]. Internal identity answers the questions ‘‘Who are we?’’ and ‘‘What kind of business are we in?’’ Conversely, external identity captures how outsiders to the organization, such as institutional actors, customers and suppliers, perceive the organization [63,23]. However, it is possible to discover similarities between organizational identities and other organizational concepts, such as organizational reputation. Therefore, considerable portion of the literature is devoted to distinguishing the differences among organizational identity, image and reputation (see Table 1) [23,11]. 2.2. The paradox of managing organizational identity The bulk of the existing literature conceptualizes organizational identity as a potentially stable and enduring notion [5,2]. However,

in recent years, an increasing number of studies have proposed that organizational identity should function as an unstable and precarious concept that changes according to the dynamic environment in which the organization operates [8,63,23]. These perspectives lead to provocative implications that emphasize the paradox concerning the relationship between organizations and their operating environments. On the one hand, organizations must maintain an enduring and stable identity to gain long-term success [2]. On the other hand, organizations must possess the ability to adapt quickly to an increasingly volatile environment to ensure profitability and survival [23,4], which may cause organizations to change their organizational identities. Organizations must maintain an enduring identity while remaining profitable by constantly using an adaptive identity to adjust to the changing environment [23]. Prior studies referred to adaptive identity as an identity that possesses a degree of continuity but differs from enduring identity, which implies that organizational identity remains the same. The idea of an identity having continuity emphasizes the organization’s attainment of core beliefs and values that endure over time [23]. Additionally, this type of identity change implies some type of process. Albert and Whetten [2] acknowledged that identity could change through a sluggish process over long periods of time, whereas Corley and Gioia [8] suggested that identity change could be rapid, such as spin-offs. However, given today’s turbulent e-commerce environment, frequent organizational identity change to maintain survival and profitability would likely damage the long-term success and sustainability of an organization [8,63,23]. As a result, organizations may seek alternatives to produce optimal outcomes. This is a common phenomenon in practice, and although Gioia et al. [23] argued that the management of the interrelationships between identity and image allows the organization to adapt to changes, this topic has not received sufficient attention in academia. The paradox between maintaining organizational identity and adaptability to an organization’s environment persists throughout the literature. Therefore, the purpose of this paper is to fill this literature gap by proposing the use of ambidextrous capability to resolve such paradoxes. As previously mentioned, environmental changes are dramatic in the e-commerce industry because technology development occurs at a rapid pace. Under such conditions, organizations must swiftly adapt to the new technological environment to remain competitive in the industry [47,59]. As such, it is imperative that the paradox an organization faces between maintaining organizational identity and adapting to its environment is resolved (refer to Fig. 1). More importantly, an increasing number of organizations are pursuing omni-channel retailing and actively jumping on the e-commerce bandwagon [58]. Therefore, by examining the case of an organization within the e-commerce industry, this paper proposes a theoretical framework for managing organizational identity while maximizing the profitability of the organization by adapting to its changing environment. We will introduce ambidextrous capability as an important concept that will assist us in achieving our goal of resolving the paradoxical issues presented here.

Table 1 Comparison of organizational concepts. Forms

Definitions

Examples from the literature

Organizational Identity Organizational Image Organizational Reputation

Enduring characteristics of an organization that maintain distinctiveness and uniqueness. The manner in which an organization’s members believe others view the organization Stable, collective judgments by outsiders regarding an organization’s actions and achievements

[2,12] [11,22] [18,17]

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Profitability

Sustainability

Balancing

Ambidextrous Capability Fig. 1. Major paradox in e-commerce firms.

2.3. Ambidextrous capability Organizations are constantly confronted by paradoxical challenges related to the exploitation of existing competencies and the exploration of new opportunities [32]. The pursuit of such paradoxical demands by an organization is known as organizational ambidexterity [26]. Prior studies have provided various definitions of organizational ambidexterity (Table 2). Because this paper focuses on investigating ambidexterity at the organizational level, we have adopted the original definition from Tushman and O’Reilly [64]. These paradoxical demands have been studied in various streams of literature [55], including those related to technological innovation [64], organizational learning [41], strategic management [6] and inter-organizational relationships [62]. However, to the best of our knowledge, no research has applied the concept of organizational ambidexterity to organizational identity, which has been increasingly considered a concept essential to an organization’s long-term success [23]. In response, we sought to investigate how to manage organizational identity in the e-commerce industry using ambidextrous capabilities.

