Does top management team diversity promote or hamper foreign expansion?

Prior research suggests that top management team (TMT) diversity increases strategic innovation. We extended this argument to the case of entering new geographic areas. In addition to exploring the cognitive implications of TMT diversity, as done in prior research, we explored when diversity may lead to the formation of subgroups within TMTs hampering communication and the propensity to enter new geographic areas. We also examined how these positive cognitive and negative social implications change over time as TMT members interact over the years. The hypotheses were tested using ordinal probit analysis and data on 2,159 expansions of 25 companies over a period of more than three decades. Copyright © 2007 John Wiley & Sons, Ltd.     

Changes in executive compensation following an environmental shift: the role of top management team turnover

In this study we examine the changes in executive compensation at the top management team (TMT) level following an environmental shift. Using the context of deregulation in the airline industry, we find that: (1) a dramatic environmental change that heightens managerial discretion leads to greater pay level and performance sensitivity of TMT compensation; and (2) the greater the magnitude of turnover among TMT members following the environmental shift, the greater the compensation change. Copyright © 2007 John Wiley & Sons, Ltd.     

Influences of top management team incentives on firm risk taking

In our work, the influences on subsequent firm risk taking of fixed incentives relative to variable incentives as well as the separate effects on subsequent corporate risk taking of variable incentives are examined. Focusing on the top management team members, we find a higher proportion of incentives that are devoted to fixed incentives relative to variable incentives tend to be inversely associated with subsequent firm risk taking. Managerial stock options are directly and uniformly associated with subsequent corporate risk taking. Executive shareholdings, however, display a curvilinear relationship with subsequent enterprise risk taking. Copyright © 2007 John Wiley & Sons, Ltd.     

Why top management team characteristics matter when employing a chief operating officer: a strategic contingency perspective

Critics of the CEO/COO duo have stressed that this arrangement burdens the firm with increased costs and decreases the CEO's effectiveness. This study adopts an upper echelon perspective to argue that the presence of a COO may also create TMT‐level information‐processing benefits that can improve firm performance in certain conditions. Data from a sample of 153 firms in five industries highlight a strong positive relationship between the presence of a COO and two established measures of firm performance: return on assets and market‐to‐book ratio. The data also suggest that those relationships are contingent on the broader characteristics of the TMT. Copyright © 2009 John Wiley & Sons, Ltd.     

The impact of U.S. company internationalization on top management team advice networks: a tacit knowledge perspective

This study surveys 37 U.S. multinational corporations (MNCs) to examine the effect of internationalization on one dimension of the top management team’s (TMT’s) character: international business advice network density. This study draws on international business (IB) theory, the resource‐based view of the firm, and philosophy of science and its view of tacit knowledge. Results show that both the firm’s internationalization extent, and the interdependence that exists across its country–market activities, are positively related to the TMT’s IB advice network density. As the extent of the MNC’s business outside the United States grows and the linkages among its IB units intensify, the demand for IB expertise within the TMT increases, TMT members share each other’s knowledge of IB more extensively and the TMT’s IB advice network density increases. Copyright © 1999 John Wiley & Sons, Ltd.     

Information asymmetry and investor valuation of IPOs: top management team legitimacy as a capital market signal

The condition of information asymmetry between current owners and potential IPO investors creates a context wherein the legitimacy of the top management team (TMT) may serve as a valid signal of value to potential investors. The results confirm our hypotheses that TMT legitimacy is negatively correlated with post‐IPO stock value run‐up. Our results support a previously unexplored view of the TMT as an important signal of value in IPOs, and suggest that dual benefits accrue to the TMT selection process in IPO firms. Copyright © 2005 John Wiley & Sons, Ltd.     

Top management team turnover as an adaptation mechanism: The role of the environment

Based on an organizational adaptation framework, this study examines the influence of three environmental dimensions–munificence, stability, and complexity–on top management team turnover. In addition to investigating the direct influence of these environmental dimensions, indirect effects through firm performance and strategic change are also examined; the indirect effect of environmental complexity through demographic heterogeneity is also studied. Path analysis indicates that the direct effects of the three environmental dimensions predominate. Indirect effects were nonsignificant except for the effect of instability and munificence through strategic change. By expanding the team turnover context to include environmental and strategic dimensions, in addition to previously examined performance and heterogeneity factors, this study enhances our understanding of managerial turnover as a form of organizational adaptation.     

