Organizational Ambidexterity: How Balanced Scorecard (BSC) and Activity-Based Costing (ABC) Enable Exploration–Exploitation Synergy and Sustainable Performance

Abstract

This study investigates how management accounting systems (MASs), specifically the balanced scorecard (BSC) and activity-based costing (ABC), foster organizational ambidexterity (OA) and, in turn, enhance firm performance. Drawing on the resource-based view, theory of constraints, and the ambidexterity literature, this research explores whether BSC and ABC act as enablers of the exploration–exploitation balance necessary for long-term competitiveness. A quantitative survey design was employed, targeting large- and medium-sized organizations in Saudi Arabia. Data from 186 valid responses were analyzed using structural equation modeling (SEM) to test the proposed relationships. The results provide robust empirical evidence that both BSC and ABC significantly contribute to OA. While BSC indirectly enhances organizational performance through OA, ABC exerts a direct positive effect on performance. Furthermore, higher levels of OA were found to significantly improve business outcomes, confirming its role as a critical mediator of strategic and operational success. The study makes three key contributions: First, it validates the role of MASs in building ambidextrous capabilities that enable firms to balance efficiency with innovation. Second, it demonstrates the complementary effects of BSC and ABC in driving superior organizational performance. Third, it highlights the strategic value of MASs in aligning organizational practices with sustainable development goals, thereby reconciling short-term profitability with long-term growth.

1. Introduction

Organizations operating within today’s dynamic and competitive business environment are faced with the challenge of achieving and maintaining a balance between exploiting their current capabilities and exploring new opportunities for growth and innovation (O’Reilly & Tushman, 2013). This delicate balance, often referred to as organizational ambidexterity (OA), has been identified as a critical factor in organizational success and long-term survival (Raisch & Birkinshaw, 2008). OA enables firms to simultaneously pursue incremental innovations that improve efficiency and radical innovations that create new markets and opportunities (Tushman & O’Reilly, 1996). Beyond financial success, however, organizations are increasingly expected to align their strategies with broader sustainability imperatives, responding to global challenges such as climate change, resource scarcity, and social responsibility. In this context, OA is not only about reconciling exploration and exploitation for competitiveness, but also about balancing short-term efficiency with long-term sustainability investments, which are central to the United Nations’ Sustainable Development Goals (SDGs). Addressing this dual challenge requires organizational mechanisms that provide timely, relevant, and strategically aligned information to guide managers in navigating efficiency, innovation, and sustainability simultaneously.

Within this context, management accounting systems (MASs), such as the balanced scorecard (BSC) and activity-based costing (ABC), emerge as potential enablers of OA. The BSC offers a multidimensional framework that translates strategy into measurable objectives across financial, customer, internal process, and learning perspectives, thereby supporting both efficiency-driven exploitation and innovation-oriented exploration (Kaplan & Norton, 1996). Similarly, ABC provides more accurate cost visibility by linking resources to activities, which aids in optimizing current operations while identifying opportunities for future growth (Cooper & Kaplan, 1988). Thus, MASs do not merely serve as performance measurement tools; they can also act as strategic facilitators that help organizations navigate the tension between exploration and exploitation, enhancing ambidextrous capabilities and ultimately firm performance.

The potential link between MASs, such as the BSC and ABC, and OA lies in their ability to provide information that is pertinent and up-to-date to inform strategic decision-making (Ittner & Larcker, 2001). The BSC, for instance, can help organizations achieve strategic alignment by converting their vision and strategy into a cohesive set of performance metrics across different perspectives (Kaplan & Norton, 1996). This can facilitate the effective implementation of both exploitative and explorative strategies, as the BSC provides a balanced view of the organization’s performance and helps managers identify areas for improvement and innovation (Bisbe & Malagueño, 2012). Similarly, ABC can contribute to OA by offering a more precise comprehension of the costs associated with various activities and products (Cooper & Kaplan, 1988). This information can support strategic decision-making, such as the deployment of organizational resources across explorative and exploitative initiatives, and the identification of new market opportunities or cost-saving measures (Banker et al., 2008). Moreover, the implementation of ABC can encourage cross-functional collaboration and knowledge sharing, which are important for developing ambidextrous capabilities (Ylinen & Gullkvist, 2014).

The concurrent implementation of the balanced scorecard and activity-based costing methodologies may substantially influence organizational performance by facilitating and promoting organizational ambidexterity. Prior studies indicate that firms capable of effectively balancing exploratory and exploitative activities tend to outperform their more specialized peers. (Cao et al., 2009; Junni et al., 2013). The BSC and ABC can contribute to this process by providing the necessary information and framework to guide strategic organizational decision-making, resource distribution, and performance evaluation in support of ambidextrous organizational capabilities. However, empirical evidence on the joint effect of these MASs and OA on organizational performance remains limited, warranting further investigation. The investigation of the potential synergistic effects of MASs, such as the BSC and ABC, and OA on organizational performance is a crucial research endeavor. Within the current highly competitive and dynamically shifting business environment, organizations must not only optimize their current operations and exploit their existing capabilities, but also explore new opportunities and innovate to ensure long-term survival and growth.

Beyond enhancing operational and financial performance, management accounting systems like BSC and ABC are increasingly recognized as enablers of sustainable business practices (Hahn & Figge, 2018). The BSC’s multidimensional framework can integrate environmental and social metrics (e.g., carbon footprint, employee well-being) alongside traditional financial targets, aligning corporate strategy with global sustainability agendas such as the United Nations’ Sustainable Development Goals (SDGs) (Robert & George, 2013). Similarly, ABC’s cost-tracking capabilities can identify inefficiencies in resource use, supporting SDG 12 (Responsible Consumption) by reducing waste. Organizational ambidexterity further bridges this gap, allowing for firms to reconcile short-term profitability (exploitation) with long-term sustainability investments (exploration), a critical balance for achieving SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure) (Bocken et al., 2017). Thus, this study’s focus on MASs and OA extends beyond performance optimization and demonstrates their strategic role in fostering sustainable development.

By providing relevant, timely, and balanced information to guide strategic decision-making and resource allocation, the BSC and ABC can help organizations effectively manage the exploration–exploitation tension and develop ambidextrous capabilities (Bisbe & Malagueño, 2012; Ylinen & Gullkvist, 2014). However, the existing literature on the interplay between MASs, organizational ambidexterity, and organizational performance remains limited. While some studies have examined the individual effects of BSC and ABC on various performance outcomes, the combined influence of these MASs and their potential synergies with organizational ambidexterity has largely been overlooked. This research aims to address this gap by exploring the complex relationships and potential synergies among these critical organizational elements, providing valuable insights for both academic and practitioner audiences. By advancing our understanding of how MASs can support the development and maintenance of ambidextrous organizational capabilities, this study has the potential to contribute to the ongoing discourse on the strategic role of management accounting and its impact on firm performance.

This study advances the existing body of knowledge in several ways. First, it explores the combined effect of the balanced scorecard (BSC) and activity-based costing (ABC) on organizational ambidexterity (OA), an area that has been largely overlooked, as most prior studies have examined these management accounting systems in isolation. Second, this study empirically demonstrates how the BSC and ABC function as complementary enablers of OA, thereby enriching theoretical discourse by positioning management accounting systems as dynamic capabilities that support exploration–exploitation balance. Third, this research highlights the mediating role of OA, clarifying that the BSC and ABC influence performance directly and indirectly through ambidexterity. Finally, this study provides practical contributions by offering managers evidence-based guidance on how to strategically deploy the BSC and ABC together to navigate tensions between short-term efficiency and long-term innovation, ultimately fostering both superior performance and alignment with sustainable development objectives.