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set of processes or systems that enable and encourage individuals to make their own judgments about how to divide their time between conflicting demands for alignment and adaptability rather than by creating dual structures.’’ ([57], 3 pp.). These two forms of ambidexterity represent two distinct approaches to balancing exploration and exploitation [64,56], namely, bottom-up and top-down approaches. However, managing organizational identity may be practiced by an organization in the ecommerce industry through the combined use of these two approaches, balancing exploration and exploitation. Therefore, we have applied structural and contextual ambidexterity at the organizational level as our theoretical lens throughout our research. 2.6. Ambidexterity in managing organizational identity

Among the various types of organizational ambidexterity, two in particular receive a large amount of attention in the current literature: (a) contextual ambidexterity and (b) structural ambidexterity [21]. Structural ambidexterity requires an organization to create separate business units within the organization, each with a separate specialization and unique capabilities [21,49]. At the same time, the top management team must ensure coordination between these two units. For example, an organization’s management must ensure that innovations originating from the explorative unit may be managed and fully utilized by the exploitative unit. Organizations with this structure are considered to have an ambidextrous organizational form [46].

To manage organizational identity in the e-commerce industry, organizations face a paradox between sustainability and profitability. On the one hand, the e-commerce industry requires profitability due to rapid advancement of technologies, which also challenges existing organizational identities. On the other hand, organizations within the industry need to manage their identities to be stable, rigorous and disciplinary, making it necessary to sustain existing organizational identities to ensure long-term sustainability. These paradoxical challenges reflect the notion of contextual ambidexterity [21]. Prior to the implementation of contextual ambidexterity, we propose that organizations in the ecommerce industry adopt structural ambidexterity. This will allow the organization to clearly separate two business units in a manner that will allow each unit to attain its respective capabilities within a concentrated technological domain and in a timely manner. Although recent literature on organizational ambidexterity identifies paradoxical challenges in many contexts, to the best of our knowledge, ambidexterity in managing organizational identity within the context of the e-commerce industry has yet to be thoroughly studied. We address this gap by examining how organizations in e-commerce manage organizational identity by balancing these paradoxical challenges. The following three concepts were identified during our literature review and guided our data collection and analysis: (1) Paradoxical challenges: The challenges posed by sustainability and profitability in e-commerce industry; (2) Structural ambidexterity: The creation of ‘‘dual structures’’ to separate conflicting demands into responsibilities of different organizational units; and (3) Contextual ambidexterity: The capability to pursue paradoxical challenges simultaneously.

2.5. Contextual ambidexterity

2.7. Research methodology

Contextual ambidexterity requires the organization to achieve ambidexterity among individual employees within a business unit [21]. Specifically, employees within a business unit are required to achieve common goals while also quickly changing in response to dynamic market conditions, which reflects the trade-offs between alignment and adaptability that an organization often faces [50,57]. ‘‘[Contextual ambidexterity] is achieved by building a

We adopted a case study design because our study was exploratory rather than confirmatory [65]. The lack of a systematic framework for understanding ambidexterity in managing organizational identity prompts the use of the case study approach to conduct an inductive analysis [13]. Qualitative methods enable researchers to delve into the complexity of problems in organizational development, resulting in richer and more informative

2.4. Structural ambidexterity

Table 2 Various definitions of ambidexterity. Terms

Definitions

Literature sources

Ambidextrous Organizations

Organizations with the ability to simultaneously pursue both incremental and discontinuous innovation and change

[64]

Ambidextrous Business Units Ambidextrous Capabilities

Units with the ability to produce high-level exploratory and exploitative innovations Contextual: Behavioral capacity to simultaneously pursue conflicting demands Structure: The creation of ‘‘dual structures’’ to separate conflicting demands into responsibilities for different organizational units

[32] [21,57] [21]

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conclusions [65]. Because we examined a complex, multi-faceted phenomenon that is deeply embedded in an organizational context, our case study research met the criteria for qualitative methodology. Our qualitative study follows the SPS research method [48], which systemically provides guidelines that serve as our research philosophy from theoretical background to framework proposition. This philosophy guided our framework for analyzing the phenomenon that is central to the study. Our study is exploratory in that it focuses on theory building, which is based on adoption of elements from prior theory that might be of ‘‘great help in focusing research efforts at the outset of the project’’ [52]. 2.8. Site selection To select the most suitable case for the purpose of our research, we used three selection criteria. First, the case organization must have maintained sustainable organizational identity in the ecommerce industry. Second, the case organization should have demonstrated an adequate level of ambidexterity in managing organizational identity. Third, there should have been evidence that the organization faced paradoxical challenges between adaptability and sustainability. According to these criteria, D.com was the organization selected as the subject of our case study. D.com was established in 1999 and has grown into the largest online ticket vendor in China. Additionally, it has formed the strongest organizational identity within its field. D.com implemented a number of strategic shift practices in an effort to balance the paradoxical demands between sustainability and adaptability that is has faced in the past and present. Specifically, D.com must adapt to the fast-paced business environment in China by maximizing profit while simultaneously developing a sustainable organizational identity that may consequently damage its current ‘cash cow’ (i.e., profitability). D.com employees believed that their ability to balance these two conflicting demands was critical to the success of their company, which can be observed by examining D.com’s B2C and B2B models. For example, the B2C model entails selling tickets online directly to customers while the B2B model encompasses selling tickets online directly to thirdparty agents such as ticket dealers who compete for the same pool of customers. When D.com expanded its B2B model to increase profits, the B2C model that attempts to establish sustainable organizational identities may have been affected, and vice versa. 2.9. Data collection Data were primarily collected from the following three sources: (1) semi-structured interviews conducted in October 2011; (2) internal archival materials; and (3) public sources, including books, news and publications written about D.com. The purpose of collecting data from multiple sources was to establish a unique perspective that incorporated the points of view of both organizational insiders and outsiders [14] and to triangulate themes and conclusions [42]. Case access was granted in June 2011 through our gatekeeper, the current CIO of D.com. The entire research process, from literature review, data collection and analysis to finalized theoretical framework, lasted more than nine months. Through our gatekeeper at D.com, we were provided with internal company documents, including partial meeting minutes. We also obtained available books and news to establish an initial understanding of D.com. Two research assistants were hired for initial data collection from multiple sources, which was summarized in a document numbering 223 pages. Through a comprehensive review of initial data, we were able to highlight interesting issues and phenomena that pertained to our research purpose. A number of semi-formal interviews were conducted via email and telephone before we arrived at the company’s organizational

