Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 5 DEVELOPING DIGITAL TRANSFORMATION CAPABILITY: THE ROLE OF MANAGERIAL AMBIDEXTROUS LEARNING Nikolina Dragi čevi ć Faculty of Economics and Business, University of Zagreb, Croa ti a ndragicevic@efzg.hr Amadeja Lamovšek School of Economics and Business, University of Ljubljana, Slovenia amadeja.lamovsek@ef.uni ‐lj.si Saša Ba ti s tič School of Social and Behavioral Sciences, Tilburg University, The Netherlands s.ba ti s ti c@ ti lburguniversity.edu Abstract This paper integrates the individual ambidexterity, digital transforma ti on, and dynamic capabili ti es literatures to de ‐ velop a framework that helps to understand the role of managerial ambidextrous learning in building the digital trans ‐ forma ti on capability of an organiza ti on. Based on a comprehensive literature review, the paper iden ti fies compe ti ng demands in terms of managerial learning orienta ti on serving as microfounda ti ons of di fferent dynamic organiza ti onal capabili ti es underpinning digital transforma ti on. We adopt an ambidextrous perspec ti ve of learning and propose that managers need to balance explora ti ve and exploita ti ve learning to aid building digital transforma ti on capabili ti es. This paper contributes to ambidexterity and dynamic capabili ti es theore ti cal perspec ti ves through its dis ti nc ti ve focus on the role of individual ‐level learning in the context of organiza ti onal ‐level digital transforma ti on. The paper enhances understanding of how firms may support digital e fforts by becoming sensi ti ve to and suppor ti ng managerial ambidex ‐ terity as a cri ti cal factor in a successful digital transforma ti on journey. We suggest that future research e fforts should inves ti gate empirically the role of managerial ambidextrous behavior in digital e fforts. Keywords: individual ambidexterity, digital transforma ti on, generalist learning, specialist learning, microfounda ti ons of dynamic capabili ti es 1 INTRODUCTION Technological advances trigger digital transfor ‐ ma ti on processes that alter value ‐crea ti ng paths in organisa ti ons (Vial, 2019) and lead to the emer ‐ gence of the fourth industrial revolu ti on (Beier et al., 2020; Dragicevic et al., 2020). The role of man ‐ agers in making digital e fforts successful is cri ti cal; however, digital transforma ti on ini ti a ti ves o ft en ex ‐ perience di fficul ti es because managers experience role ambiguity and do not know how to act (Ell ‐ ström et al., 2021; Fitzgerald et al., 2014). For man ‐ agers to successfully navigate through the digital journey, a vital challenge is building a digital trans ‐ forma ti on capability (Ellström et al., 2021; Warner & Wäger, 2019) while at the same ti me keeping the con ti nuity of business performance, sa ti sfying cus ‐ tomer needs, and ensuring the wellbeing of employ ‐ Vol. 11, No. 2, 5 ‐19 doi:10.17708/DRMJ.2022.v11n02a01 Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 6 Nikolina Dragi čevi ć, Amadeja Lamovšek, Saša Ba ti s tič : Developing Digital Transforma ti on Capability: The Role of Managerial Ambidextrous Learning ees. Essen ti ally, managers need to balance between the integra ti on of new technologies (explora ti on) and taking care (exploita ti on) of the core, well ‐es ‐ tablished business (Li et al., 2021; Warner & Wäger, 2019). This premise states that there is a great para ‐ dox that surrounds digital transforma ti on processes (Purvanova & Kenda, 2018), requiring managers to deal with tensions resul ti ng from conflic ti ng de ‐ mands such as free explora ti on to complement ex ‐ ploita ti ve processes of business as usual (Ellström et al., 2021). Managing compe ti ng demands is be ‐ coming necessary for e ffec ti ve digital transforma ‐ ti on to occur (Montealegre & Iyengar, 2021). Compe ti ng demands at the individual level o ft en are studied using the construct of individual ambidexterity, defined as a capacity of a manager (or another employee) to exhibit seemingly incom ‐ pa ti ble behaviors (Birkinshaw & Gibson, 2004) of performing both explora ti ve and exploita ti ve ac ti v ‐ i ti es, which lead to innova ti on and job performance (Mom et al., 2007; Rosing & Zacher, 2017). Individ ‐ ual ambidexterity is suited to cope with dynamic contexts (Eisenhardt et al., 2010; Good & Michel, 2013) such as technology turbulent environments (Folger et al., 2021). Moreover, in uncertain and in ‐ terdependent work contexts, managers’ ambidex ‐ terity has proven to contribute to individual performance (Mom et al., 2015). Despite the promising value of inves ti ga ti ng the role of individ ‐ ual ambidexterity in the digital transforma ti on ef ‐ forts in companies, the literature s ti ll lacks relevant studies of the ma tt er. Although some recent re ‐ search discussed technological change and digital transforma ti on concerning organisa ti onal ambidex ‐ terity (Ouyang et al., 2020; Scuo tt o et al., 2019) and some studies connected individual ambidexterity to technology turbulent environments (Folger et al., 2021), less is known about how digital transforma ‐ ti on is connected to the individual, and in par ti cular managerial ambidexterity. We contribute to bridging that gap by inves ti ‐ ga ti ng the following research ques ti on: What type of learning is required from ambidextrous managers to develop digital transforma ti on capability? We fo ‐ cused on the dimension of learning because am ‐ bidexterity is associated inherently with learning and two types of learning ac ti vi ti es—explora ti ve and exploita ti ve (March, 1991) —which echo the specialist–generalist dilemma at the individual level (Bonesso et al., 2014; Kang & Snell, 2009a; Kelly et al., 2011a). For example, whereas specialist human capital favors exploita ti ve learning (i.e., in ‐depth learning within a narrow field), generalist human capital fosters explora ti ve learning (i.e., learning within di fferent fields) (Bonesso