Research &amp; Development (R&amp;D) departments are becoming increasingly structured and routine-based, with tight schedules and daily follow-ups. This way of working stems from increased demands for delivering products to customers quickly and with high quality at a low price. At the same time, these organisations are faced with the challenge of coming up with new ideas that can become the foundations of tomorrow’s innovations. This means that R&amp;D departments must achieve both exploration, in terms of coming up with new ideas, and exploitation in terms of turning existing ideas into products available on the market. If these dual perspectives are to be met within a single work unit, the employees in that unit must achieve what we call contextual ambidexterity. Previous research has shown this to be difficult to achieve and has offered little guidance for organisations about how to organise and manage their operations in order to increase their chances of achieving contextual ambidexterity.The aim of this thesis is to explore challenges related to innovation that are encountered at the micro-level in contextually ambidextrous organisations and to shed light on factors that explain those challenges.This study has combined survey data with interview data from several organisations to analyse the relationship between aspects of efficiency and aspects of creativity. It was found that employees in a contextually ambidextrous organisation struggle to ensure enough micro-level exploration space, in other words, they have trouble finding time to explore ideas and making room for novel ideas.This research shows that a contextually ambidextrous approach in R&amp;D will likely exert two main challenges related to innovation. The first challenge is a crowding out of exploratory activities in favour of exploitatory activities. One reason for this is the combination of using productivity goals for exploitation and not using any similar targets for exploration activities. Large discrepancies in how these two types of activities are treated runs the risk that the one that is less monitored – most often exploration – is likely to be crowded out in favour of the one that is more intensely monitored.A second possible challenge is the demand on predictability in project progress that is often built into organisations as a means to enhance exploitation. This aim for predictability might create a reluctance to introduce new projects with high levels of novelty because the introduction of novel ideas contains uncertainties that jeopardise the adherence to the project plan. The combination of this view of novelty in the later phases of product development and the crowding out of exploratory activities could possibly lead to insufficient room for novel ideas to gain ground in the organisation, and this could lead to less innovative output. / <p>QC 20150225</p>