headquarters. The purpose of these interviews was to verify gathered secondary data and establish an accurate overview of D.com. We also made an official research visit to the organizational headquarters of D.com and collected primary data. During our visit to D.com, extensive interviews and analyses were conducted. In summary, 25 informants, who were primarily from IT, marketing and logistics departments, participated in our interview sessions. To minimize issues related to validity and reliability of data, the interview questions were open-ended and focused on the history of the company as well as its primary strategic shifts and business expansions. The underlying intention of this methodology was to provide an open environment for the interviewees by probing for answers to broad questions that pertained to our research topics. Next, a total of five researchers joined the interview sessions; one researcher focused on recording important research-related answers while a second researcher focused on asking interview questions. The remaining three researchers paid close attention to the comments provided and probed for clarification, if necessary. The average interview session took one and a half hours, and the interviews adhered to a protocol that evolved during the research project [60]. All interviews were taped and transcribed for detailed analysis [65]. Supplementary data were collected from public sources to corroborate primary data that were collected. Public sources included books, newspaper articles and D.com’s official website. 2.10. Data analysis Before arriving onsite, we identified a number of pertinent themes from the literature that may be relevant to the management issues connected to organizational identity. The purpose of this refinement was to form the basis of our theoretical lens, which served as a ‘‘sensitizing device’’ [34] for directing data analysis. During our visit, we analyzed the data in tandem with data collection [33] and verified the alignment between our preliminary model and the collected data. After the data were transcribed during the offsite period, we spent the majority of time and effort on data analysis and used the open coding and axial coding techniques introduced by Strauss and Corbin [60]. Specifically, we performed three separate steps to facilitate our understanding of the data and ambiguous information while eliminating preliminary biases. First, we highlighted similar comments and grouped them into themes until a final set of themes was developed. A number of analysis strategies were applied, including temporal bracketing strategy, narrative strategy and visual mapping strategy [35]. The primary aim of this approach was to eliminate irrelevant comments present within the wealth of information collected and its potential for variance [60]. Second, we conducted a detailed analysis [39]. The narrative containing the final set of themes was organized and codified without introducing preliminary analytic biases. To eliminate bias in our interpretation, we confirmed our conclusions by consulting archival and publicly available materials. Third, we aligned empirical data with our theoretical lens and research model [33,54]. By applying visual maps and the narrative created in the first step, our data from both primary and secondary sources revealed that D.com successfully established a sustainable organizational identity with its ambidexterity. This observation resonated with the findings from the organizational ambidexterity and organizational identity literature [23,64]. Strategic decisions, events and activities were classified into these three stages based on the prevalence of these phases in collected data and the relevance of these phases to our confirmed theoretical lens. Data were analyzed iteratively until a state of theoretical saturation was reached [24].

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An overview of the overall research strategy can be seen below: Onsite Data Collection