et al., 2014). Similar to Teece (2007) and Warner and Wäger (2019), we approached digital transforma ti on as a dynamic ca ‐ pability and assumed that managers can contribute to the development of such capability through their knowledge (Helfat & Peteraf, 2015; Pasamar et al., 2015). Dynamic capabili ti es enable con ti nuous restoring of the firms’ resources and competencies in line with environmental changes and new sources of compe titi ve advantage (Teece, 2007). Although researchers have dealt with our topic of interest im ‐ plicitly to some extent (e.g. Ellström et al., 2021; Laudien & Daxböck, 2016; Warner & Wäger, 2019), we connected the dots from various contribu ti ons into an integrated framework to establish the rela ‐ ti onship between digital transforma ti on as a dy ‐ namic capability and ambidextrous’ managers di fferent learning orienta ti ons. We addressed the research aim with a literature review to integrate conceptually the theore ti cal streams we inves ti gated—managerial ambidextrous learning and digital transforma ti on as a dynamic ca ‐ pability—to gain understanding of how managers can make their way through ongoing business challenges (i.e., compe ti ng demands) that they face in adap ti ng to rapid technological and market change. Accord ‐ ingly, this study builds a framework that explicates managerial learning orienta ti ons (i.e., generalist or specialist) serving as microfounda ti ons of di fferent dynamic capabili ti es underpinning digital transforma ‐ ti on. Microfounda ti ons are primary components (e.g. individual ‐level prac ti ces) underlying higher ‐level constructs such as organiza ti onal dynamic capabili ‐ ti es (Felin et al., 2012; Mousavi et al., 2019). The contribu ti ons of this study are as follows. First, the study extends the exis ti ng literature on managerial ambidexterity by explaining how the role of a manager’s ambidextrous learning is related to di fferent categories of dynamic capabili ti es un ‐ derpinning digital transforma ti on (i.e., sensing, seiz ‐ ing, and transforming capabili ti es). Second, we enhance understanding of how firms may support Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 7 digital e fforts by becoming sensi ti ve to and support ‐ ing managerial ambidexterity as a cri ti cal factor in a successful digital transforma ti on journey. Accord ‐ ingly, we believe that the framework may aid man ‐ agers with developing and deploying digital strategies that consider important choices that managers need to make in digital e fforts, namely which mode of learning on which to focus as a part of capabili ti es development required for successful digital transforma ti on. 2 MANAGERIAL AMBIDEXTERITY: OVERVIEW OF THE CONCEPT 2.1 Defining Managerial Ambidexterity Compe ti ng or conflic ti ng demands are in man ‐ agement literature studied under the umbrella con ‐ struct of ambidexterity—the exploita ti on and explora ti on dilemma, seen as the core to learning, performance, agility, and innova ti on across the level of analysis (Birkinshaw & Gibson, 2004; Birkinshaw & Gupta, 2013; Raisch et al., 2009). Whereas explo ‐ ra ti on aids with sensing market opportuni ti es and re ‐ newing companies’ capabili ti es, exploita ti on builds on exis ti ng opportuni ti es and creates a return on cur ‐ rent capabili ti es (Levinthal & March, 1993). Ambidex ‐ terity at the individual level is seen as having a cri ti cal role in organiza ti onal ambidexterity (Birkinshaw & Gupta, 2013; O’Reilly III & Tushman, 2013; Raisch et al., 2009). Whereas organiza ti onal ambidexterity has been a well ‐established construct for three decades, recently researchers have started to pay a tt en ti on to individual ambidexterity, the capacity of an individual to conduct contradictory ac ti vi ti es of explora ti on and exploita ti on toward job performance and innova ti on (Bledow et al., 2009; Mom et al., 2015b). We focused on managers as units of our analysis because they are expected to be more exposed to such paradoxical be ‐ havior. Accordingly, we subscribed to the defini ti on of individual ambidexterity as “a manager’s be ‐ havioural orienta ti on toward combining explora ti on ‐ and exploita ti on ‐related ac ti vi ti es within a certain pe ‐ riod of ti me” (Mom et al., 2009, p. 812). The literature describes ambidextrous man ‐ agers as mul ti taskers capable of engaging in com ‐ plex cogni ti ve processes such as integra ti ve and paradoxical thinking, and capable of being involved in both rou ti ne and nonrou ti ne ac ti vi ti es and in dif ‐ ferent types of learning ac ti vi ti es which both refine exis ti ng and increase the variety of their knowledge and skills (Adler et al., 1999; Mom et al., 2007, 2015; Papachroni & Heracleous, 2020). The literature pro ‐ vides examples of various di fferent tensions or con ‐ flic ti ng demands that are related to individual ambidexterity (Pertusa ‐Ortega et al., 2020). For ex ‐ ample, studies have focused on the tensions be ‐ tween the explora ti on of new capabili ti es and the exploita ti on of current capabili ti es (Rosing & Zacher, 2017), adaptability and alignment (Birkinshaw & Gibson, 2004), explora ti on of new ideas and their implementa ti on (Bledow et al., 2009), flexibility and e fficiency (Yu et al., 2020), and the pursuit of new knowledge or use of the exis ti ng knowledge (Kelly et al., 2011). However, less is known about how di ‐ mensions of learning orienta ti on (i.e., explora ti ve or generalist and exploita ti ve or specialist learning) can influence individuals’ ambidexterity. 