This study is organized as follows: First, a review of the relevant literature on MASs, organizational ambidexterity, and their potential linkages is presented. This is followed by the development of a conceptual framework that outlines the hypothesized relationships among these key constructs. The Methodology section describes the research design, data collection, and analysis procedures employed to empirically test the proposed model. The Results section then presents the findings from the quantitative analysis, including the direct and indirect effects of the BSC, ABC, and OA on various performance outcomes. Finally, the Discussion and Conclusions sections interpret the findings, highlight the theoretical and practical implications, and address the limitations of the study, while also outlining avenues for future research.

2. Literature Review and Hypotheses Development

2.1. Theoretical Background

2.1.1. Organizational Ambidexterity

Organizational ambidexterity has been a topic of extensive research in the management and organizational behavior literature. Organizational ambidexterity denotes the capacity of a firm to engage in both exploitative and exploratory innovation concurrently (March, 1991). Exploitative innovation entails the enhancement and optimization of current products, services, and operational processes, whereas exploratory innovation is directed toward the creation of novel products, services, and business frameworks (Tushman & O’Reilly, 1996). The concept of organizational ambidexterity suggests that firms need to balance these two seemingly contradictory activities in order to achieve long-term success and sustainability (O’Reilly & Tushman, 2004). The literature identifies three main approaches to achieving OA, structural, contextual, and sequential ambidexterity, each with distinct advantages and challenges depending on organizational context (O’Reilly & Tushman, 2008; Gibson & Birkinshaw, 2004; Gupta et al., 2006).

Moreover, prior studies have identified several antecedents and enablers of organizational ambidexterity. For example, organizational structure, leadership, and organizational culture have been found to play a critical role in fostering ambidexterity (Jansen et al., 2009; Raisch & Birkinshaw, 2008). Specifically, firms that are able to implement structural mechanisms, such as differentiated organizational units for exploration and exploitation, coupled with integration mechanisms, are more likely to achieve ambidexterity (Tushman & O’Reilly, 1996). Additionally, leaders who are able to manage the tensions between exploration and exploitation, and create an organizational culture that supports both, can enable ambidexterity (Carmeli & Halevi, 2009; Havermans et al., 2015). The outcomes of organizational ambidexterity have also been extensively studied. Ambidextrous organizations have been shown to outperform their peers in terms of financial performance, innovativeness, and adaptability to environmental changes (Patel et al., 2013; Raisch & Birkinshaw, 2008). However, achieving and maintaining ambidexterity is challenging, as the two activities of exploration and exploitation often require different, and sometimes conflicting, organizational structures, processes, and cultures (Lavie et al., 2010). Understanding how firms can effectively manage this tension and balance exploration and exploitation is an important area of research in the field of strategic management.

While the benefits of OA are widely recognized, recent empirical studies highlight ongoing debates about its implementation and outcomes. For instance, some findings suggest that achieving high levels of exploration and exploitation simultaneously may create resource strain and managerial overload, potentially reducing performance in resource-constrained contexts (Sayed & Dayan, 2024; Lavie et al., 2010). Other studies argue that the effectiveness of OA may depend on contextual moderators such as industry turbulence, firm size, and leadership style (Junni et al., 2013; Havermans et al., 2015). These debates indicate that OA is not a universally beneficial capability, but rather one whose value is contingent on organizational and environmental conditions. This critical perspective underscores the importance of examining enabling mechanisms, such as management accounting systems, which can help organizations operationalize ambidexterity more effectively in diverse contexts.

2.1.2. Balanced Scorecard

BSC is a strategic management tool designed to assess organizational performance, introduced by Kaplan and Norton (1992) as a comprehensive framework for aligning business activities with long-term objectives. BSC extends conventional financial performance measures by incorporating three non-financial dimensions: (1) customer-related indicators, (2) internal operational processes, and (3) organizational learning and development (Kaplan & Norton, 1996). The balanced scorecard was designed to provide managers with a more comprehensive view of organizational performance by measuring and monitoring a variety of financial and non-financial performance indicators (Niven, 2002). The framework posits that traditional financial metrics alone do not adequately capture the drivers of long-term organizational success and that a more balanced set of measures is required (Kaplan & Norton, 1996). By including measures related to customer satisfaction, internal processes, and organizational learning and growth, the balanced scorecard aims to provide executives with a clearer picture of how the organization is performing and what areas may need improvement.

The theoretical basis of the balanced scorecard draws primarily from the resource-based view of the firm, which emphasizes the importance of intangible assets and organizational capabilities as sources of sustainable competitive advantage (Barney, 1991; Wernerfelt, 1984). The balanced scorecard framework recognizes that an organization’s long-term success is not solely dependent on financial outcomes, but also on its ability to develop and leverage its internal capabilities and resources to meet customer needs and adapt to changing market conditions (Kaplan & Norton, 2002). This theoretical perspective has been widely adopted in the management accounting literature and has informed the development of numerous variations and applications of the balanced scorecard approach (Norreklit, 2000; Speckbacher et al., 2003).

2.1.3. Activity-Based Costing

ABC is a management accounting technique that was developed in the 1980s as an alternative to traditional volume-based costing systems (Cooper & Kaplan, 1988). Traditional costing approaches were increasingly seen as inadequate for capturing the true costs of production in modern manufacturing environments, which were becoming more complex with a greater diversity of products and higher levels of automation (Hopper & Major, 2007). The core premise of ABC is that organizational activities, rather than individual products or services, are the fundamental cost drivers (Kaplan & Cooper, 1998). By tracing costs to the activities that consume organizational resources, ABC aims to provide a more accurate and clear view of product or service profitability compared to traditional costing methods (Drury & Tayles, 1994). This is achieved by identifying the various activities involved in the production process and then allocating overhead costs to products based on their consumption of those activities, rather than using broad-based volume-based allocation bases such as direct labor or machine hours.

The theoretical foundations of ABC draw heavily from the work of economists on activity-based management and the management of indirect costs (Hoozée & Bruggeman, 2010). Specifically, the ABC approach is informed by the theory of constraints, which emphasizes the importance of identifying and managing the constraining factors or bottlenecks within a production system (Goldratt & Cox, 2016). By focusing on the activities that drive overhead costs, ABC enables managers to better understand the cost structures of their organization and identify opportunities for process improvement and cost reduction (Innes & Mitchell, 1995). This alignment between ABC and the theory of constraints has helped to drive the widespread adoption of ABC in a variety of industries and organizational contexts.

In sum, the conceptual framework integrates the resource-based view and the theory of constraints by positioning BSC and ABC simultaneously as strategic resources (RBV) and as mechanisms for addressing operational bottlenecks (ToC). This dual perspective provides the theoretical grounding for their role in enabling organizational ambidexterity and performance.