Preliminary Data Collection •

Searched secondary data

•

from

multiple resources •

Interviewed TMT, IT departments and business units

Gathered internal archrival data

E

•

Group

discussions

with

other

researchers were conducted A

C

B

Preliminary Data Analysis •

Offsite Data Analysis

Conducted initial interviews with gatekeepers via emails and phones

•

F

•

Nov 2011

data-theoretical alignment

through

group discussions •

organizational identity

Ensured framework

Reviewed extensive literature on

Oct 2011

D

Follow-up interviews

Dec 2011

2.11. Case description and analysis D.com was established in Beijing in 1999 when information technology began to flourish in China. After 13 years of growth, D.com is now considered China’s number one online ticket-selling platform, and it controls up to 70% of the market, equating to 10 million registered users. The entire ticket-selling market in China earned up to 800 billion Yuan ($127 billion) in 2011. D.com’s primary business activities cover five service areas, including sports, concerts, Chinese opera, entertainment and children’s shows. These business activities are designed to access customers through both online and offline business modes. In terms of offline modes, D.com now has more than 30 subsidiaries located in major cities across China and establishes a wide range of partnerships with travel agents, hotels and small- to medium-sized ticket sellers that are allowed to trade and purchase tickets from platforms provided by D.com. Moreover, D.com will release its first mobile platform in the coming months to allow customers to purchase tickets on-the-go. Thus, D.com has created three major channels to reach its customers using the widest range possible. Prior to the official launch of D.com, the company used the web address piao.com.cn, which remains in existence. Due to the focused strategy implemented by upper management, D.com is currently merging with piao.com.cn and aims to project a unified organizational identity to its employees and customers. The success of D.com developed from the solid foundation created by piao.com.cn during the early stages of the company. Recognizing D.com’s wide coverage, Lenovo invested in the company and became a D.com shareholder in 2005. Ticketmaster, the world’s largest player in this field, twice expressed interests in acquiring D.com, but the founder and CEO rejected these offers. 2.12. Phase 1: establishing strategic logic (paradox A: focused strategy and divergent strategy) D.com began as a ticket delivery company in 1999 and swiftly expanded into the ticket-selling business under the leadership of D.com’s founder two years later. From 2001 to 2004, D.com’s primary business focused on ticket sales and delivery. At the beginning of 2005, a milestone in the history of D.com was reached when the first online ticket business system was officially launched, which allowed D.com to expand its exposure on the Internet and increase its online presence. Until 2005, D.com utilized a single business model in which the company sold tickets directly to its customers. Although the

Feb 2012

business model produced a considerable amount of profit for the company, the top management team (TMT) had to face a decisive problem that could have damaged the entire ticket market. The surplus of tickets purchased from the sponsors could not be sold on time, and sponsors were urgently seeking partnerships to sell all of the tickets. Thus, it was extremely difficult for D.com to estimate how many tickets they actually needed due to the varying levels of popularity of different shows and concerts, which resulted in a supply chain problem. Recognizing the severity of the problem, the TMT of D.com authorized the following two strategic shifts: (1) the establishment of a strong organizational identity to increase its customer base or, in other words, establishing an organizational identity so that D.com would be the first ticket-buying entity to enter customers’ minds for every show or event, and (2) the establishment of a B2B department with the purpose of helping sponsors distribute the tickets to other sellers within the shortest period of time, thereby cutting profits. To minimize the conflict of interest between the existing B2C model and the newly founded B2B model, the TMT decided to physically separate these two departments and utilize different strategies and personnel for each. A summary of relevant data can be observed in Table 3. Following data analysis, the organization conducted a strategy renewal when the crisis was fully exposed. The change of strategy concerned organizational structure, personnel and, more importantly, a new organizational identity that caused the organization to move forward [45]. The paradoxical demand here reveals the core ongoing challenge faced by the organization of maintaining organizational identity while maximizing profit. Focusing more heavily on its current B2C model would enable the organization to maintain a stable organizational identity, but the surplus of unsold tickets would lower profitability without the B2B model in place to assist. Strategic renewal [1] introduces both opportunities and challenges for organizations. However, separating the two business units may afford D.com the flexibility to manage its B2B and B2C functions simultaneously. This is consistent with the logic of optimality, which states that when organizations in the same organizational niche compete for the same resources, a natural selection process results that expels weaker organizational forms [28,29,61]. 2.13. Phase 2: framing the marketing network (paradox B: tight coupling and loose coupling) Subsequent changes were still necessary to conduct such functions as human resources in the wake of unit separations. The

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Table 3 Establishing strategic logic. Strategic Shifts

Structural Separation Focused Strategy of B2C

Divergent Strategy of B2B

Reaping the Outcomes

‘‘Sticking with the B2C model will surely enable us to have a sustainable customer base. However, we have to increase the size of the cake rather than only take one piece and walk away. So, we have to involve more sellers to join us to increase the market size’’ – CIO ‘‘All employees during that period understood what was going to happen in the firm. Looking back, it was a wise choice to establish the B2B model in another department; otherwise, the internal competition won’t bring anything good to us’’ – Business Director ‘‘The mission of our department is that we try to sell as many tickets as possible through our B2C platform, that’s our official website. However, we also agreed that we need more sellers to open up multiple channels for ticket selling, but our goal focuses on our customers’’ – Head of B2C Department ‘‘We are a pretty new department but our objective is very clear and straightforward. Our CEO has emphasized the importance of our department and granted us the permission to engage sellers freely, regardless of their backgrounds. The aim is to increase market size’’ – Senior Staff of B2B Department ‘‘It is impossible for us to cover all of the customers out there who are looking for tickets. On the flip side, the B2B model covers those customers who did not purchase from our website and brings us considerable extra profitability. Currently, we have 60% from the B2C side and 40% from the B2B side’’ – Vice President