2.2 Role of Learning in Managerial Ambidexterity Managerial learning is an integral part of man ‐ agers’ work, and it is essen ti al for organiza ti onal change (Sollander & Engström, 2021). From a knowl ‐ edge ‐based view, ambidexterity at the individual level includes either the deepening of one’s exis ti ng knowledge or learning outside one’s current knowl ‐ edge domains (Keller & Weibler, 2015). Therefore, some models of ambidexterity directly connect to the human resource base and perceive these di ffer ‐ ent types of learning ac ti vi ti es as a core to building individual and organiza ti onal ambidexterity (Kang et al., 2009; Mom et al., 2007, 2015; Prieto & Santana, 2012). In par ti cular, the explora ti ve ‐exploita ti ve learning orienta ti on echoes the generalist–specialist learning dilemma (Kang & Snell, 2009). Whereas spe ‐ cialists have in ‐depth knowledge associated with a par ti cular knowledge domain or func ti on and typi ‐ cally occupy more narrowly defined jobs, generalists tend to have cross ‐disciplinary knowledge that can be enacted across di fferent domains and hence oc ‐ cupy heterogeneous (boundary ‐spanning) jobs that require diverse skill ‐sets (Kang & Snell, 2009; Kelly et al., 2011). Generalists are valued for the breadth of their knowledge and entrepreneurial behavior which provides an organiza ti on with the ability to explore Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 8 and cost savings), organiza ti onal performance (i.e., innova ti veness, financial performance, firm growth, compe titi ve advantage), and wellbeing of employ ‐ ees. However, digital transforma ti on also has some drawbacks, such as algorithmic control and data se ‐ curity issues (Kellogg et al., 2020; Vial, 2019). Some other challenges require the management of em ‐ ployees’ heterogeneous percep ti ons of digitaliza ti on e fforts (Schneider & S ti ng, 2020). Organiza ti ons engaged in digital transforma ti on processes need to reconfigure and innovate their prac ti ces to establish a balance between more or less radical improvements and maintaining a core busi ‐ ness. Digitaliza ti on o ft en serves as a prompt for orga ‐ niza ti ons to experiment and reinvent their business models, including reinven ti ng industries, changing products and services, crea ti ng new digital businesses, reshaping value delivery models, and rethinking value proposi ti ons (Westerman et al., 2014; Warner & Wäger, 2019). Companies also can use digital tech ‐ nologies to change their business models incremen ‐ tally, i.e., “to extend, revise, or terminate exis ti ng ac ti vi ti es in an evolu ti onary manner” (Cavalcante et al., 2011; Foss & Saebi, 2018; Kim & Min, 2015). Given the strategic nature of change, the e fforts that digital ‐ iza ti on e fforts require, and the challenges that these e fforts face, it becomes apparent that the managerial role is cri ti cal (Montealegre & Iyengar, 2021). 3.2 Digital Transforma ti on and Managerial Ambidexterity Underlying the digitaliza ti on a tt empts, tensions emerge which require managers’ both explora ti ve and exploita ti ve ac ti vi ti es (Montealegre et al., 2019; Warner & Wäger, 2019). O ft en, the emphasis on ei ‐ ther explora ti on or exploita ti on will a ffect a decision regarding the type of business model change (Lau ‐ dien & Daxböck, 2016). For example, managers are prompted to explore because there are changes in technologies that they poten ti ally need to adopt to keep long ‐term compe titi veness. At the same ti me, they need to exploit to maintain companies’ short ‐ term compe titi ve pressures. Managers also need to either adjust their digital technology por tf olio or ac ‐ quire new technologies (Li et al., 2021). These ex ‐ amples show that digital transforma ti on and digital workplaces o ft en require performing contradictory new capabili ti es and to adapt (Kang & Snell, 2009; Shane, 2000). On the other hand, specialists are ex ‐ perts in a given field and are e ffec ti ve in gaining new in ‐depth knowledge within the narrow range defined by the domain. Ambidextrous managers exhibit both generalist and specialist learning orienta ti ons. For example, Birkinshaw and Gibson (2004) suggested that am ‐ bidextrous individuals enact both types of knowl ‐ edge but are typically more generalists; this stance was adopted by other authors (e.g., Mom et al., 2009). Furthermore, Kelly et al. (2011, p. 620) found that specialist–generalist demarca ti on is “too rigid as it does not take into account the ways in which individuals themselves may choose to shape their working lives and careers.” 3 DIGITAL TRANSFORMATION IN FIRMS 3.1 Defining Digital Transforma ti on Digital transforma ti on refers to “a process wherein organiza ti ons respond to changes taking place in their environment by using digital technolo ‐ gies to alter their value crea ti on processes” (Vial, 2019, p. 3). Digital technologies are combina ti ons of informa ti on, compu ti ng, communica ti on, and con ‐ nec ti vity technologies (Bharadwaj et al., 2013; Vial, 2019). Examples of such technologies driving digital transforma ti on and bringing new market and oper ‐ a ti onal opportuni ti es are mobile technologies, cloud compu ti ng, blockchain, ar ti ficial intelligence, and the internet of things (IoT) (Vial, 2019; Warner & Wäger, 2019). 1 In a recent literature review, Vial (2019) iden ti fied several organiza ti onal ‐level out ‐ comes that digital transforma ti on promises to bring to organiza ti ons, such as opera ti onal e fficiency (i.e., improvement of business processes, automa ti on, 1 Consider also McAfee & Brynjolfsson’s (2017) study which iden ti fies three major trends related to technol ‐ ogy that are reshaping how the businesses are run: the expanding capabili ti es of machines, rise of pla tf orms or “digital environment[s] characterized by near ‐zero marginal cost of access, reproduc ti on, and distribu ‐ ti on” (p. 216); and emergence of the crowd—“human knowledge, exper ti se, and enthusiasm distributed all over the world and now available, and able to be fo ‐ cused, online” (p. 28). Nikolina Dragi čevi ć, Amadeja Lamovšek, Saša Ba ti s tič : Developing Digital Transforma ti on Capability: The Role of Managerial Ambidextrous Learning Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 9 ac ti vi ti es and switching between di fferent