2.1.4. Recent Developments and Extensions

The recent literature has expanded the discussion on management accounting systems (MASs) to account for digitalization, sustainability, and non-Western institutional contexts. Emerging studies on digital transformation emphasize that management control and performance measurement must integrate advanced analytics, digital platforms, and real-time dashboards in order to remain strategically relevant (Appelbaum et al., 2017; Kasztelnik & Campbell, 2023). In line with this, the notion of the ambidextrous scorecard (Sierra & Mila, 2025) and the digital balanced scorecard (Digital BSC) has been proposed as an extension of the classical BSC, embedding digital capabilities, data-driven KPIs, and platform-based strategies into performance frameworks (Fabac, 2022; Ibrahim et al., 2023; Kalista et al., 2023).

At the same time, the sustainability and green accounting literature highlights a shift towards incorporating environmental and social objectives directly into MASs, with frameworks such as the sustainability balanced scorecard or carbon accounting systems supporting strategic alignment with the SDGs (Chehimi & Naro, 2024; Dağıdır & Özkan, 2024; Mio et al., 2022; Sharaf-Addin & Al-Dhubaibi, 2025). This resonates with the notion of green ambidexterity, where firms are urged to balance exploitative efficiency gains with exploratory ecological innovation (Martínez-Falcó et al., 2024; Úbeda-García et al., 2022).

Furthermore, recent studies stress the importance of examining MAS practices in non-Western or emerging contexts, where institutional conditions, cultural factors, and digital adoption trajectories may differ significantly from Western economies (Al-Dhubaibi et al., 2023; Yousef & Sponem, 2025). Incorporating these perspectives allows for a more global understanding of how BSC and ABC can act as enablers of ambidexterity and sustainable performance.

While other management accounting systems such as lean accounting or real-time dashboards also offer potential performance benefits, they were not included in this study for two reasons: First, BSC and ABC represent well-established and theoretically grounded MASs that are widely adopted across diverse organizational contexts, providing a robust basis for empirical investigation. Second, the prior literature highlights their unique and complementary roles in balancing exploration and exploitation: BSC through multidimensional strategic alignment and ABC through detailed cost transparency. Focusing on these two systems, therefore, enables a more precise assessment of their synergistic effects on organizational ambidexterity and performance while keeping the study’s scope analytically manageable.

2.2. Hypotheses Development

The balanced scorecard framework, with its emphasis on aligning an organization’s strategic objectives and performance metrics across financial, customer, internal process, and learning and growth perspectives, could be a key enabler of organizational ambidexterity. By incorporating measures of both efficiency (e.g., financial metrics, process improvements) and innovation (e.g., new product development, employee capabilities), the balanced scorecard can help organizations simultaneously pursue exploration and exploitation activities (Inamdar & Kaplan, 2002; Newbert, 2008).

The comprehensive nature of the balanced scorecard, and its ability to link high-level strategic goals to operational initiatives, could provide the organizational structures, processes, and culture necessary for ambidexterity. For example, the balanced scorecard’s focus on continuously monitoring and adjusting performance metrics may help organizations quickly identify and respond to changes in their competitive environment, a key capability for ambidextrous firms (Gibson & Birkinshaw, 2004; Mayo-Alvarez et al., 2024). Additionally, the balanced scorecard’s emphasis on the learning and growth perspective could foster the organizational learning and development required to build the skills and mindset for ambidexterity. Accordingly, the following hypothesis is proposed:

H1. 

The adoption of a balanced scorecard significantly contributes to the achievement of organizational ambidexterity.

ABC enables organizations to better allocate resources between innovative endeavors and efficient operational processes (Kaplan & Anderson, 2007). This precise allocation is essential for maintaining the delicate balance required for OA, as it ensures that both exploration of new opportunities and exploitation of existing capabilities are adequately funded and managed. The accurate cost data from ABC can highlight areas where existing processes and products can be streamlined and optimized, supporting the exploitation of current capabilities. Conversely, ABC can also identify activities and resources that are critical for developing new products, services, and capabilities, guiding the necessary exploration efforts (Abernethy & Lillis, 1995; Ittner et al., 2003). This ability to simultaneously manage both incremental enhancements and radical innovations is at the heart of organizational ambidexterity.

Furthermore, ABC supports organizational ambidexterity by fostering a culture of continuous improvement and strategic agility. According to Turner and Lee-Kelley (2013), the detailed cost information provided by ABC enables managers to identify inefficiencies and areas for improvement, thereby facilitating more dynamic and responsive decision-making processes. This heightened level of responsiveness is critical for ambidextrous organizations that must constantly adapt to changing market conditions and technological advancements. Additionally, ABC’s emphasis on activity and process analysis encourages a deeper understanding of operational workflows, promoting a holistic view that integrates both explorative and exploitative activities within the organizational strategy (Hoozée & Bruggeman, 2010). Therefore, the present study hypothesizes the following:

H2. 

The use of activity-based costing significantly contributes to the achievement of organizational ambidexterity.

Organizational ambidexterity, the capacity of the firm to engage in both exploratory innovation (pursuing novel opportunities) and exploitative optimization (leveraging current competencies) concurrently, has been widely recognized as a key driver of organizational performance. Drawing on the dynamic capabilities perspective, scholars argue that OA enables firms to adapt to rapidly changing environments by engaging in both incremental and radical innovation (Raisch & Birkinshaw, 2008; Sayed & Dayan, 2024; Tushman & O’Reilly, 1996).

Empirical studies have provided substantial support for the positive relationship between OA and various performance outcomes. For instance, a meta-analysis by Junni et al. (2013) found that OA was positively associated with financial performance, innovative performance, and organizational effectiveness. Similarly, Peng et al. (2019) demonstrated that high levels of OA led to enhanced productivity, profitability, and market share among high-tech firms. The underlying logic is that, by maintaining a balance between exploration and exploitation, organizations are better equipped to sense and seize new opportunities while also improving efficiency and leveraging existing competencies, ultimately resulting in superior performance (Dranev et al., 2020; Jansen et al., 2009; Patel et al., 2013). In line with this theoretical foundation, the present study introduces the subsequent hypothesis:

H3. 

Organizations exhibiting higher levels of organizational ambidexterity experience improved performance.

BSC has been widely recognized as a strategic management tool that can enhance organizational performance. By providing a balanced set of financial and non-financial measures across different perspectives, BSC enables organizations to align their activities with strategic objectives and track progress towards desired outcomes (Hoque, 2014; Kaplan & Norton, 1992). Numerous empirical studies have demonstrated the direct positive effects of BSC implementation on various performance indicators, such as financial returns, productivity, and customer satisfaction (Al-Dhubaibi et al., 2023; Decoene & Bruggeman, 2006; Gavrea et al., 2011; Jusoh et al., 2008). The underlying logic is that the BSC helps organizations to better understand their value-creation processes, make more informed decisions, and ultimately enhance their overall performance.

In addition to the direct performance benefits, the BSC may also have an indirect positive effect on performance by fostering organizational ambidexterity (OA). The BSC’s emphasis on balancing multiple performance perspectives, including both financial and non-financial measures, can promote the development of organizational capabilities that enable firms to simultaneously explore new opportunities and exploit existing competencies (Chenhall, 2005; Kaplan & Norton, 2001). For instance, the customer perspective of the BSC may drive organizations to engage in exploratory innovation to meet evolving customer needs, while the financial perspective may encourage exploitative activities to improve efficiency and profitability. Hence, the BSC can enhance an organization’s ambidexterity, which in turn has been shown to lead to improved performance outcomes (Junni et al., 2013). Thus, the current study aims to empirically test the following hypotheses:

H4a. 

