Top Management Team Surface-Level Diversity, Strategic Change, and Long-Term Firm Performance: A Mediated Model Investigation

2019 ◽  
Vol 26 (3) ◽  
pp. 304-318 ◽  
Author(s):  
Jie Wu ◽  
Orlando C. Richard ◽  
Xinhe Zhang ◽  
Craig Macaulay
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Strategic Change ◽  
Top Management Team ◽  
Management Team ◽  
Top Management ◽  
Upper Echelons ◽  
Surface Level ◽  
Upper Echelons Theory

Top management team (TMT) heterogeneity research has not yet clearly revealed whether surface-level diversity (i.e., national culture, gender, age) contributes to or detracts from a firm’s financial performance and has not focused on how strategic change frequency (number international diversification or refocusing activities) serves as an intervening mechanism. Based on a sample of 1,993 firms between 2003 and 2015, we examine the mediating role of strategic change frequency in the relationship between surface-level diversity and long-term firm performance. Grounded in the upper echelons perspective, we find that TMT surface-level diversity increases rather than decreases strategic change frequency. Furthermore, our results are consistent with our hypothesized positive relationship between strategic change frequency and long-term firm performance. More important, we also find support for a longitudinal-based mediation model in which strategic change frequency in terms of diversification/refocusing actions (Time 2) transmits the positive effect of TMT surface-level diversity (Time 1) to long-term financial performance (Time 3) without accounting for any moderated conditions suggesting that mediation models warrant more utilization in the upper echelons research and internationalization research domains. Implications for the upper echelons theory in a more global world as if relates to the often unexplored surface-level diversity are offered.

scholarly journals Top management team diversity and firm performance: Empirical evidence from the fashion and luxury industry

2017 ◽  
Vol 15 ◽  
pp. 325-340 ◽  
Author(s):  
Domenico Rocco Cambrea ◽  
Giorgia Lussana ◽  
Fabio Quarato ◽  
Paola Varacca Capello
Keyword(s):  
Firm Performance ◽  
Research Question ◽  
Top Management Team ◽  
Educational Background ◽  
Management Team ◽  
Top Management ◽  
Luxury Brands ◽  
Upper Echelons ◽  
Term Survival ◽  
Upper Echelons Theory

The purpose of this study is to advance the current understanding of the relationship between top management team (TMT) diversity and firm performance in the fashion and luxury industries. Predictions from the relevant theoretical perspectives – namely, Upper Echelons and Social Psychology theories – are often conflicting, and the controversial nature of this phenomenon together with the lack of empirical studies in the fashion and luxury industries have inspired the research question to investigate the link between TMT diversity and firm performance. Moreover, this is even more relevant in a setting where human capital management is one of the main keys to the long-term survival of fashion and luxury brands. To this extent, a principal component analysis and subsequent regression analyses have been performed on a sample of 78 listed companies operating in the fashion and luxury industries, over the five-year period 2011-2015. Results indicate that TMTs with greater gender, international experience, and educational background diversity are positively associated with higher firm performance. Hence, we found support for the Upper Echelons Theory, which predicts organizational outcomes as a function of managerial characteristics, thus offering few practical implications for companies operating in these industries.

scholarly journals Effects of Top Management Team Characteristics on Patent Strategic Change and Firm Performance

2022 ◽  
Vol 12 ◽  
Author(s):  
Yongtao Zhou ◽  
Yi Zhou ◽  
Li Zhang ◽  
Xu Zhao ◽  
Weijing Chen
Keyword(s):  
Firm Performance ◽  
Safety Climate ◽  
Strategic Change ◽  
Top Management Team ◽  
Management Team ◽  
Top Management ◽  
Core Competitiveness ◽  
Upper Echelons Theory ◽  
Patent Strategy ◽  
Top Managers

Patent strategy is increasingly recognized as a vital contributor in promoting core competitiveness of an enterprise. A top management team (TMT) has been indicated as one of the key factors driving changes in patent strategy. Based on upper echelons theory, this study examines how TMT characteristics, including, team diversity, emotional intelligence, and safety climate, influence enterprise patent strategic change and, hence, the business outcome. The data from 930 top managers in 228 enterprises showed that the changes in patent strategies are significantly influenced by the characteristics of top managers. These aforementioned internal TMT factors have diverse effects on the speed and scope of the enterprise patent strategic change, which in turn affects firm performance in a positive and negative way, respectively.