boundary and business objectives for these two units were much clearer before this stage. Beginning in 2006, D.com focused on competing for market shares as more competitors, such as Yong Le and Zhong Yan, began to enter the online ticket-selling arena. For its B2C model, D.com adopted the strategy of one-stop services. Given the nature of the ticket business, sellers would normally complete their job function once the tickets were sold to the customers. Unlike other sellers, D.com provided comprehensive services to its customers in terms of ticket selling, delivery, verification, seat selection, check-in and fan clubs. All services allowed D.com to establish strong customer loyalty and clearer organizational identity. Three systems were implemented during the year 2007 that allowed D.com to achieve its business objective for its B2C model, including CRM, a ticketing selling system, and ERP. D.com’s CIO revealed that the B2B department was established to focus on expanding its current marketing network to ‘‘increase the size of the cake’’; however, the initial response to the initiative was significantly smaller than expected. The possible explanation for this suggested by the Vice President was as follows: ‘‘There are primarily two reasons. First, the overall market was not mature enough to conduct frequent online transactions among the sellers. Second, our channels for reaching the sponsors were too limited. We need to expand our B2B marketing network.’’ Recognizing the dilemma, D.com again made a strategic decision to primarily focus on its B2C model while maintaining basic B2B operation and waiting for the overall market to mature. Establishing strong partnerships with a wide range of sponsors was the primary discussion topic in the boardroom because it concerned the future of both the B2C and B2B models. Because the overall market had matured significantly by 2009, D.com successfully built a stable organizational identity within its field through its focus on its B2C model. The B2B trading platform ‘‘Mai+’’ was first released to strengthen the company’s B2B capability. As the project director of the B2B model noted, ‘‘Beginning in 2009, we began to implement our B2B plan step by step. The B2B trading platform we currently use is actually the third

generation based on the first version, which was launched in 2009.’’ Based on the solid relationship built with sponsors over the years, the impact of D.com in the ticket-selling industry has significantly increased, which attracts many sellers to use the B2B platform to close deals with other sellers. Currently, the odds of success favor D.com’s B2B models. Data from Table 4 reveal that D.com has focused on building its marketing blueprint over the past five years. Two contrasting marketing strategies were adopted for the B2C and B2B models. For the B2C model, one-stop services enable D.com to closely follow its customers’ needs. This practice is consistent with the notion of tight coupling for customer orientation [3]. Tight coupling refers to an emphasis on needs and constraints. In terms of B2B, D.com urgently needed to establish partnerships with other sellers in the market and, therefore, reached out by utilizing multiple channels. Consistent with the notion of loose coupling, which refers to an emphasis on freedom and possibilities, D.com attempted to increase the size of the market by grasping all possible ways of promoting the ticket business [3]. In terms of ambidexterity, the B2C–B2B relationship can be conceptualized as explorationexploitation activities, which have been considered to constitute a continuum in recent literature due to D.com’s tendency to transition from exploration and exploitation, and vice versa, over time [56]. 2.14. Phase 3: consolidating organizational identity (paradox C: social embeddedness and symbolic embeddedness) To consolidate the current organizational identity established primarily through its B2C model, D.com conducted a technological breakthrough to increase customer loyalty and organizational identity. D.com’s official website enabled online seat selection that allowed customers to select their ticketed seats prior to show time. D.com was the first company in China to own such technology, and this breakthrough offered D.com an advantageous position in terms of future development. The first trial of online seat selection technology occurred during ticket sales for a Chinese pop singer’s

Table 4 Framing the Marketing Network. D.com’s Marketing Network

Logic of the B2C Model Logic of the B2B Model

Reaping the Outcomes

‘‘Having these two models at the same time is good but difficult to manage. We need to find a better way of highlighting their own merits and pulling them together. So the first thing we did is to let them use different ways to build their own marketing networks.’’ – Vice President ‘‘Steve Jobs stated that the company should offer something that customers cannot think of. We provide a wide range of pre-sell and post-sell services to distinguish ourselves from other companies. It works well for us’’ – President of Website ‘‘Beginning in 2009, we engaged massive small- and medium-sized sellers in the field, including travel agents and hotels. We also contacted a wide range of supermarkets to ask them import our ticket-selling machine in their locations. They can take a cut from our profit.’’ – Senior Manager ‘‘The B2B model covers those customers who don’t use the Internet often. The entrainment expenditure stimulates consumption. For example, if a customer passes by a travel agent or stays in a hotel, they won’t be interested in seeing a show unless they occasionally saw the ads. That’s the main purpose of our B2B model’’ – Vice President

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Table 5 Consolidating organizational identity. Consolidating Organizational Identity