The adoption of a balanced scorecard has a direct positive effect on performance.

H4b. 

The adoption of a balanced scorecard has an indirect positive effect on performance through enhanced organizational ambidexterity.

The use of activity-based costing (ABC) has been widely recognized as a strategic management accounting tool that can enhance organizational performance. ABC provides a more accurate and comprehensive understanding of the true costs associated with a firm’s products, services, and processes by tracing indirect costs to specific activities and cost drivers (Cooper & Kaplan, 1988; Turney, 1996). This enhanced cost information enables managers to make more informed decisions, ultimately leading to improved financial and operational performance ((Maiga & Jacobs, 2008; Banker et al., 2008). Numerous empirical studies have demonstrated the direct positive effects of ABC implementation as a new management accounting tool on various performance indicators, such as profitability, productivity, and customer satisfaction (Al-Dhubaibi, 2024; Cagwin & Bouwman, 2002; Duh et al., 2009; Ittner et al., 2002). The underlying logic is that the use of ABC helps organizations to better understand their cost structure, identify and eliminate inefficiencies, and ultimately enhance their overall performance.

In addition to the direct performance benefits, the use of ABC may also have an indirect positive effect on performance by fostering organizational ambidexterity (OA). The enhanced cost information provided by ABC can enable organizations to better balance their exploration and exploitation activities, which are essential for achieving organizational ambidexterity (Chenhall & Langfield-Smith, 1998; Jansen et al., 2009). For instance, the accurate cost information from ABC can help organizations identify and prioritize opportunities for exploitative activities, such as process improvements and cost reductions, while also providing insights into potential areas for exploratory innovation, such as new product development or market expansion. Hence, the use of ABC can enhance an organization’s ambidexterity, which in turn has been shown to lead to improved performance outcomes (Dranev et al., 2020; Junni et al., 2013). Based on the established theoretical relationships, the following hypotheses are examined:

H5a. 

The use of activity-based costing has a direct positive effect on performance.

H5b. 

The use of activity-based costing has an indirect positive effect on performance through enhanced organizational ambidexterity

3. Methodology

3.1. Research Design

This study uses a quantitative research methodology to investigate the interrelationships between the balanced scorecard (BSC) framework, activity-based costing (ABC) practices, and organizational ambidexterity (OA), as well as their combined impact on organizational performance within the context of companies operating in Saudi Arabia. To address this research objective, this study employed a survey research design, targeting a sample of manufacturing and service organizations operating throughout the Kingdom of Saudi Arabia. The focus on manufacturing and service organizations in the Kingdom of Saudi Arabia reflects their central role in national economic diversification initiatives and their intensive use of management accounting systems to enhance competitiveness. These sectors also represent the largest share of private business activity in the country, making them an appropriate and relevant setting to examine the research model. A structured questionnaire was developed based on a comprehensive review of the extant academic literature pertaining to the key constructs under investigation. This survey instrument was further subjected to a pre-testing phase to ascertain its reliability and validity prior to the main data collection process. The data collected through the administered survey was subsequently analyzed using structural equation modeling (SEM) techniques facilitated using the AMOS software package (AMOS 21). This data analysis approach enabled the researchers to statistically model and examine the hypothesized relationships between the balanced scorecard, activity-based costing, organizational ambidexterity, and business performance constructs within the context of the sampled Saudi Arabian firms. SEM is a robust multivariate statistical analysis method that allows for the simultaneous examination of multiple hypothesized relationships, including both direct and indirect effects, among the latent constructs of interest (Hair et al., 2014).

3.2. Sample and Data

The empirical data for this study was collected from a sample of manufacturing and service-oriented companies. The researcher employed a simple random sampling technique to select participants from a comprehensive list of large- and medium-sized enterprises operating within the country. Of the 395 questionnaires that were distributed to the sampled organizations, the researchers obtained 186 valid and completed responses, which formed the primary dataset for the subsequent analysis and hypothesis testing. The use of simple random sampling ensured that each eligible company in the population had an equal probability of being selected, thereby enhancing the representativeness of the final sample and the generalizability of this study’s findings. The population frame comprised large- and medium-sized companies formally registered in the Saudi Ministry of Commerce database and supplemented with records from the national Chamber of Commerce directories. From this combined list, simple random sampling was enforced using a random number generator to ensure that each organization had an equal probability of selection. This procedure eliminated researcher bias and provided a transparent basis for contacting the 395 firms invited to participate.

The final sample size of 186 respondents is adequate for structural equation modeling (SEM). The methodological literature generally recommends a minimum ratio of 5 cases per estimated parameter (Hair et al., 2014). This study sample exceeds this threshold, ensuring sufficient statistical power, stable parameter estimates, and reliable model fit assessment. Furthermore, recent studies suggest that SEM models with similar complexity to this study yield valid results with comparable or even smaller samples, provided that data quality is high and that indicators demonstrate strong loadings (Wolf et al., 2013). Accordingly, the sample size employed in this study can be considered both adequate and reliable for SEM analysis.

The structured questionnaire employed in this study was divided into five distinct sections. The first section was dedicated to gathering background information about the participating organizations, including their industry and other relevant details. This initial set of questions was intended to provide important contextual insights about the sample companies. The second section of the questionnaire was specifically designed to elicit information regarding the respondent organizations’ adoption and implementation of the balanced scorecard (BSC) framework. The construct “Balanced Scorecard adoption” was measured with seven items adapted from established scales in prior literature (Braam & Nijssen, 2004; Hoque, 2014; Hoque & James, 2000; Ittner et al., 2003). These items covered the extent of formal adoption, integration into strategy, KPI alignment, attention to the four perspectives, top management commitment, regular updating, and cross functional alignment. Responses were recorded on a 7 point Likert scale (1 = strongly disagree and 7 = strongly agree).

The third section of the questionnaire was specifically designed to evaluate the extent to which the respondent organizations have adopted and integrated ABC practices within their business operations and management decision-making processes. This construct was measured with seven items adapted from established scales in prior studies (Cohen et al., 2005; Ittner et al., 2002; Krumwiede, 1998). These items assessed the extent to which ABC has been formally adopted, integrated into decision-making, applied to product costing, pricing, cost management, and performance evaluation, and updated in line with organizational changes. Responses were recorded on a 7 point Likert scale (1 = strongly disagree and 7 = strongly agree).

The fourth section was designed to assess the level of organizational ambidexterity demonstrated by the respondent companies. Organizational ambidexterity refers to a firm’s ability to simultaneously pursue both exploitative and exploratory strategies and practices. The questions in this section were intended to gauge the sampled organizations’ capabilities in leveraging existing competencies and resources (exploitation) while also investing in the development of new capabilities and the pursuit of innovative opportunities (exploration). Organizational ambidexterity construct was measured with seven items adapted from established scales in prior studies (Gibson & Birkinshaw, 2004; He & Wong, 2004; Jansen et al., 2006). The items captured both exploratory and exploitative orientations. Exploration was reflected in the firm’s ability to experiment with new products, technologies, and markets, while exploitation emphasized improving efficiency, leveraging existing competencies, and refining current processes. A balance item captured the integration of exploration and exploitation. Responses were recorded on a 7 point Likert scale (1 = strongly disagree and 7 = strongly agree).