mindsets and ac ti on sets (Bledow et al., 2009), and resolving paradoxical requirements of exploita ti on and explo ‐ ra ti on (Raisch et al., 2009). Therefore, developing managerial ambidexterity seems to be cri ti cal. The role of managers’ knowledge is an important aspect of balancing compe ti ng demands. Managers need to capitalize on previous learning and focus on ac ti vi ti es that maintain exis ti ng performance or learn new ways of dealing with customers and other stake ‐ holders via digital technologies, opening themselves to new (or adjusted) ways of working (Bap ti sta et al., 2020; Warner & Wäger, 2019). However, such man ‐ agement of compe ti ng demands may not be easy. Managers, to deal with uncertainty and complexity arising from digital transforma ti on pressures, some ‐ ti mes choose to rely on prior expert experience and familiar choices in their decision ‐making rather than to explore new possibili ti es that would lead to change (Gave tti & Levinthal, 2000; Laudien & Daxböck, 2016; Warner & Wäger, 2019). Managers tend to exploit al ‐ ready ‐established technological assets rather than ex ‐ pand their search ac ti vi ti es (Teece, 2007). Hence, managing di fferent learning orienta ti ons (i.e., special ‐ ist or generalist) o ft en is a (necessary) challenge. Recognizing the value of ambidexterity re ‐ search, Montealegre and Iyengar (2021) argued that central to successfully managing a digital business pla tf orm is the organiza ti onal ability to balance re ‐ newal (i.e., explora ti on) and refinement (i.e., ex ‐ ploita ti on). 2 We build on the premises of their study and focus on the role of the individual level of am ‐ bidexterity in digital transforma ti on change process. 3.3 Digital Dynamic Capabili ti es Due to its focus on developing mechanisms for organiza ti ons to cope with con ti nuous (rapid tech ‐ nological) change and remain competiti ve (Peteraf et al., 2013; Schilke et al., 2018), the dynamic ca ‐ 2 They suggested that three interrelated ac ti vi ti es—iden ‐ ti fying ‐nourishing, expanding ‐legi ti mizing, and aug ‐ men ti ng ‐embedding—enable the organisa ti onal ambidexterity, i.e., “renewal and refinement in the evolu ti on of the digital pla tf orm” (Montealegre & Iyen ‐ gar, 2021, p. 2). pabili ti es framework (Teece, 2007) is regarded as one of the promising underlying theore ti cal frame ‐ works to study digital transforma ti on (Vial, 2019). The dynamic capabili ti es framework emerged from and extended the resource ‐based view of firms to explicate how firms strategically renew resources and competencies to fit uncertain environments (Eisenhardt & Mar ti n, 2000; Helfat et al., 2009; Teece et al., 1997). Con ti nuous restoring of the firms’ resources and competencies in line with changes in the organiza ti on’s business environment enables new sources of competiti ve advantage (Teece, 2007). Teece (2007) recognized three cate ‐ gories of dynamic capabili ti es that enable this: sensing, seizing, and transforming capabili ti es. Sensing involves ac ti vi ti es of gaining knowledge about the business environment to make decisions about future development; seizing includes ex ‐ ploita ti on of the sensed opportuni ti es for the im ‐ provement of current and development of new services and products; and transforming involves ac ti vi ti es to reconfigure resources and competen ‐ cies to create be tt er fit with the environment (Teece, 2007, 2014). Because digital transformation requires orga ‐ nizational adaptation to changing business envi ‐ ronment, a dynamic capabilities framework was adopted in some recent digital transformation studies (e.g. Ellström et al., 2021; Matarazzo et al., 2021; Warner & Wäger, 2019). For example, Warner and Wäger (2019) suggested that digital transformation is a capability, and identified digi ‐ tally based dynamic capabilities and their subca ‐ pabilities required for digital transformation: digital sensing, digital seizing, and digital trans ‐ forming capabilities. Ellström et al. (2021) built on Warner and Wäger’s findings to suggest comple ‐ mentary routines for achieving digital transforma ‐ tion in firms. Our work to some extent builds on these studies and is distinguished from them by fo ‐ cusing on the role of managerial ambidextrous learning. Table 1 provides an overview of the original dy ‐ namic capabili ti es framework (Teece, 2007) and the adop ti on of this framework to the digital transfor ‐ ma ti on context (Ellström et al., 2021; Warner & Wäger, 2019). Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 10 Nikolina Dragi čevi ć, Amadeja Lamovšek, Saša Ba ti s tič : Developing Digital Transforma ti on Capability: The Role of Managerial Ambidextrous Learning ferent aspects of building digital transforma ti on as a dynamic capability. We posit that these ambidex ‐ trous learning ac ti vi ti es serve as microfounda ti ons— or micro ‐level origins or basic elements—underlying dynamic capability building (Felin et al., 2012; Mousavi et al., 2019). Figure 1 illustrates the frame ‐ work that lays out the conceptual integra ti on of the selected theories. We posit that building each of the digital transforma ti on capabili ti es (digital sensing, digital seizing, and digital transforming) includes tasks requiring both managerial generalist and spe ‐ cialist learning orienta ti ons. In an introduc ti on to special issues on digital work and transforma ti on, Bap ti sta et al. (2020) suggested three orders of e ffects of digital transforma ti on on or ‐ ganiza ti ons: convergent change, transforming work, and transforming the organiza ti on. Convergent change refers to the appropria ti on of workplace tech ‐ nologies with immediate e ffects on the execu ti on of tasks and established pa tt erns of work; transforming work leads to a more fundamental change in the pat ‐ terns and nature of work; and transforming the orga ‐ niza ti on creates new understandings of work and changes the deep structure