The study, anchored in the dynamic capabilities view (DCV), aims to investigate how organizational ambidexterity (AMB) drives financial performance (FP) by examining the serial mediating roles of dynamic capabilities (DC) (strategic routines) and quality systems (QS) (operational micro-foundations).
A cross-sectional survey was conducted between June and September 2023, collecting 308 valid responses from senior managers in the Palestinian business sector (comprising both manufacturing and service firms). The hypothesized relationships were analyzed using partial least squares structural equation modeling.
The analysis confirms that both DC and QS mediate the AMB–FP relationship, with AMB positively influencing DC. Specifically, DC acts as a partial mediator, while QS performs no mediating effect in terms of variance-accounted-for estimation. Crucially, the serial mediation path combining DC and QS is fully supported, showing the sequential effect of operational stability enabling strategic agility.
This research emphasizes the significance of AMB and DC in the enhancement of FP in the business domain. It brings to the fore the role of QS as a foundational and operational mediator, while in a similar vein serving as a guide for managers of businesses who seek to enhance FP by controlling their DC while relying on a foundation of QS.
The research made a maiden attempt, especially in the emerging economy setting, to empirically test a holistic model of the interlinking relationship between AMB, DC and QS, as drivers of FP. It adds to the domain of DCV by shedding light on the role of operational stability as a required foundational mediator for the achievement of strategic agility in the pursuit of ambidextrous financial gains.