Consolidation of the B2C Network Consolidation of the B2B Network

Reaping the Outcomes

‘‘We have two very strong competitors, Yong Le and Zhong Yan. They are almost using the exactly same business model as we are, like having both B2C and B2B models. At this stage of development with our company, we must distinguish ourselves from them in terms of management and marketing strategies’’ – Vice President ‘‘To gain more member points, more customers are willing to come to our website for ticket buying. As D.com is becoming more and more popular, we are becoming the general agent for all tickets in the major cities in China’’ – Vice President ‘‘We must make sure that customers understand that it is D.com who has been serving them. Of course, profitability is the key for any business. However, for long-term survival in the field, I believe that organizational identity plays a significant role as well’’ – Senior Staff A ‘‘According to our initial data analysis, the ratio of ticket buying for the B2C and B2B models was 60%-40% initially and has now become 70% and 30%’’ – Senior Staff B

concert. Within 24 h of the tickets becoming available, the concert sold out. This event marked a record in the ticket industry because customers had never attempted to select seats online before the show instead of calling to book seats. Additionally, D.com initiated a membership scheme to attract more customers. Membership benefits currently include discounts, free points and free entrance to member clubs and events. For example, the ‘Show for Children’ channel was added to the website in response to requests from members. As more partners joined its B2B platform, D.com began to realize that the increasing number of competitors could damage its organizational identity on the B2C side. With such concerns in mind, D.com initiated a number of measurements to consolidate its organizational identity around the B2B model. First, every ticket sold by the sellers whose ticket source is D.com must bear the D.com logo on both sides of the ticket. Second, D.com will be responsible for machine installation for ticket sellers, thus providing customers with a sense of D.com’s service. Third, D.com gained the authority from all of its sponsors to be the only party who can perform ticket check-in. While checking in tickets, all employees wear D.com uniforms and use D.com-enabled PDAs. With the consolidation of its organizational identity in terms of both B2C and B2B models, D.com has been able to occupy the leading position in the market since 2010. Additional measures will be initiated to achieve the same goal in the coming years. Data from Table 5 demonstrate that D.com’s efforts in this phase were primarily focused on consolidating organizational identity by focusing on balancing both B2C and B2B models. Prior studies assumed that exploration and exploitation activities could be conducted in multiple domains [46]. The measurements undertaken by D.com are consistent with the notion of embeddedness. Embeddedness refers to companies’ relations with and dependence on various types of networks [27]. Our data reveal that D.com applied social embeddedness to establish better relations with its customer network while also using symbolic embeddedness to strengthen its organizational identity within its partner network. Given the paradoxical nature of these two models, D.com performed exploration through its B2B model while simultaneously performing exploitation through its B2C model utilizing two different embeddedness mechanisms.

2.15. Phase 4: articulating paradoxical demands (paradox D: breakthrough emphasis and profit emphasis) ‘‘In fact, D.com includes two primary business models – B2C and B2B – bringing us sustainability and profitability, respectively,’’ noted the vice president. ‘‘The conflicts between these two models are unavoidable, so we must develop the optimal solution for minimizing the influence,’’ stated the vice president. D.com has developed a clear understanding of the dilemma it has faced. However, the nature of business requires D.com to maintain its current business models through seeking balance. Social media initiatives constitute the next area of focus in which D.com will continue its organizational identity building. The B2C and B2B departments have now been given clear instructions regarding their business objectives. B2C employees were instructed to create the best and most stable organizational identity in the industry and within the organization itself. B2B employees were instructed to maximize profitability by persuading an increasing number of small- and medium-sized sellers to join D.com’s B2B platform. D.com has also implemented a commission-based scheme (Table 6). The paradoxical demands have been explicitly observed within D.com to establish a clear business objective for every employee, which has guided D.com’s future development. On the one hand, the B2C model concentrates on breakthrough emphasis [3], with a focus on reputation building and risk-taking for long-term survival. On the other hand, D.com’s B2B model concentrates on profit emphasis [3] and entails seeking stable revenues via repeat clients and careful resource allocation to foster efficiency. 2.16. Findings and discussion In the present study, our purpose was to understand how organizational identity in the e-commerce industry can be managed with ambidextrous capabilities. By summarizing the aforementioned data analysis, the following theoretical framework has been inductively obtained based on the paradoxes embedded at each phase of development (see Fig. 2). The case organization’s overall efforts in managing organizational identity in the e-commerce industry relied on two levels of

Table 6 Paradoxical demands. Understanding Paradoxical Demands

Emphasis on Sustainability Emphasis on Profitability Reaping the Outcomes

‘‘Some people asked why we adopted a B2B model which allowed others to share the market and we should only focus on our B2C model. That was logical thinking but the reality is not what we thought. B2C model can help us to be more recognizable to customers while B2B model can help us to be more profitable, we need both of them, even though the B2B may harm our B2C model a little.’’ – CIO ‘‘I think our B2C model is actually eating the cake alone to be recognizable in the market, whereas the B2B model is trying to help the entire industry by increasing the size of the cake’’ – CIO ‘‘We have been given specific tasks to be completed every month now. The pressures on our B2B department are very obvious’’ – Market Manager ‘‘On the flip side, our two business models actually complement each other. That’s also the ultimate goal we want to achieve at this stage of development’’ – Network Director

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Fig. 2. Paradoxes at strategic and operational levels.