of organiza ti ons. Building on their idea, we propose that digital capabili ti es of sensing, seizing, and transforming (together with learning ac ti vi ti es associated with them) could be con ‐ nected with the aforemen ti oned three order e ffects of digital transforma ti on on organiza ti ons. 4 AMBIDEXTROUS MANAGERIAL LEARNING ORIENTATIONS AND DIGITAL TRANSFORMATION CAPABILITY 4.1 Integrated Framework Dynamic capabili ti es are organiza ti onal, higher ‐ level capabili ti es; nevertheless, they are rooted in and emerge from individual, managerial prac ti ces (Helfat & Peteraf, 2015; Teece, 2012, 2014). We rec ‐ ognize that developing digital transforma ti on capa ‐ bility requires managerial handling of compe ti ng demands and that the role of learning per se is cri ti ‐ cal. Researchers have considered ambidexterity to act as a dynamic capability and have recognized the role that managers have in it (Birkinshaw et al., 2016; O’Reilly III & Tushman, 2008). Therefore, we recognize that there is value in developing a frame ‐ work that connects these di fferent (yet related) the ‐ ore ti cal streams. Specifically, building on the dynamic capabili ‐ ti es, digital transforma ti on, and individual ambidex ‐ terity literatures, we suggest a framework that describes the role of a manager’s ambidexterity, by considering her or his learning orienta ti on, in build ‐ ing digital transforma ti on capability. In par ti cular, we iden ti fy learning (knowledge ‐based) ac ti vi ti es that could be classified as having either a generalist or a specialist orienta ti on, and describe their role in dif ‐ Framework/key reference Type of dynamic capability Teece (2007) Sensing Scanning, crea ti on, learning, and interpreta ti on of local and global technologies and markets; investment in research and related ac ti vi ti es. Seizing Improving current technological competencies; inves ti ng in new technologies and designs, developing services and products. Transforming Recombining and reconfiguring competencies, assets and organiza ti onal structures as technologies or market change. Warner & Wäger (2019) Digital sensing (1) digital scou ti ng, (2) digital scenario planning, and (3) digital mindset cra ft ing. Digital seizing (1) strategic agility, (2) rapid prototyping, and (3) balancing digital por tf olios. Digital transforming (1) naviga ti ng innova ti on ecosystems, (2) redesigning internal structures, and (3) improving digital maturity. Ellström et al., (2021) Digital sensing (1) cross ‐industrial digital sensing, (2) inside ‐out digital infrastructure sensing. Digital seizing (1) digital strategy development, (2) determining enterprise boundaries. Digital transforming (1) decomposing digital transforma ti on into specified projects, (2) crea ti ng unified digital infrastructure. Table 1: Dynamic capabili ti es and their role in digital transforma ti on Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 11 covering and sensemaking ac ti vi ti es (Kirzner, 1997; Weick, 1995). Managers also have access to part ‐ ners’ resources and capabili ti es (Laudien & Daxböck, 2016), which they can use to probe technological possibili ti es (Teece, 2007). Digital sensing also may involve deepening ways of knowing and executing the existing tasks. For example, awareness of available workplace technologies (Li et al., 2021) may stimulate man ‐ agers to apply some of these technologies to en ‐ hance their daily practices, that is, to deepen their existing knowledge base. They may use digital technologies, such as IoT platforms, to perform their tasks more efficiently (Laudien & Daxböck, 2016; Warner & Wäger, 2019). Furthermore, man ‐ agerial specialist knowledge and experience, due to its awareness of firm ‐specific requirements, may help with setting the initial constraints and feasibility testing of the current digital infrastruc ‐ ture and identified technological opportunities (Cross & Sivaloganathan, 2007; Ellström et al., Table 2 summarizes the specifics of managerial ambidextrous learning orienta ti ons (i.e., generalists or specialists) in connec ti on to each of the digital transforma ti on capabili ti es (i.e., sensing, seizing, or transforma ti on). 4.2 The Role of Managerial Ambidexterity in Digital Sensing Digital sensing entails discovering new techno ‐ logical and market opportuni ti es (Helfat & Peteraf, 2015; Teece, 2007), including scanning of data and informa ti on available at digital networks [ecosys ‐ tems “comprised of people, data, processes, and things connected by the shared used of technolo ‐ gies that go beyond the scope of a single system (Henfridsson & Bygstad, 2013; Yoo; Henfridsson, & Lyy ti nen, 2010)”; Montealegre & Iyengar, 2021, p. 1]. Managers’ explora ti ve learning about opportu ‐ ni ti es regarding digital technologies and ways in which they may reinvent business is guided by dis ‐ Figure 1: Conceptual integra ti on of the included theories Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 12 Alenka Slavec Gomezel: Firm Characteris ti cs, Debt Maturity Structure, and Innova ti on Performance of Small Firms 2021). They also may assist in building and assess ‐ ing the routines for capturing technological infor ‐ mation captured by digital networks (Ellström et al., 2021). Digital sensing entails mostly a generalist learn ‐ ing orienta ti on (Pasamar et al., 2015), i.e., it includes more entrepreneurial behavior, is open to discover ‐ ing new possibili ti es, and is less confined to a certain perspec ti ve. Therefore, we suggest: Proposi ti on 1: Digital sensing predominantly re ‐ quires a generalist learning orienta ti on. Digital dynamic capabili ti es Ambidextrous managerial learning orienta ti on Organiza ti onal e ffects of digital transforma ti on Explora ti ve learning orienta ti on Exploita ti ve learning orienta ti on Digital sensing An imbalance towards generalist learning orienta ti on Scanning new technological and market opportuni ti es via a