The final section of the survey instrument solicited the respondents’ assessment of their respective firm’s performance. The participants were asked to evaluate their companies’ performance in comparison to the industry average using a Likert-type scale, where 1 represents “significantly lower” and 7 denotes “significantly higher”. The organizational performance construct was measured using seven subjective indicators adapted from established scales in prior studies (Henri, 2006; Maiga & Jacobs, 2008; Tsamenyi et al., 2011). Respondents assessed their firms’ performance relative to industry peers over the past three years in terms of overall financial performance, sales growth, profitability, market share, customer satisfaction, operational efficiency, and innovation outcomes. The use of self-reported performance measures is a widely accepted approach in the extant literature, particularly in situations where the researcher does not have access to objective performance data (Dess & Robinson, 1984; Wall et al., 2004). This subjective evaluation method has been frequently adopted in numerous prior studies (Henri, 2006; Maiga & Jacobs, 2008; Tayles et al., 2007; Tsamenyi et al., 2011), indicating its validity and relevance within the current research context.

Because the data for both independent and dependent variables were collected from the same respondents, the potential for common method bias (CMB) was carefully considered. Several procedural remedies were applied during survey design, including assuring respondents of anonymity, varying the scale formats, and separating items related to different constructs to reduce evaluation apprehension and method-related artifacts (Podsakoff et al., 2003).

3.3. Path Model

The conceptual model depicted in Figure 1 posits that the implementation of both balanced scorecard and activity-based costing techniques directly impact an organization’s ability to achieve ambidexterity, which in turn affects the overall organizational performance. Furthermore, the proposed path model suggests a mediating mechanism whereby organizational ambidexterity is hypothesized to serve as a conduit through which balanced scorecard and activity-based costing exert their influence on organizational performance. This implies that these management accounting practices may not only have a direct effect on performance outcomes, but may also indirectly shape performance through their impact on the organization’s capacity for ambidexterity—the ability to simultaneously pursue exploratory and exploitative strategic initiatives. By elucidating these multilayered relationships, the conceptual framework aims to provide a more comprehensive understanding of the pathways through which management accounting innovations and organizational capabilities interact to drive superior business results.

The proposed conceptual model was evaluated using a system of two structural equations to derive the corresponding path coefficients:

(i)

OA = β0 + β1BSC + β2ABC + ℇ

(ii)

PER = β0 + β1BSC + β2ABC + β3OA + ℇ

where

• OA = Organizational ambidexterity;
• BSC = Balanced scorecard;
• ABC = Activity-based costing;
• PER = Organizational performance;
• β0 = Constant term;
• β1, β2, β3 = Regression coefficients;
• ε = Error term.

This simultaneous equation approach allows for the examination of both the direct effects of balanced scorecard and activity-based costing on organizational performance, as well as the indirect effects mediated through the organization’s capacity for ambidexterity. By specifying these interrelated structural equations, the analytical framework enables a more comprehensive assessment of the complex pathways through which management accounting innovations and organizational capabilities interact to influence overall business results.

4. Results

Before conducting the confirmatory factor analysis and structural equation modeling, our essential assumptions were examined. The data did not present problematic multicollinearity, as all variance inflation factor (VIF) values were well below the recommended threshold. Normality was also assessed, and the skewness and kurtosis statistics for the observed variables fell within generally acceptable limits recommended in (Hair et al., 2014), supporting the assumption of approximate multivariate normality. These diagnostics confirmed the suitability of the dataset for subsequent SEM analysis.

4.1. Measures Validation

This section examines the reliability and validity of the measurement constructs used within the structural model for hypothesis testing. Based on the guidelines from Hooper et al. (2008), this study evaluated each latent variable’s unidimensionality and construct validity by examining the fit of each measurement model. The constructs were merged into a single model, and a Confirmatory Factor Analysis (CFA) was conducted to verify the model’s overall validity and reliability. Relevant goodness-of-fit measures were obtained from three categories. According to Hair et al. (2014), selecting one fit index from each category is adequate to confirm the model’s suitability for structural analysis.

Table 1. Goodness-of-fit for each measurement model.

Construct	Absolute Fit	Incremental Fit			Parsimonious Fit
	GFI (>0.90)	CFI (>0.90)	TLI (>0.90)	NFI (>0.90)	ChiSq/df (<5.0)
Balanced Scorecard	0.975	0.993	0.982	0.989	3.041
Activity-Based Costing	0.940	0.974	0.951	0.966	4.256
Organizational Ambidexterity	0.950	0.975	0.963	0.959	2.438
Performance	0.948	0.979	0.963	0.970	3.129

displays the values for the selected fit indices. The reported fit indices exceed the minimum recommended criteria, which are presented at the top of the table as the level of acceptance used as a reference. These results indicate that the measurement model demonstrates an adequate fit to the data, and the constructs exhibit acceptable levels of unidimensionality and construct validity.

The discriminant validity of the constructs was assessed by examining the correlations between the constructs and the square root of the average variance extracted (AVE) for each construct. This approach helps to determine the extent to which the constructs are distinct from one another, as evidenced by low inter-construct correlations and the square root of the AVE for each construct exceeding the correlations with other constructs. Establishing discriminant validity ensures that the constructs measure unique and independent concepts within the overall theoretical framework. The results presented in

Table 2. Discriminant validity index summary.

	Balanced Scorecard	Activity-Based Costing	Organizational Ambidexterity	Performance
Balanced Scorecard	0.909
Activity-Based Costing	0.580	0.849
Organizational Ambidexterity	0.716	0.782	0.784
Performance	0.537	0.776	0.711	0.842

suggest that the four latent constructs exhibit adequate discriminant validity. Specifically, the correlations between each pair of the exogenous latent variables are below the commonly used 0.85 threshold, indicating that they measure distinct concepts. Furthermore, the square root of the Average Variance Extracted (AVE) for each construct is greater than the correlations between that construct and the others. These square roots of AVE values, shown on the diagonal (in bold) in Table 2, are higher than the corresponding off-diagonal values in the same row and column. This pattern of findings provides evidence that the constructs are empirically distinct and capture the unique aspects of the underlying theoretical framework.

The results of the confirmatory factor analysis (CFA) are presented in

Table 3. Confirmatory factor analysis (CFA) results.

Construct	Item	Factor Loading (>0.6)	R2 (>0.4)	Cronbach Alpha (>0.7)	CR (>0.6)	AVE (>0.5)
Balanced Scorecard	BSC_1	0.88	0.77	0.961	0.960	0.827
	BSC_2	0.85	0.72
	BSC_3	0.93	0.86
	BSC_4	0.97	0.94
	BSC_5	0.92	0.85
Activity-Based Costing	ABC_1	0.89	0.78	0.936	0.939	0.720
	ABC_2	0.87	0.75
	ABC_3	0.92	0.84
	ABC_4	0.89	0.80
	ABC_5	0.83	0.69
	ABC_6	0.69	0.47
Organizational Ambidexterity	OA_1	0.79	0.62	0.913	0.916	0.610
	OA_2	0.65	0.43
	OA_3	0.82	0.68
	OA_4	0.70	0.49
	OA_5	0.84	0.71
	OA_6	0.75	0.57
	OA_7	0.88	0.78
Performance	PER_1	0.76	0.57	0.944	0.944	0.710
	PER_2	0.81	0.65
	PER_3	0.88	0.77
	PER_4	0.95	0.90
	PER_5	0.86	0.75
	PER_6	0.90	0.81
	PER_7	0.73	0.53

. The standardized factor loadings and the squared multiple correlations (R-squared) for each item across all of the evaluated constructs surpass the recommended thresholds of 0.60 and 0.40, respectively. This finding suggests that the unidimensionality and construct validity of the measured variables have been successfully established. The CFA procedure enables the assessment of the hypothesized factor structure by examining the relationships between the observed variables and their corresponding latent constructs. The standardized factor loadings, which represent the strength of the associations between the manifest indicators and the underlying factors, exceed the widely accepted guideline of 0.60. This indicates that the items demonstrate a strong correlation with their respective constructs, affirming the convergent validity of the measurement model. Furthermore, the squared multiple correlations (R-squared) for each item exceed the recommended threshold of 0.40. The R-squared value represents the proportion of variance in the observed variable that is accounted for by the latent construct. This result confirms that a substantial amount of the item’s variance is explained by the corresponding factor, further supporting the construct validity of the measurement scales.