operations, namely the strategic level and the operational level. For its B2C model, the organization’s strategies and regulations directed actual operations in which customer-centric strategies were fully implemented. In turn, the feedback received during operations redirected the organization’s regulations and strategies. This set of movements is consistent with the concept of ‘‘exploitation’’ [26,41] and further expands on the existing literature by proposing the mechanisms of exploitation in the ecommerce industry. The overall strategy of the B2B model is to diffuse the organization’s operations to allow more sellers and partners to engage with the B2B platform. However, the joined sellers and partners must be effectively managed. Therefore, those at the operational level must aggregate sellers and partners at a strategic level so that outsiders can follow the rules and regulations set by the case organization. The notion of ‘‘exploration’’ is observed here [56], and we propose these two mechanisms to further broaden the literature related to the e-commerce industry.

2.17. Strategic level: creating dual organizational identities While balancing the paradox between sustainability and profitability, D.com first became aware of the necessity to restructure its current organizational strategy to address this issue within different business units. With this initiative in mind, spatial and cultural boundaries were created to separate the B2C and B2B departments in terms of organizational structures and strategies [37]. Because D.com was fully aware of the impact of maintaining a stable organizational identity for long-term survival, a focused strategy was adopted by the B2C department [12]. In contrast, a divergent strategy was adopted by the B2B department in an effort to establish solid partnerships with a wide range of sponsors and downstream sellers. These measures are consistent with the notion of structural ambidexterity, which requires an organization to create separate business units within the organization, each with a specialization that entails different capabilities [21].

Fig. 3. Process model of managing organizational identity with ambidexterity.

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Our data reveal that to minimize the paradoxical demand between sustainability and profitability, organizations first create dual organizational identities [53,43] that entail structural ambidexterity (see Fig. 3). Such dual identities must be managed simultaneously on both sides of business units and strengthened with different effects as the organization develops. 2.18. Strategic level: cementing identity ties Given the strategic logic designed during Phase One, our data revealed that the management of dual identities that concerned both streams of customers (i.e., consumers and downstream sellers) was conducted during Phase Two. Tight coupling and loose coupling strategies were utilized to manage customer orientations for its B2C and B2B models, respectively [3]. Faced with constraints in terms of the lack of market maturity, the performance of the B2C unit largely surpassed that of the B2B unit. As a result, the balancing approach to temporal separation that emphasizes sequential shifts over time from exploration to exploitation and vice versa was adopted through cementing identity ties (e.g., refer to members’ identification with the organizational identity) with customers for both units through tight and loose coupling mechanisms [10,15]. Consistent with our data, the organization focused on the B2C model during the initial stage and later shifted to the introduction of measures for managing its B2B model. These two phases occurred at the strategic level. 2.19. Operational level: infusing embodied cognition The case organization adopted a number of approaches for maintaining organizational identity for both of its business units. Our data revealed that both social and symbolic embeddedness [27] helped the firm to achieve this vision. In managing organizational identity at the operational level, the domain separation [36] that typifies exploration can be conducted in one domain while exploitation is conducted simultaneously in another. This type of ambidextrous capability helped the case organization to balance social embeddedness for the B2C domain and symbolic embeddedness for the B2B domain. By doing so, embodied cognition, defined as the human capacity to process information and gain knowledge based on the function of bodily experiences, was achieved through the visual, verbal and emotional provision of embodied messages for customers [16,30]. Consequently, dual organizational identities were consolidated strongly within D.com’s own business units. However, the level of manifestation of these dual identities included both a dominant phenotype for its B2C unit and recessive one for its B2B unit. D.com maintained a lower level of organizational identity for its B2B unit to allow other downstream sellers to join D.com and maximize profitability [28]. Symbolic embeddedness was initiated for this purpose. 2.20. Operational level: aligning identity domains Reaping the positive outcomes of the previous stages, the case organization articulated the basic operation model aimed at balancing sustainability and profitability in terms of profit emphasis and breakthrough emphasis. Dual organizational identities had been well established for both business units, and the final stage focused on aligning the identity domains for these two models. Identity domains define the competitive actions in which the organization should engage given its current identities [38]. The fundamental purpose of dual organizational identities is to maintain the organization’s competitiveness in different competitive domains through the balancing of breakthrough emphasis and