Top management team diversity,group process,and strategic consensus

This study integrated concepts from upper echelons, group process and social cognition theories to investigate how demographic diversity and group processes influence strategic consensus within the top management team (TMT), where strategic consensus is defined as the degree to which individual mental models of strategy overlap. Data from 76 high‐technology firms in the United States and Ireland were used to examine three alternative models. The results showed that while demographic diversity alone did have effects on strategic consensus the overall fit of the model was not strong. Adding two intervening group process variables, interpersonal conflict and agreement‐seeking, to the model greatly improved the overall relationship with strategic consensus. For the most part, TMT diversity had negative effects on strategic consensus. The model with superior fit showed both direct and indirect effects of diversity on strategic consensus. Copyright © 1999 John Wiley & Sons, Ltd.     

Effects of top management team faultlines in the service transition of manufacturing firms

Manufacturing firms have increasingly begun to offer services in addition to products, a strategy known as “service transition.” Because top management team (TMT) is responsible for implementing and coordinating firm strategy, it is important to understand how the characteristics of TMT affect service transition. The objective of this study is to investigate the differential effects of product-related and product-unrelated service transitions on financial performance and the moderating roles of informational and social TMT faultlines. Analyses of secondary data from 293 manufacturing firms in China between 2003 and 2018 indicate that although product-related service transition increases financial performance (as measured by Tobin's Q), product-unrelated service transition decreases it. Informational faultlines increase these performance implications by enhancing the positive effect of product-related service transition but attenuating the negative effect of product-unrelated service transition. In contrast, social faultlines decrease these performance implications by attenuating the positive effect of product-related service transition but enhancing the negative effects of product-unrelated service transition. These findings contribute to the marketing strategy literature by providing new insights into the differential effects of TMT faultlines on service transition.     

Good learners: How top management teams affect the success and frequency of acquisitions

We develop new theory and hypotheses on how a firm's top management team learns from acquisition experience, why, in consequence, the composition of the team is crucial, and how this affects acquisition frequency and success. We focus on the diversity of the top team and argue that heterogeneous teams, as compared to homogenous ones, acquire less but benefit more from their acquisition experience and are more successful with their acquisitions because they avoid mis‐transferring their experiences. We tested our hypotheses on acquisition frequency and success using longitudinal data on more than 2,000 acquisitions by 25 Dutch companies over four decades (1966 to 2006). Copyright © 2013 John Wiley & Sons, Ltd.     

The relationship between product and international diversification: the effects of short‐run constraints and endogeneity

We examine the relationship between growth along the product and international dimension in the short run. We argue that while the presence of fungible intangible resources and economies of scope may create opportunities for a firm to expand along both dimensions, the effect of short‐ run constraints may lead to a trade‐off and a negative association between the two dimensions. In addition, we suggest that rather than being independent, decisions concerning the extent of growth along the two dimensions are likely to be made simultaneously and endogenously by firms after taking into consideration the availability of various resources. We test these propositions by observing a sample of 1,299 firms over the period of 1993–1997. Our results show strong evidence of endogeneity and a negative association between growth along the two dimensions. These findings provide important support for theories of firm growth that have long held that firms are limited in the number of opportunities they can exploit in the short run by various constraints. Copyright © 2008 John Wiley & Sons, Ltd.     

The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance

This research reexamines the link between top management team (TMT) heterogeneity and firm performance. Specifically, I theorize that the effects of education, work experience, and tenure on performance will depend upon the top management team's strategic and social context. In a test of such theorizing, I find that (1) the positive relationships between TMT educational, functional, and tenure heterogeneity and performance are contingent on complexity, as indicated by a firm's international strategy and, (2) such relationships are clearly stronger in short‐tenured top management teams. The theory and results presented here provide impetus for future studies, as well as suggest to upper echelon researchers that they think more critically about the conditions under which demographic characteristics are most likely to influence organizational outcomes like performance. Copyright © 2002 John Wiley & Sons, Ltd.     

The relationship between corporate diversification and corporate social performance

Does diversification affect firm response to stakeholder demands and social issues? Despite extensive interest in corporate diversification in the strategy literature, the relationship between diversification and corporate social performance (CSP) remains largely unexplored. In this study, I propose that the level of diversification will be positively related to the CSP of firms. However, when diversified firms have a strong focus on short‐term profit, it may discourage firm response to stakeholder demands and investment in social issues, thereby negatively moderating the positive relationship between the level of diversification and CSP. Empirical testing on a sample of U.S. firms generally supports my predictions. Copyright © 2012 John Wiley & Sons, Ltd.     