How does top management team composition matter for continual growth? Reinvestigating Penrose’s growth theory through the lens of upper echelons theory

2019 ◽  
Vol 57 (1) ◽  
pp. 41-70 ◽  
Author(s):  
Wein-Hong Chen ◽  
Min-Ping Kang ◽  
Bella Butler
Keyword(s):  
Top Management Team ◽  
Management Team ◽  
Asia Pacific ◽  
Growth Theory ◽  
Top Management ◽  
Upper Echelons ◽  
Content Type ◽  
Upper Echelons Theory ◽  
Penrose Effect ◽  
The Impact

Purpose Penrose’s argument regarding the managerial constraint on continual expansion over two consecutive periods is termed the “Penrose effect,” a relatively less investigated premise in Penrose’s growth theory. The purpose of this paper is to empirically re-examine the Penrose effect from the perspective of upper echelons theory and investigated how top management team (TMT) composition influences the continual growth of a firm. Design/methodology/approach This study empirically tested the hypotheses based on a sample of listed manufacturing firms operating in Taiwan, a newly industrialized economy in the Asia–Pacific region. Moderated hierarchical regression analyses were applied to test hypotheses. Findings The empirical results suggest that low TMT diversity (in terms of educational, functional and team tenure diversity) is likely to engender a situation in which the Penrose effect might occur. Additionally, the results indicate that the proportion of functional executives plays a significant role in influencing the growth trend over two consecutive periods and may soften the impact of the Penrose effect. Practical implications This paper suggests that appropriate structuring of TMTs and appropriate management of their members’ backgrounds and team tenure diversity can help firms overcome the Penrose effect and grow continually. Furthermore, the proportion of functional executives in a TMT is influential. Originality/value This paper uniquely contributes to the theoretical and empirical development of Penrose’s growth theory, upper echelons theory and resource-based view concerning managerial resources.

Entrepreneurial orientation and the interaction of top management team background characteristics

2020 ◽  
pp. 1-17
Author(s):  
J. Ruben Boling ◽  
Mariangela Vecchiarini
Keyword(s):  
Entrepreneurial Orientation ◽  
Top Management Team ◽  
Management Team ◽  
Industry Dynamics ◽  
Top Management ◽  
Background Characteristics ◽  
Upper Echelons ◽  
Upper Echelons Theory ◽  
Using Data ◽  
The Relationship

Abstract The current study draws on the upper echelons theory to examine the nature of the relationship between top management team (TMT) tenure and a firm's level of entrepreneurial orientation (EO). We find evidence of an inverted-U relationship between TMT tenure and EO using data from firms across three industries with varied industry dynamics. We further introduce a contingency element by demonstrating that TMT industry background heterogeneity moderates the relationship between TMT tenure and EO, where the inverted U-shaped relationship will be more pronounced when the heterogeneity is low and will flatten when the heterogeneity is high. The findings demonstrate the complexity CEOs and governing bodies face while shaping a diverse TMT that can affect EO.

Untangling the relationship between strategic consistency and organizational performance: An empirical analysis of moderator variables

2016 ◽  
Vol 23 (4) ◽  
pp. 483-503 ◽  
Author(s):  
Chin-Shien Lin ◽  
Van Thac Dang
Keyword(s):  
Organizational Performance ◽  
Theoretical Foundation ◽  
Strategic Change ◽  
Top Management Team ◽  
Management Team ◽  
Organizational Slack ◽  
Top Management ◽  
Environmental Dynamism ◽  
Upper Echelons Theory ◽  
The Relationship

AbstractResearchers have advocated various perspectives on the relationship between strategic consistency and organizational performance. This inconclusive debate has created an inadequate theoretical foundation in strategic consistency literature. Therefore, the present study uses strategic planning, strategic change, upper echelons theory, and other literature as the theoretical foundation to empirically examine the moderating roles of organizational slack, environmental dynamism, and top management team attributes in the relationship between strategic consistency and organizational performance. Using 439 electronics companies in the Taiwanese stock market as sample data, the empirical results show that organizational slack, environmental dynamism, top management team tenure, and top management team tenure heterogeneity moderate the relationship between strategic consistency and organizational performance.

Top management team diversity and firm performance: exploring a function of age

2017 ◽  
Vol 23 (3/4) ◽  
pp. 156-170 ◽  
Author(s):  
Tomohiko Tanikawa ◽  
Soyeon Kim ◽  
Yuhee Jung
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Interactive Effect ◽  
Top Management Team ◽  
Management Team ◽  
Top Management ◽  
Socioemotional Selectivity Theory ◽  
Content Type ◽  
Socioemotional Selectivity ◽  
Age Diversity

Purpose Based on socioemotional selectivity theory, the authors aimed to develop and test hypotheses that identify the direct effect of top management team (TMT) age diversity on firms’ financial performance (return on equity [ROE], return on assets [ROA]) and the interactive effect of TMT age diversity and TMT average age on firms’ financial performance. Design/methodology/approach The paper presents results from a quantitative study of 867 TMTs in Korean manufacturing firms. Multiple hierarchical regression analysis was used to test the hypotheses. Findings The results show that TMT age diversity had a negative and significant main effect on ROE but not on ROA. They also indicate that the negative relationship between TMT age diversity and firm performance (ROE) was attenuated when the members of TMTs were relatively older. Originality/value First, this study extends existing TMT research, which mainly focuses on macro factors, such as industry and environment, by using micro factors, including TMT age diversity and TMT average age. Second, this paper combines and extends previous TMT studies, which have been dominated by either “property” or “tendency”, by examining the interactive effect of the distributional property (diversity) and central tendency (average) of TMT age on firms’ financial performance. Finally, this study indicates that socioemotional selectivity theory may be useful to explain the link between TMT age diversity and firms’ financial performance.

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