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profit emphasis. Clearly articulated paradoxical demand would help the organization constantly align its identity domain for the achievement of effective competitive actions [38]. Contextual ambidexterity, defined as concurrent performance of exploitation and exploration at the group and individual levels, balanced such paradoxical demands adequately through the nurturing of an appropriate organizational context that combines stretching, discipline, support and trust [21,51]. Specifically, the supportive context empowers the organization’s members, directed by shared ambition and a collective identity, to meet performance standards [20]. Thus, nurturing well-articulated strategies, culture and organizational identities enables the simultaneous alignment of identity domain and organizational adaptability [21]. 3. Conclusion 3.1. Theoretical and practical contributions The two theoretical frameworks involving the identification of paradoxes and its managing process, which emerged from the development of e-commerce company D.com, provide new insights into how to manage organizational identity through the balance of paradoxical demands between sustainability and profitability. The first theoretical framework, identification of paradoxes, identifies four pairs of critical paradoxes that ecommerce firms must address in managing organizational identity through interactions between strategic and operational levels. The second theoretical framework, managing process, further parses how to leverage the four modes of ambidexterity in order to address these four pairs of paradoxes identified. Specifically, our study makes a number of important theoretical and practical contributions to the literature on organizational ambidexterity and identity. First, in terms of theoretical contributions, this study proposes four ambidextrous capabilities for resolving the existing paradoxical challenges in managing organizational identity highlighted in the literature, namely, seeking sustainability while adapting to the existing environment in order to ensure profitability [23,4,13]. This study also empirically illustrates how organizations in the ecommerce industry manage the strategic and operational paradoxes encountered during the development journey. Second, our study provides empirically-based frameworks with which we examined the holistic process of organizational identity management over time, addressed the lack of specific actions for managing identity and provided empirical evidence in support of current propositions in the ambidexterity and organizational identity literatures [3,21,43,10]. Third, our proposed models can be viewed as important complements to the existing conceptual knowledge on managing organizational identity, adopting the novel perspective of ambidexterity and providing theoretical guidelines for future research. In contrast, existing studies on ambidexterity or managing exploitation-exploration tensions lack a comprehensive understanding of practice, presenting either architectural or contextual approaches and employing conceptual anecdotal studies [32,21]. As a response to the current literature, this paper provides holistic research by empirically applying the conceptual knowledge of ambidexterity to a practical case [3]. Our results shed light on how the concepts of ambidexterity can be operationalized at the organizational level, and they also validated a number of balancing approaches proposed in prior studies [64,56]. More importantly, our study expands upon the existing knowledge of ambidexterity into e-commerce literature and offers the novel perspective of managing organizational identity in the e-commerce industry. In terms of practical implications, this paper provides insightful and detailed practical actions that organizations may undertake to

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manage their organizational identities. These actions involve adopting ambidextrous capabilities within the context of the ecommerce industry, in which paradoxical challenges universally exist. The paradoxes identified in this study that are commonly observed in practice shed light on the necessary considerations for organizations in the e-commerce industry that aim to establish strong organizational identities. By elucidating the obscurities of organizational identity management, our study provides organizations with systemic means of concentrating on balancing sustainability and profitability through the use of ambidextrous capabilities to ensure long-term success. This paper also shifts practitioners’ attention to the ways in which an e-commerce company can manage organizational identities that add value to the development of the organization as a whole. 3.2. Limitations and implications for future research One limitation of this study concerns the case organization itself. We only explored dual organizational identities based on the nature of the e-commerce industry in which B2C and B2B models are very common. In future studies, multiple organizational identities should inform the preferred theoretical lens for investigating such phenomena to increase the applicability of research findings. Second, the topic of the operationalization of contextual ambidexterity needs more research to achieve adequate academic support. This paper’s unit of analysis is the organization, whereas contextual ambidexterity is more concerned with the individual and group levels. Finally, we consider questions for future work. Our study investigated the managerial issues of organizational identity for which the basic assumption is that the organization has established organizational identities. However, future studies on how to establish organizational identity in the context of the e-commerce industry may provide insightful theoretical and practical contributions. Considering the research related to organizational ambidexterity [3,46,7], one might explore the optimal balance levels for exploration and exploitation under varying conditions and delve into the ways in which different ambidextrous approaches facilitate the establishment of organizational identities.

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Zheng (Zack) Wang is currently working toward the Ph.D. degree at the Department of Information Systems, School of Computing, National University of Singapore, Singapore. He received the Master of Science degree from London School of Economics and Political Science (LSE) and the Bachelor of Science degree from University of Warwick, U.K. His work has been published in IEEE Transactions on Engineering Management, International Conference on Information Systems (ICIS), Pacific Asia Conference on Information Systems (PACIS) and Hawaii International Conference on System Sciences (HICSS). His research interests include IT identity, electronic commerce, the strategic management of information systems and IT outsourcing. Dr. Jinsong Huang is an Associate Professor in the School of Economics and Management at Beihang University. Dr. Huang’s research focuses on case studies, customer value, branding and social media. Dr. Huang’s work has been published in some English Journals including Journal of Interactive Marketing, Social Behavior and Personality, and some Chinese journals including Acta Psychologica Sinica, Chinese Journal of Management Science, Application of Statistics and Management.

Dr. Barney Tan is a Lecturer in Business Information Systems at the University of Sydney Business School. His research interests include strategic information systems, enterprise systems implementation, electronic commerce and qualitative research methods. Dr Tan’s research has been published in IEEE Transactions on Engineering Management, Information and Organization, European Management Journal, and the International Conference of Information Systems.