Product diversification in international joint ventures: performance implications in an emerging market

This study extends product diversification research to a new organizational form (IJV) and a new environmental context (emerging market). It explores the extent to which product relatedness with both foreign and local parents affects IJV performance as perceived by venture managers. After controlling for relevant variables, analysis of the data containing 134 IJVs in China validates our major premise: the relatedness of an IJV's products with that of its foreign and local parents is positively associated with its performance. An IJV maintaining bilateral related diversification (i.e., with both parents) performs better than a venture maintaining a unilateral related linkage (i.e., with one parent), which in turn outperforms an IJV which is unrelated to either parent. When resource complementarity or goal congruity between parents is higher, there is a stronger positive relationship between product relatedness and IJV performance. When structural opportunities are fewer or institutional deterrence is higher, there is a weaker positive relationship between product relatedness and IJV performance. Copyright © 2002 John Wiley & Sons, Ltd.     

The relationship between product and international diversification: The role of experience

We establish prior diversification experience as a key determinant of the relationship between growth of product and international diversification. Prior diversification experience allows firms to overcome short‐run constraints on simultaneous diversification growth imposed by the difficulty to transfer tacit knowledge, ambiguous competencies, and limited absorptive capacity. Studying U.S. and European firms, we find a positive relationship between growth in product and international scope for firms with high and a negative one for those with little prior diversification experience. Further, we find that product diversification experience has greater impact than international diversification experience. Copyright © 2014 John Wiley & Sons, Ltd.     

Direct and interaction effects of top management team and board compositions on R&D investment strategy

This paper examines why firms differ in levels of R&D investment intensity by developing and testing a theory of direct and interaction effects of top management team and board outsider composition on R&D intensity. The theory is tested in a longitudinal sample of technology‐intensive firms that completed an initial public offering. The results indicate that both top management team composition and board composition have direct and additive effects on R&D investment intensity. Also, monitoring by outsider directors does not constitute a universally effective governance mechanism with regard to a firm's R&D investment strategy. Firms opt for lower levels of R&D investment intensity when their outsider‐rich board interacts with a team of managers who have high levels of (1) firm tenure, (2) shared team‐specific experience, or (3) functional heterogeneity. When a firm's competitiveness relies on sustained R&D investments, it is important to note these interaction effects and make adjustments to promote a healthy dialogue between managers and the board. Adjustments could be made to the management team composition (e.g., initiating management turnover to reduce firm tenure) or to the bundle of governance mechanisms (e.g., partially substituting board monitoring with other mechanisms). Copyright © 2006 John Wiley & Sons, Ltd.     

Polychronicity in top management teams: The impact on strategic decision processes and performance of new technology ventures

This study focuses on polychronicity as a cultural dimension of top management teams (TMTs). TMT polychronicity is the extent to which team members mutually prefer and tend to engage in multiple tasks simultaneously or intermittently instead of one at a time and believe that this is the best way of doing things. We explore the impact of TMT polychronicity on strategic decision speed and comprehensiveness and, subsequently, its effect on new venture financial performance. Contrary to popular time‐management principles advocating task prioritization and focused sequential execution, we found that TMT polychronicity has a positive effect on firm performance in the context of dynamic unanalyzable environments. This effect is partially mediated by strategic decision speed and comprehensiveness. Our study contributes to research on strategic leadership by focusing on a novel value‐based characteristic of the TMT (polychronicity) and by untangling the decision‐making processes that relate TMT characteristics and firm performance. It also contributes to the attention‐based view of the firm by positioning polychronicity as a new type of attention structure. Copyright © 2010 John Wiley & Sons, Ltd.     

Offshoring and firm innovation: The moderating role of top management team attributes

This study attempts to increase the understanding of how offshoring influences the introduction of new products and services. Focusing on the offshoring of those business functions that provide direct knowledge inputs for innovation (i.e., production, R&D, and engineering), we propose that offshoring has an inverted U‐shaped influence on firm innovativeness. Additionally, we provide an upper echelon contingency perspective by considering the moderating role of two top management team (TMT) attributes (i.e., informational diversity and shared vision). Using a cross‐industry sample with lagged data, we find that offshoring has an inverted U‐shaped influence on firm innovativeness and that this relationship is steeper in firms with high TMT informational diversity and in firms with low TMT shared vision. Copyright © 2012 John Wiley & Sons, Ltd.     

企业高层管理团队绩效的模糊综合评价研究

企业高层管理团队是由社会精英人士组成的复杂系统,以往对其绩效的评定研究大都停留在繁复数据的简单归纳和各类变量的定性评价上,既易于失真又难以体现TMT运作的动态性。因此,应在系统分析其绩效各要素内涵及彼此关联的基础上,综合运用模糊数学工具,构建以绩效的六维力度体系为核心的绩效数学模型及相应评价方法,以减少主观噪声的干扰而真实反映TMT绩效的客观状态。