The average variance extracted (AVE) was calculated for each construct by summing the squared standardized factor loadings for that construct and then dividing the sum by the number of items or indicators for the respective construct (AVE = Σ(standardized loading^2)/n). The AVE metric provides a measure of the amount of variance that a latent construct is able to capture from its associated indicators relative to the amount of variance attributable to measurement error. It serves as an indicator of the convergent validity of a construct. An AVE value of 0.50 or greater is generally considered an acceptable threshold, indicating that the latent construct is able to explain at least 50% of the variance in its corresponding items on average. Conversely, AVE values below 0.50 suggest that, on average, more variance is attributable to measurement error than the variance explained by the construct itself. The analysis revealed that all of the calculated AVE values exceeded the 0.50 benchmark, demonstrating the convergent validity of the measured constructs. This finding implies that the latent factors are able to account for a substantial portion of the variance observed in their respective indicator variables, providing evidence of the strong convergence between the measured items and their underlying theoretical constructs. Hence, the AVE results confirm that the constructs exhibit a satisfactory level of convergent validity, indicating that the measured variables are indeed representative of their corresponding latent factors and that the measurement model has been successfully established.

Furthermore, the analysis revealed that the composite reliability (CR) and Cronbach’s alpha values calculated for each construct exceeded the recommended thresholds of 0.6 and 0.7, respectively. These reliability metrics indicate that the measured variables demonstrate adequate internal consistency reliability. Composite reliability is a measure of the internal consistency of a construct, reflecting the degree to which the set of items reliably represents the underlying latent variable. A CR value greater than 0.6 is generally considered acceptable, suggesting that the items converge well in measuring the intended construct. Similarly, Cronbach’s alpha is a widely used coefficient that assesses the internal consistency of a scale by evaluating the average inter-item correlation. A Cronbach’s alpha value exceeding the 0.7 benchmark is typically deemed satisfactory, implying that the set of items consistently measure the same underlying concept. The finding that both the CR and Cronbach’s alpha values for each construct surpassed their respective recommended thresholds provides strong evidence for the reliability of the measurement model. This suggests that the items reliably and consistently capture the essence of their corresponding latent variables, ensuring the stability and dependability of the measurement scales. In conclusion, the results of the confirmatory factor analysis (CFA) procedure offer robust support for the reliability and validity of the measurement model. The CFA findings demonstrate the unidimensionality, convergent validity, and internal consistency reliability of the measured constructs, instilling confidence in the quality of the research instrument used in this study.

4.2. Results of the Structural Model and Hypothesis Testing

This section reports the empirical findings of the hypothesis-testing procedures. The direct effects of the exogenous variables on the endogenous variables are summarized in

Table 4. Standardized and regression coefficients (β) of the structural model.

Hypothesized Paths			Standardized Estimate	Regression Estimate	S.E.	C.R.	p-Value
Structural Model with Direct Effects (Pre-Mediation Effects)
Balanced Scorecard	➔	Performance	0.129	0.111	0.055	2.018	0.044
Activity-Based Costing	➔	Performance	0.701	0.71	0.083	8.527	***
Final Structural Model (After Incorporating the Mediator)
Balanced Scorecard	➔	Organizational Ambidexterity	0.396	0.314	0.051	6.183	***
Activity-Based Costing	➔	Organizational Ambidexterity	0.552	0.517	0.065	7.974	***
Balanced Scorecard	➔	Performance	0.033	0.029	0.064	0.448	0.654
Activity-Based Costing	➔	Performance	0.564	0.573	0.098	5.841	***
Organizational Ambidexterity	➔	Performance	0.246	0.266	0.117	2.279	0.023

*** denotes significance at the 0.001 level (two-tailed).

. Based on the standardized path coefficients of the final structural model, the analysis provides support for the first hypothesis (H1). Specifically, the effect of the balanced scorecard (BSC) on organizational ambidexterity (OA) was found to be statistically significant at the 0.001 level (H1: β = 0.396, p < 0.001). This indicates that the balanced scorecard, as an organizational performance measurement system, has a positive and significant direct influence on the organization’s ambidextrous capabilities. The magnitude of the standardized path coefficient (β = 0.396) suggests that a one-unit increase in the balanced scorecard construct is associated with a 0.396 unit increase in the organizational ambidexterity construct, holding all other variables constant. Additionally, the empirical analysis provides support for the second hypothesis (H2). The results indicate that activity-based costing (ABC) has a significant positive effect on organizational ambidexterity (H2: β = 0.552, p < 0.001). The magnitude of the standardized path coefficient (β = 0.552) suggests that a one-unit increase in the activity-based costing construct is associated with a 0.552 unit increase in the organizational ambidexterity construct, holding all other variables constant. The analysis further revealed significant positive direct effects of organizational ambidexterity on organizational performance supporting hypothesis (3) (H3: β = 0.246, p < 0.05). This finding indicates that an organization’s ability to simultaneously explore new opportunities and exploit existing capabilities has a positive and statistically significant impact on its overall organizational performance.

The analysis of the structural model, as presented in

Table 5. Results of the direct and the indirect effect analysis (standardized coefficients).

Hypothesized Paths					Direct Effect Before Mediation	Direct Effect After Mediation	Indirect Effect	Test of Mediation
BSC	--------->			PER	0.129 **	0.033		Full Mediation
BSC	--->	OA	--->	PER			(0.396 ***) × (0.246 **) = 0.097
ABC	--------->			PER	0.701 ***	0.564 ***		No Mediation
ABC	--->	OA	--->	PER			(0.552 ***) × (0.246 **) = 0.136

*** denotes significance at the 0.001 level (two-tailed). ** denotes significance at the 0.01 level.

, indicates that the direct effect of the balanced scorecard (BSC) on organizational performance in the final model was found to be statistically non-significant. Consequently, Hypothesis 4a (H4a), which theorized a direct positive relationship between the balanced scorecard and organizational performance, was not supported by empirical evidence (H4a: β = 0.033). However, the results reveal that this direct path was significant in the initial, more parsimonious model before the inclusion of the mediating variable, organizational ambidexterity (OA) (β = 0.129, p < 0.05). Given that both the indirect paths in the final model—from the balanced scorecard to organizational ambidexterity, and from organizational ambidexterity to organizational performance—were statistically significant, and the direct path from the balanced scorecard to performance changed from significant to non-significant, the conditions for full mediation were met. Based on this comprehensive analysis, Hypothesis 4b (H4b), which proposes that organizational ambidexterity mediates the relationship between the balanced scorecard and organizational performance, was supported by the empirical findings. This suggests that the positive influence of the balanced scorecard on organizational performance is not direct, but rather operates indirectly through the enhancement of the organization’s ambidextrous capabilities. In other words, the balanced scorecard appears to improve organizational performance by first allowing for firms to maintain equilibrium between exploratory initiatives (pursuing novel opportunities) and exploitative activities (optimizing existing competencies).

