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The purpose of the study was to analyse the impact of innovation ambidexterity represented by explorative and exploitative innovation capabilities and their combined effects on product innovation performance and to prove the mediating effect of decentralization.

The study uses partial least squares for structural equation models and SmartPLS version 3.3.1 on a sample of 174 Romanian medium- and large-sized firms from the IT industry to test six research hypotheses. To measure innovation ambidexterity, the orthogonal approach was used, conceptualizing innovation ambidexterity as a multidimensional, second-order construct composed of explorative and exploitative innovation capabilities. Innovation ambidexterity was conceptualized as a multiplicative term of both explorative and exploitative innovation capabilities.

The empirical results prove that innovation ambidexterity is positively correlated with product innovation performance, while decentralization is mediating the impact of innovation ambidexterity on product innovation performance in the IT industry.

The data was based on self-reported assessments of senior executives. While innovation ambidexterity may influence product innovation performance in the long term, such long-term effects are not assessed. Other studies found a moderating effect between centralization or decentralization and ambidexterity, while we found that it has a mediating effect.

In the context of innovation capability, the combination of explorative or exploitative capabilities may lead to a better synergy. Innovation ambidexterity influences product innovation performance through a synergistic effect, making the simultaneous combination of capabilities useful for firms willing to make efficient use of existing resources and make their capabilities mutually supportive. Moreover, for senior executives, the effects of decentralization as a mediator provide further incentive to include it in their development of firms' innovation capabilities.

This study extends findings of other studies by contributing to a deeper examination of the effects of decentralization, on innovation outcomes by focusing on a specific type of innovation, product innovation. Moreover, since innovation capability is often studied in small firms or in the manufacturing industry, this study contributes to the research on innovation capability and the consequences on innovation capability in the services sector and medium- and large-sized companies. By proving that decentralization mediates the effects of innovation ambidexterity on product innovation performance, it enables reconsideration of the organizational structure role in fostering innovation.