digital network (Helfat & Peteraf, 2015; Teece, 2007; Montealegre & Iyengar, 2021) by using discovering and sensemaking ac ti vi ti es (Kirzner, 1997; Weick, 1995). Enhancing exis ti ng practi ces with digital tools (Laudien & Daxböck, 2016; Warner & Wäger, 2019) Knowledge specific to the industry to set the ini ti al constraints and test the feasibility of technological opportuni ti es (Cross & Sivaloganathan, 2007). First ‐order e ffects: Convergent change Digital seizing A balance between generalist and specialist learning orienta ti on Decisions on a business model redesign by using digital technologies (Teece, 2007; Warner & Wäger, 2019) and which competencies to build within the firm and which to outsource (Ellström et al., 2021) Flexibility, adap ti on, and openness to new growth opportuni ti es (Ellström et al., 2021). Skills of interpreta ti ons to discover, comprehend, and apply knowledge with future goals (Bunderson & Sutcli ffe, 2002; Kelly et al., 2011; Shane, 2000). Expert reasoning about making investments in digital technologies (Helfat & Peteraf, 2015) Decomposing the projects and building the business processes for e ffec ti ve distribu ti on of resources and team members (Ellström et al., 2021). Elici ti ng expert feedback or preferences regarding digital seizing choices from internal and external stakeholders; development of detailed design (Cross & Sivaloganathan, 2007). Second ‐order e ffects: Transforming work Digital transforming A balance between generalist and specialist learning orienta ti on Managerial decision making and ac ti on regarding the coordinated adapta ti on of strategic assets that are cri ti cal for digital transforma ti on (Helfat & Peteraf, 2015) Leadership, social skills, and e ffec ti ve communica ti on across func ti ons (Bunderson & Sutcli ffe, 2002; Helfat & Peteraf, 2015). Development of digital skills (Warner & Wäger, 2019) Decomposing the projects and building the business processes for e ffec ti ve distribu ti on of resources and team members (Ellström et al., 2021). Overcoming the poten ti al obstacles in building the digital infrastructure by pinpoin ti ng best prac ti ces for how come some specific challenges (regarding technology and people) may be overcome (Cross & Sivaloganathan, 2007). Third ‐order e ffects: Transforming the organiza ti on Nikolina Dragi čevi ć, Amadeja Lamovšek, Saša Ba ti s tič : Developing Digital Transforma ti on Capability: The Role of Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 13 4.3 The Role of Managerial Ambidexterity in Digital Seizing Digital seizing may involve business model re ‐ design by using digital technologies (Teece, 2007; Warner & Wäger, 2019), that is, capturing the value of new growth opportuni ti es through new products, processes, and services (Ellström et al., 2021). To pursue business model reinven ti on, managers need to decide which competencies to build within the firm and which to outsource (Ellström et al., 2021), as well as the form of the human resource base (Matarazzo et al., 2021). For this, they need to have skills of interpreta ti on of varied problems and skills to discover, comprehend, and apply knowledge with future goals, which typically are generalists’ traits (Bunderson & Sutcli ffe, 2002; Kelly et al., 2011; Shane, 2000). Managers also may act spontaneously, without seeking permission from their superiors (Birkinshaw & Gibson, 2004) in making decisions about which technologies to pursue in developing new services and products. Nevertheless, adjustments to business model design involve managers’ specialist knowledge as well. This can entail, for example, the capacity to make well ‐thought ‐out investments in new or im ‐ proved digital technologies, which requires in ‐depth knowledge in the field and reasoning skills [i.e., “evalua ti ng informa ti on, arguments, and beliefs to draw a conclusion” or “using informa ti on to deter ‐ mine if a conclusion is valid or reasonable” (Gaz ‐ zaniga et al., 2010, p. 342)] (Helfat & Peteraf, 2015). Specialist knowledge may be relevant in deciding on priori ti es and responsibili ti es for resources alloca ‐ ti on dedicated to strategy realiza ti on (Ellström et al., 2021) and human resources hiring (Matarazzo et al., 2021). Moreover, a specialist orienta ti on may be re ‐ quired in (building rou ti nes for) elici ti ng expert feed ‐ back or preferences regarding digital seizing choices from internal and external stakeholders, as well as for the detailed design of new digital service or product solu ti ons (Cross & Sivaloganathan, 2007). Because building digital seizing capability incor ‐ porates tasks requiring both generalist and specialist learning, we suggest: Proposi ti on 2: Digital seizing requires a balance be ‐ tween generalist and specialist learning orienta ti ons. 4.4 The Role of Managerial Ambidexterity in Digital Transforming Digital transforming, for example, requires managerial decision making and ac ti on regarding the coordinated adapta ti on of strategic assets, that is “the selec ti on, configura ti on, alignment, and modifica ti on of tangible and intangible assets (Helfat et al., 2007)” (Helfat & Peteraf, 2015, p. 12) that are cri ti cal for digital transforma ti on. Coordina ‐ ti on of these strategic changes requires generalist skills of e ffec ti ve communica ti on across func ti ons (Bunderson & Sutcli ffe, 2002). Moreover, one of the criti cal aspects of developing digital transforma ti on capability is the company’s culture (Fitzgerald et al., 2014; Hartl & Hess, 2017), and employees may have heterogeneous percep ti ons of digitaliza ti on that may serve as an obstacle to digital transforma ti on processes. Therefore, to overcome resistance to change, managers need both communica ti on and social skills to induce common understanding and coopera ti ve behaviors in their subordinates (Helfat & Peteraf, 2015). Managers need not only to create but also to communicate e ffec ti vely a digital