The hypothesized mediating effect proposed in Hypothesis 5b (H5b) was not supported by the empirical analysis. While the results indicate that organizational ambidexterity (OA) has a significant direct positive effect on organizational performance, it did not serve as a mediator in the relationship between activity-based costing (ABC) and performance. As shown in Table 5, the direct effect of activity-based costing on performance was statistically significant both before and after the inclusion of the mediator variable, organizational ambidexterity (ABC → Performance: β = 0.701, p < 0.001; β = 0.564, p < 0.001). Although the magnitude of the direct effect of ABC on performance was reduced after the mediator was introduced into the model, the direct effect in the final structural model (β = 0.564, p < 0.001) remained stronger than the combined indirect effect. The indirect effect, calculated as the product of the paths from ABC to OA and from OA to performance, was estimated to be β = 0.136. These findings suggest that the positive influence of activity-based costing on organizational performance is primarily direct, rather than operating indirectly through the enhancement of the organization’s ambidextrous capabilities.

The structural equation model explains a substantial proportion of the variance in the endogenous (dependent) variables under investigation. Specifically, the R-squared value for the latent construct of organizational ambidexterity (OA) is 0.715, indicating that the model accounts for 71.5% of the total variance in organizational ambidexterity. Furthermore, the R-squared value for the endogenous variable of organizational performance is 0.630. This means that the structural model explains 63% of the total variance in the organization’s performance outcomes. These robust R-squared values suggest that the model has strong explanatory power and is able to effectively capture the key relationships and mechanisms underlying the hypothesized antecedents and consequences of both organizational ambidexterity and organizational performance. The high R-squared values demonstrate the model’s ability to provide a comprehensive and accurate representation of the complex interplay between the variables of interest. Such a high proportion of explained variance in the dependent constructs indicates that the independent variables included in the structural model, such as the balanced scorecard (BSC) and activity-based costing (ABC), are important and relevant predictors of organizational ambidexterity and organizational performance. This provides support for the theoretical framework and the hypothesized relationships examined in this study.

The research findings are comprehensively summarized in Figure 2, which provides an overview of the key results from the hypothesized structural model. Specifically, the figure depicts the direct effects observed between the model constructs, the indirect effects capturing the mediated relationships, and the standardized path coefficients quantifying the magnitude and significance of these direct and indirect effects. Additionally, the figure presents the squared multiple correlation coefficients (R-squared values) for the dependent variables in the model. The R-squared values indicate the proportion of the total variance in the dependent variables that is accounted for by the set of predictor (independent) variables included in the research model. In other words, the R-squared statistics demonstrate the strong explanatory power of the model, highlighting its ability to substantially explain the observed differences in the outcome variables.

5. Discussion

This study offers valuable insights into the intricate connections among MASs (the balanced scorecard and activity-based costing), organizational ambidexterity, and organizational performance. The findings contribute to the expanding body of research on the strategic significance of management accounting and its potential to facilitate the development of ambidextrous organizational capabilities, thereby enhancing organizational outcomes.

Consistent with Hypothesis 1, the results demonstrate that the adoption of a balanced scorecard significantly contributes to the achievement of organizational ambidexterity. This aligns with previous research suggesting that the BSC can facilitate the effective implementation of both exploitative and explorative strategies by providing a balanced set of performance measures across different organizational perspectives (Bisbe & Malagueño, 2012; Kaplan & Norton, 1996). The positive impact of BSC on OA can be attributed to its ability to provide a clear and coherent view of organizational objectives, facilitating strategic alignment and integration across different functional areas. By ensuring that all levels of the organization are focused on the same strategic priorities, the BSC helps to harmonize short-term efficiency improvements (exploitation) with long-term innovation initiatives (exploration). This finding is consistent with prior research by Bisbe and Malagueño (2012), who identified the BSC as an effective tool for supporting strategic decision-making in dynamic environments.

The findings also support Hypothesis 2, demonstrating that the use of activity-based costing significantly contributes to the achievement of organizational ambidexterity. ABC provides detailed insights into the cost structures and resource consumption associated with various activities. The enhanced cost visibility equips managerial decision-makers with robust data analytics to optimize capital deployment strategies, operational process enhancements, and innovation portfolio investments. The significant contribution of ABC to OA can be understood through its role in enhancing cost transparency and operational efficiency. By identifying and eliminating non-value-adding activities, ABC helps organizations to streamline their operations and redirect resources towards innovative projects. This dual focus on efficiency and innovation is essential for achieving ambidexterity, as it allows for firms to optimize their current capabilities while simultaneously exploring new growth opportunities. This finding aligns with the work of Banker et al. (2008), who highlighted the benefits of ABC in supporting strategic decision-making and cost management.

The analysis also provides strong evidence in support of Hypothesis 3, which asserts that organizations exhibiting higher levels of organizational ambidexterity experience improved performance. The positive relationship between OA and organizational performance can be attributed to the balanced approach that ambidextrous organizations adopt. By effectively managing the tension between exploiting existing capabilities and exploring new opportunities, these organizations are better equipped to respond to dynamic market environments, seize new opportunities, and mitigate risks associated with environmental uncertainty. This balanced approach enhances organizational resilience and agility, leading to superior performance outcomes. The findings are consistent with prior research by He and Wong (2004) and Gibson and Birkinshaw (2004), who demonstrated that ambidextrous organizations outperform their counterparts in terms of innovation, adaptability, and overall performance.

The analysis did not support Hypothesis 4a, which posited that the adoption of a balanced scorecard (BSC) directly enhances organizational performance. This finding suggests that merely implementing a BSC does not automatically lead to improved performance outcomes. Rather, the findings strongly support Hypothesis 4b, which posited that the adoption of a balanced scorecard has an indirect positive effect on performance through enhanced organizational ambidexterity (OA). This mediating effect highlights the importance of OA as a critical mechanism through which the BSC influences performance. The BSC facilitates the achievement of OA by providing a structured framework for balancing short-term exploitation and long-term exploration activities. By aligning strategic goals with operational activities, the BSC enables organizations to effectively manage the dual demands of efficiency and innovation. This alignment fosters a more ambidextrous organizational culture, where resources are allocated to both optimizing current processes and exploring new opportunities. These results highlight the importance of achieving organizational ambidexterity as a mediating mechanism through which the BSC can drive performance improvements. Organizations should focus not only on implementing the BSC, but also on leveraging it to foster a balanced approach to exploitation and exploration activities, thereby enhancing overall performance.

