Can empowering leadership teams improve how public organizations explore and exploit opportunities?

Organizations that can simultaneously explore new possibilities and exploit existing strengths outperform those that do only one well. This capacity—known as organizational ambidexterity—is well studied in private firms but far less understood in the public sector, where bureaucratic structures, political oversight, and the absence of profit motives create a different strategic landscape.

This study examines whether shared leadership in top management teams (TMTs) promotes ambidexterity in public organizations, and how different types of management control systems moderate that relationship. The setting is 85 Swedish municipal housing corporations—entities that operate with commercial mandates but serve public purposes.

What We Studied

The researchers collected survey data from CEOs, CFOs, and a third senior executive in each corporation. Shared leadership was measured through items capturing joint decision-making, collective responsibility, and team-level strategic engagement. Ambidexterity was assessed by combining separate scales for exploration (pursuing new services, markets, and approaches) and exploitation (refining existing operations and capabilities).

The critical moderating variable was management control systems, divided into two types. Traditional public management control systems (TPMCS) emphasize planning, budgets, and administrative procedures. New public management control systems (NPMCS) focus on performance metrics, output measurement, and reward-based incentives. The analysis used hierarchical regression to test both direct and interaction effects, controlling for organization size and CEO tenure.

Key Insights

Shared leadership promotes ambidexterity

Organizations where leadership responsibility was distributed across the TMT—rather than concentrated in a single executive—scored significantly higher on ambidexterity. The mechanism is straightforward: collective decision-making brings more perspectives to the table, reduces the risk of strategic blind spots, and makes it easier to pursue both exploratory and exploitative activities simultaneously. A single leader tends to favor one orientation; a team can hold both in productive tension.

Performance-oriented controls amplify the effect

The positive link between shared leadership and ambidexterity was significantly stronger in organizations using NPMCS. Performance metrics, output targets, and reward systems appear to create the right conditions for shared leadership to flourish: clear goals provide alignment, feedback loops support learning, and incentive structures encourage the kind of calculated risk-taking that exploration requires. The combination of distributed authority and results-based accountability proved more powerful than either element alone.

Traditional controls do not enhance shared leadership’s impact

TPMCS—planning-based and procedurally oriented—did not significantly moderate the shared leadership–ambidexterity relationship. This does not mean traditional controls are useless. They showed a direct positive association with ambidexterity, suggesting that structure and planning contribute to organizational capacity on their own. But when paired with shared leadership, their rigidity appears to constrain the flexibility that collective decision-making needs to operate effectively. The finding highlights a tension: structure helps, but the wrong kind of structure can suppress the adaptive benefits of shared leadership.

Takeaways

Distribute leadership deliberately

Organizations that rely on a single dominant executive for strategic direction may be limiting their capacity for ambidexterity. Building genuine shared leadership at the TMT level—where multiple members hold real authority over strategic decisions—creates the cognitive and relational diversity needed to balance exploration and exploitation. This requires more than delegation. It requires collective ownership of outcomes.

Align control systems with leadership style

Shared leadership thrives under performance-oriented controls that clarify expectations without dictating process. Organizations transitioning toward more distributed leadership models should examine whether their control systems support or undermine that shift. If the dominant controls are procedural and compliance-based, they may inadvertently stifle the flexibility that shared leadership needs.

Use traditional controls for stability, not for innovation

Planning-based controls still have a role in ensuring operational discipline and resource allocation. But they should not be the primary mechanism for supporting innovation or strategic renewal. Reserve them for the exploitation side of the ambidexterity equation, and rely on performance-based systems to enable exploration.

Impact

This study makes a distinctive contribution by examining ambidexterity in the public sector, where the concept has received far less attention than in private firms. It demonstrates that shared leadership is not just a private-sector phenomenon—it has measurable effects on strategic capacity in public organizations. The finding that control system type moderates this relationship adds nuance: it is not enough to share leadership; the organizational infrastructure must be compatible with it.

The implications extend beyond public housing corporations. Any organization facing the simultaneous demands of innovation and efficiency—including nonprofits, cooperatives, and family-controlled enterprises during transitions—can draw lessons from the interplay between leadership distribution and control system design. The core insight is that leadership style and organizational infrastructure are not independent choices. They must be designed together.

Recommendations

1. Invest in TMT development. Build leadership capacity across the team, not just at the top. Ensure that strategic decision-making involves multiple senior leaders with real authority.
2. Transition toward performance-based controls. Move from legacy planning systems to more agile, output-oriented models that support autonomy and accountability simultaneously.
3. Audit the leadership–control fit. Examine whether current management control systems are compatible with the leadership style the organization aspires to. Misalignment between distributed leadership and rigid controls creates friction.
4. Use ambidexterity as a performance indicator. Track the organization’s balance between exploration and exploitation as a measure of strategic health, alongside traditional financial and operational metrics.