vision to inspire and support their subordinates in their digital transforma ti on journey (Dery et al., 2017). Exploita ti ve learning orienta ti on is involved in the applica ti on of specialist knowledge and using it for enhancing managers’ knowledge base. In par ti c ‐ ular, managers need to develop new digital skills and/or become sensi ti ve to support the development of such skills in their subordinates (e.g., big data anal ‐ ysis) (Laudien & Daxböck, 2016). Workers need to re ‐ alize more deeply the poten ti al of digital technology in their daily work prac ti ces by learning to apply ar ti ‐ ficial intelligence, IoT pla tf orms, cloud compu ti ng, and others (Warner & Wäger, 2019). Furthermore, specialist expert knowledge may help with decom ‐ posing the projects and building the business pro ‐ cesses for e ffec ti ve distribu ti on of resources and team members (Ellström et al., 2021). Specialist ex ‐ perience also may aid with overcoming the poten ti al obstacles in building the digital infrastructure by as ‐ sessing the similari ti es from past projects and know ‐ ing the best prac ti ces for how to overcome some specific challenges (regarding technology and people) (Cross & Sivaloganathan, 2007). Exper ti se also may be required in establishing new func ti ons such as dig ‐ ital marke ti ng and digital reorganiza ti on (Matarazzo Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 14 Nikolina Dragi čevi ć, Amadeja Lamovšek, Saša Ba ti s tič : Developing Digital Transforma ti on Capability: The Role of Managerial Ambidextrous Learning et al., 2021). Because building the digital transform ‐ ing capability includes tasks requiring both generalist and specialist learning, we suggest: Proposi ti on 3: Digital transforming capability re ‐ quires a balance between generalist and specialist learning orienta ti ons. 5 DISCUSSION AND CONCLUSION 5.1 Theore ti cal Contribu ti on Our study contributes to the individual am ‐ bidexterity literature by inves ti ga ti ng the role of managerial ambidextrous learning (i.e., di fferent learning orienta ti ons) in building the digital transfor ‐ ma ti on capability. Its focus is in line with the propo ‐ si ti on that dynamic capabili ti es are rooted in managerial capabili ti es and prac ti ces (Helfat & Pe ‐ teraf, 2015; Teece, 2012, 2014) and that managers [and their ambidextrous learning (Pasamar et al., 2015) 3 ] have a key role in developing such capabili ‐ ti es. The microfounda ti ons of dynamic capabili ti es for digital transforma ti on iden ti fied and described in this paper are present to some extent in previous re ‐ search that focused on the same topic (Ellström et al., 2021; Warner & Wäger, 2019). However, our work complements the exis ti ng studies by dis ti n ‐ guishing between generalist and specialist learning orienta ti ons and recognizing their dis ti nc ti ve micro ‐ founda ti onal roles in digital transforma ti on capability building. In contrast to the arguments of Birkinshaw et al. (2016), who equated a “sensing” capability with explora ti on, a “seizing” capability with exploita ‐ ti on, and “reconfiguring” to a higher ‐order capability that enables a balance between the first two, we view each digital capability as consis ti ng of both ex ‐ plora ti ve and exploita ti ve ac ti vi ti es, and hence in ‐ cluding both generalist and specialist learning. Nevertheless, we acknowledge that one learning ori ‐ enta ti on may prevail in the development of a specific capability. For example, as we argued in the previous 3 Pasamer et al. suggested that ambidextrous learning and diverse architectures of intellectual capital are re ‐ lated to the development of dynamic capabili ti es; however, they focused on a structural approach to am ‐ bidextrous organiza ti ons, and not on an individual level as we do. sec ti ons, whereas digital sensing capability may re ‐ quire a greater generalist learning orienta ti on, both seizing and transforming capability require a balance between generalist and specialist learning orienta ‐ ti on. This balance may depend on the environmental circumstances, availability of resources, and strategic choices regarding the kind of digital transforma ti on that will be pursued (Pasamar et al., 2015), as well as on the individual and leadership characteris ti cs, culture, and other factors a ffec ti ng individual am ‐ bidexterity (Pertusa ‐Ortega et al., 2020). 5.2 Managerial Implica ti ons Because the role of managers is cri ti cal in digital e fforts, firms need to build guidelines for taking into account both managers’ generalist and specialist learning needs. However, managers may not be equally skilled at generalist and specialist learning. Hence, if a certain type of learning is more required for some aspect of dynamic capabili ti es building (i.e., sensing, seizing, or transforming), managers who have this learning orienta ti on as dominant may provide su ‐ perior aid in this aspect. Nevertheless, we believe that ambidextrous learning should be a common manage ‐ rial trait, and that such duality is par ti cularly required to foster change in organiza ti ons (Sollander & En ‐ gström, 2021). Therefore, human resource manage ‐ ment systems should ac ti vely aim to s ti mulate managerial ambidextrous learning, for example, by deploying prac ti ces that specifically target building “entrepreneurial ability to iden ti fy and exploit oppor ‐ tuni ti es both of experimenta ti on and search for e ffi ‐ ciency (Corbe tt , 2005; Shane, 2000; Short, Ketchen, Shook, & Ireland, 2010” (Bonesso et al., 2014, p. 402). For example, Bonesso et al. (2014) showed how broad knowledge and inter ‐func ti onal and/or inter ‐firm work leads to a balance between explora ti on and ex ‐ ploita ti on. In contrast, managers’ narrow prior knowl ‐ edge and working experience may direct a search for opportuni ti es for exploita ti on (e.g., improvement of current technologies). Following this and other studies (e.g. Mom