In contrast, the analysis provides strong support for Hypothesis 5a, which posits that the use of activity-based costing (ABC) has a direct positive effect on organizational performance, and does not support Hypothesis 5b, which proposes an indirect effect through OA. The non-significant mediation of the ABC → OA → performance path can be explained by the proximate mechanisms through which ABC delivers value. ABC predominantly generates immediate, operational improvements, cost transparency, process streamlining, and pricing refinement that translate directly into performance without necessarily relying on the higher-order, longer-cycle capability reconfiguration implied by ambidexterity. While ABC can facilitate elements of ambidexterity, its primary performance payoffs in this context arise through tightly coupled exploitation improvements, making OA complementary rather than the principal conduit of impact.

This finding highlights the efficacy of ABC in enhancing performance outcomes by providing a more precise understanding of cost drivers and resource allocation. The direct positive effect of ABC on performance can be attributed to several key factors such as cost transparency, resource optimization, and enhanced decision-making. ABC offers detailed insights into the costs associated with specific activities and processes. This level of transparency enables organizations to identify and eliminate inefficiencies, leading to more effective cost management and improved profitability. By accurately tracing costs to activities, ABC helps managers make more informed decisions regarding resource allocation. This ensures that resources are directed towards high-value activities that drive performance, rather than being wasted on non-value-adding processes. Furthermore, ABC provides a robust framework for analyzing the true cost and profitability of products, services, and customers. This information supports strategic decision-making, allowing for organizations to focus on their most profitable segments and to optimize their product and service portfolios. These benefits align with prior research by Kaplan and Anderson (2007), who demonstrated that ABC can lead to substantial performance improvements by providing more accurate and actionable cost information.

The divergence in mediation results between BSC and ABC can be explained by the different roles these MASs play in organizational architectures. The BSC is primarily a strategic management system rather than an operational tool. Its influence on performance is therefore more indirect: by fostering strategic alignment, balancing short-term and long-term objectives, and guiding capability development, it first enhances ambidexterity, which then translates into performance outcomes. In contrast, ABC operates closer to the operational core of the organization. Its provision of detailed cost information produces immediate efficiencies in resource allocation, pricing, and process optimization, all of which directly feed into financial and operational performance. This distinction highlights BSC as a higher order enabler that shapes ambidextrous capabilities, while ABC functions as a tactical instrument with direct performance impact. Together, these complementary effects highlight the varying but synergistic pathways through which MASs contribute to organizational success.

6. Conclusions

In conclusion, this study provides robust empirical evidence of the positive impact of BSC and ABC on OA and organizational performance. By highlighting the synergistic effects of these MASs, this study advances our understanding of their strategic role in enabling ambidexterity and enhancing firm performance. These findings have significant implications for both academic research and managerial practice, offering valuable insights into how organizations can leverage MASs to achieve a balanced approach to innovation and growth.

6.1. Theoretical Implications

The findings of this study make several notable contributions to the literature. First, it extends the existing research on the strategic role of MASs by providing empirical evidence that both the BSC and ABC contribute to supporting organizational ambidexterity. While previous studies have examined the individual impacts of these MASs, this research is among the first to investigate their combined presence and to discuss the potential for complementarity in enabling ambidextrous organizational capabilities. Second, this study adds to the growing body of literature on organizational ambidexterity by demonstrating the mediating effect of OA on the relationship between the BSC and organizational performance. Hence, this research highlights the strategic significance of management accounting in shaping an organization’s ability to effectively balance exploration and exploitation activities. Third, the findings contribute to a broader understanding of the antecedents and outcomes of organizational ambidexterity. While past studies have identified various organizational, environmental, and managerial factors that influence ambidexterity (e.g., structural differentiation, leadership, and organizational culture), this research introduces MASs as an important organizational capability that can enable and support the development of ambidextrous organizational competencies.

Beyond traditional performance outcomes, the findings of this study provide meaningful insights into sustainability. Management accounting systems, such as the BSC and ABC, can be more than efficiency and control tools; in ambidextrous organizations, they can act as enablers of “sustainable ambidexterity,” where firms balance short-term exploitation with long term investment in sustainable innovation. The BSC, with its multidimensional structure, allows for organizations to integrate environmental and social indicators alongside financial ones, enabling strategy alignment with the United Nations Sustainable Development Goals (e.g., SDG 8 on Decent Work and Economic Growth and SDG 9 on Industry, Innovation and Infrastructure). For instance, measures on resource efficiency, employee well-being, or carbon reduction can be embedded within the learning and internal process perspectives. Similarly, ABC provides cost visibility that can highlight energy use, waste streams, or resource inefficiencies, directly linking managerial actions to sustainability objectives such as SDG 12 (Responsible Consumption and Production). By connecting cost information with sustainability metrics, firms can make informed tradeoffs between profitability and environmental or social investments. Together, the findings suggest that sustainable development is not a by product, but a capability that can be actively designed through MASs and ambidexterity. This extends the literature on “green ambidexterity” by showing that management accounting practices are practical levers for embedding sustainability into strategic decision-making, resource allocation, and performance evaluation.

6.2. Practical Implications

The findings offer managers a blueprint for leveraging Management Accounting Systems (MAS) to foster ambidexterity. Effective implementation requires attention to several key elements. For the balanced scorecard (BSC), the key is moving beyond a simple performance metric tracker to a strategic framework. This involves deliberately incorporating leading indicators for exploration (e.g., % of revenue from new products, R&D pipeline strength) into the Learning & Growth and Internal Process perspectives, alongside traditional exploitative metrics (e.g., operational efficiency, cost variance). For activity-based costing (ABC), the crucial element is using its detailed cost data not just for product costing, but for strategic resource allocation. Managers should employ ABC to identify and quantify the true cost of both exploitative (e.g., process improvement initiatives) and exploratory activities (e.g., new product development, market research), ensuring that both are adequately and accurately funded.

The systems are best combined by using ABC data to populate and validate the cost and process-oriented metrics within the BSC. This integration provides a cause-and-effect logic: investments in learning (BSC perspective) drive process improvements (BSC perspective), whose true costs and efficiencies are measured by ABC, ultimately impacting financial outcomes (BSC perspective). Managers should anticipate implementation barriers, including resistance from employees accustomed to traditional accounting, the significant resource investment required for data collection and software, and the challenge of achieving cross-functional buy-in. Success depends on strong leadership commitment, clear communication of the strategic benefits, and phased implementation to demonstrate quick wins and build organizational support for this integrated approach.

6.3. Limitations and Future Studies

This study, while providing valuable insights, is subject to certain limitations that should be considered when interpreting the results. Firstly, the use of cross-sectional data captures a snapshot in time. Although the model is grounded in strong theory, future longitudinal research could strengthen causal inferences by tracing the evolution of these relationships. Secondly, this study relies on manager self-assessments of firm performance relative to the industry average. While such perceptual measures are validated and have been widely used in contexts where objective benchmarks are difficult to obtain across heterogeneous industries, they remain subject to cognitive and subjective bias. Although procedural remedies and statistical checks for common method bias did not indicate a pervasive issue, this limitation should be acknowledged. Future research could address this by incorporating secondary data sources (e.g., audited financial reports) or by triangulating performance with multiple indicators to enhance robustness. Finally, the focus on two specific MASs within the Saudi Arabian context, while being a source of rich insight, suggests the need for caution in generalizing the results to all management accounting innovations or cultural settings. Replicating this study to include other systems and different geographic contexts would be a fruitful avenue for further research and would help establish the boundary conditions of the findings.