et al., 2009; Un, 2007), we suggest that fa ‐ cilita ti ng par ti cipa ti on in cross ‐func ti onal work may s ti mulate more ‐entrepreneurial managerial behavior and balanced learning. Because managers with broader prior work experience may be more likely to exhibit ambidextrous behaviors, HR practiti oners in ‐ Dynamic Rela ti onships Management Journal, Vol. 11, No. 2, November 2022 15 volved in the recruitment processes might take this insight as a guiding principle in their decision ‐making. Furthermore, Mom et al. (2019) drew on self ‐ef ‐ ficacy (Bandura, 1982) and self ‐determina ti on theory (Deci & Ryan, 2008) to put forward a set of human re ‐ source management prac ti ces that s ti mulate manage ‐ rial ambidexterity, namely mo ti va ti ng (i.e., job enrichment, behavioral appraisal, and commitment ‐ oriented rewards and compensa ti on), ability (i.e., comprehensive training and job enlargement), and opportunity ‐enhancing prac ti ces (i.e., decision mak ‐ ing, informa ti on sharing, and support for ideas). We suggest that these are relevant in the context of digital transforma ti on. Furthermore, recent studies iden ti ‐ fied microfounda ti ons (Warner & Wäger, 2019) and rou ti nes (Ellström et al., 2021) underpinning dynamic capabili ti es in support of firms’ digital e fforts and the realizing of the poten ti al of digital transforma ti on. Our study complements these works by focusing on am ‐ bidextrous learning as the core to building such capa ‐ bili ti es. In par ti cular, we suggest a framework that di fferen ti ates a role of either generalist or specialist learning orienta ti on in di fferent dynamic capabili ti es underpinning digital transforma ti on (sensing, seizing, or transforming). We hold that such a framework may assist managers with crea ti ng digital strategies that take into account important learning processes un ‐ derpinning managers’ work in digital transforma ti on pursuits. 5.3 Limita ti ons This study provides a general framework de ‐ scribing the role of managerial ambidextrous learn ‐ ing in developing the digital transforma ti on capability. However, this study does not assume that a specific hierarchical level is associated exclusively with microfounda ti ons of dynamic capabili ti es and should predominantly prac ti ce only a par ti cular learning orienta ti on. Birkinshaw et al. (2016) took a di fferent approach and emphasized that sensing and seizing typically are front ‐line capabili ti es, whereas reconfiguring commonly is an execu ti ve capability. Montealegre and Iyengar (2021) proposed that the evolu ti on of digital business pla tf orms has three dif ‐ ferent phases (i.e., ini ti a ti ng, developing, and grow ‐ ing) and that in each phase top, middle, and opera ti onal management have di fferent roles in bal ‐ ancing between renewal (i.e., explora ti on) and re ‐ finement (i.e., exploita ti on). Nadkarni and Prügl (2020) emphasized the cri ti cal role of middle man ‐ agers in implemen ti ng digital transforma ti on. Con ‐ versely, we believe that it would be beneficial to extend our study to inves ti gate key management prac ti ces (including generalist or specialist learning orienta ti ons) related to these di fferent management levels. We also suggest that it would be useful to in ‐ ves ti gate empirically the role of managerial ambidex ‐ trous learning in digital e fforts in specific firms and across management levels because dynamic capa ‐ bili ti es are context ‐specific (Birkinshaw et al., 2016). Finally, there is an increasing stream of research on the T ‐shaped individuals in di fferent contexts, includ ‐ ing digital transforma ti on (Demirkan & Spohrer, 2018); we believe that future research on individual ambidexterity could connect frui tf ully with this stream. 5.4 Conclusion This study conducted a comprehensive litera ‐ ture review to connect di fferent theore ti cal streams—dynamic capabili ti es, digital transforma ‐ ti on, and individual ambidexterity literatures—to iden ti fy how di fferent managerial learning orienta ‐ ti ons (i.e., generalist or specialist) underpin digital transforma ti on capabili ti es (i.e., sensing, seizing, and transforming). Specifically, we build on these theore ti cal perspec ti ves to o ffer a more comprehen ‐ sive conceptualiza ti on and framework that reveals the learning mechanisms (predominantly exploita ‐ ti ve or explora ti ve) for achieving digital transforma ‐ ti on. In doing this, we help to understand how each digital dynamic capability includes managerial learn ‐ ing ‐based handling of compe ti ng demands, i.e., re ‐ quires development of managerial ambidextrous learning. Future research should inves ti gate empir ‐ ically the role of managerial ambidextrous learning in digital a tt empts because our conceptual e fforts cannot capture the specific market dynamics. Acknowledgements This work has been supported in part by the Croa ti an Science Founda ti on under Project number UI ‐2020 ‐02 ‐8889. 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Prispevek na podlagi obsežnega pregleda literature opredeljuje konkuren čne zahteve v smislu usmeritve managerskega u čenja, ki služijo kot mikrotemelji razli čnih dinami čnih organizacijskih sposobnos ti , ki podpirajo digitalno pre ‐ obrazbo. Sprejemamo dvostransko perspek ti vo u čenja in predlagamo, da morajo managerji uravnoteži ti raziskovalno in izkoriš čevalno u čenje, da bi pomagali pri izgradnji sposobnos ti digitalne preobrazbe. Ta članek prispeva k teore tič nim perspek ti vam obojero čnos ti in dinami čnih sposobnos ti s svojim izrazi ti m poudarkom na vlogi u čenja na ravni posameznika v kontekstu digitalne preobrazbe na organizacijski ravni. Članek izboljšuje razumevanje, kako lahko podjetja podpirajo digitalna prizade ‐ vanja, tako da postanejo ob čutljiva in podpirajo vodstveno obojero čnost kot kri tič ni dejavnik na us ‐ pešni po ti digitalne preobrazbe. 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