How CEOs and TMTs Build Adaptive Capacity in Small Entrepreneurial Firms

Research suggests that a CEO may have more influence in the context of small entrepreneurial firms, but it is still unclear how a company's chief executive facilitates strategic decision‐making. Little is known about the ways in which these individuals build strategic capabilities, such as the capacity to adapt to changing environments. This study addresses these issues and develops a model indicating that transformational leadership facilitates behavioural integration and comprehensiveness in the decision process among members of the top management team (TMT), which in turn enhances organizational capacity to adapt to environmental changes. Survey results shed light on the complex way in which CEOs facilitate processes within the TMT and enhance small entrepreneurial firms’ capacity to adapt, thereby increasing their viability. This study contributes to the literatures on Upper Echelon Theory, strategic decision‐making, and dynamic capabilities by shedding light on the ways in which transformational leaders influence behavioural and decision‐making processes.     

How Does Executive Strategic Human Resource Management Link to Organizational Ambidexterity? An Empirical Examination of Manufacturing Firms in China

Despite a plethora of studies that demonstrate the positive impact of strategic human resource management on firm performance, existing knowledge of the processes through which such gains can be achieved remains limited. This study aims to extend our knowledge by investigating the mechanism through which a teamwork‐oriented executive strategic human resource management system impacts organizational ambidexterity. Specifically, by integrating the resource‐based view and information‐processing theory, we examine the mediating role of top management team effectiveness and the moderating role of knowledge–sharing intensity from middle managers to top management teams. Drawing on a multiple‐source and multiple‐respondent survey from 144 manufacturing firms in China, we show that top management team effectiveness partially mediates the effect of the executive strategic human resource management system on organizational ambidexterity. Moreover, knowledge‐sharing intensity from middle managers to top management teams strengthens the effect of the executive strategic human resource management system on organizational ambidexterity. © 2016 Wiley Periodicals, Inc.     

Organizational Causes and Strategic Consequences of the Extent of Top Management Team Replacement During Turnaround Attempts

Researchers have argued that top management team changes are an important force spurring change at declining firms. Yet, studies find that top executives at some firms are able to avoid being replaced even though their firms perform poorly. Also, despite support from numerous case analyses, there is little systematic evidence that replacing top managers leads to substantial organizational change at declining firms. In this study, we examine these issues by looking at levels of top management team replacement at a sample of declining firms attempting turnarounds. We find that top management team replacement levels vary with the presence of inertial or change-creating forces within firms. In particular, reduced levels of top management team replacement occur during turnaround attempts at large firms and those that have followed the same strategic orientation for a long period of time. Meanwhile, increases in outsider control of the board are associated with increased levels of replacement. We further find that higher levels of top management team replacement are associated with greater changes in firm competitive strategy and firm structure and controls during turnaround attempts. Overall, our findings show that organizational-level forces play an important role in top management and strategic change processes at declining firms.     

STRATEGIC CONSEQUENCES OF EXECUTIVE SUCCESSION WITHIN DIVERSIFIED FIRMS

Systematic investigation of leaders and their influence on organizations has been a major area of research interest. In examining the upper echelon-organizational outcome linkage, researchers have come to focus on the issue of executive succession. This focus has been due in large part to an emerging theoretical perspective that managerial differences may explain much of the variance in organizational outcomes. The purpose of this study is to ascertain whether or not top management succession affects subsequent corporate strategy. This article extends previous research efforts by longitudinally examining the linkage between executive succession and the extent of corporate strategic change across a sample of Fortune 1000 diversified firms. The findings confirm that the nature of executive succession has substantial consequences for corporate strategy. Firms have a greater likelihood of experiencing significant changes in strategy when they choose successors from outside the organization; firms that select their key executives by promoting from within are more likely to experience significantly less change in their corporate strategy. The results of this longitudinal investigation of the strategic outcomes of succession have significant implications for those in a position to select successors to the executive ranks.     

Family ownership,corporate governance,and top executive compensation

In this study we investigate how top management pay is determined in a family firm environment where even listed firms are effectively controlled by a single individual or a single family. Using data from Hong Kong, we find that executive directors' pay is reduced if the directors have substantial stockholdings. Moreover, pay is related to profits but not to stock returns. Our results are consistent with external blockholders and independent non‐executive directors persuading firms to base top management compensation on a firm's profitability. Copyright © 2006 John Wiley & Sons, Ltd.     

Cooperative Goals,Leader People and Productivity Values: Their Contribution to Top Management Teams in China*

abstract This study proposes that when top management team members are convinced that their leader is committed to people and productivity, they conclude that their leader is effective and contribute to making their organization innovative. Cooperative goals among top management team members may be credible evidence that their leader has people and production values. Executives from over 100 organizations in China completed measures of their cooperative, competitive, and independent goals, their leader's people and production values, and their leader's effectiveness. CEOs from these firms rated their organization's innovativeness. Structural equation analysis suggested that cooperative goals among top management teams convince them that their leader values people and production and that these values in turn result in leader effectiveness and organizational innovation. Results, coupled with previous research, were interpreted as suggesting that cooperative goals and leader people and production values are foundations for leader and top management team effectiveness in China.     

Top Management Team Advice Seeking and Exploratory Innovation: The Moderating Role of TMT Heterogeneity

Research on strategic decision making has considered advice‐seeking behaviour as an important top management team attribute that influences organizational outcomes. Yet, our understanding about how top management teams utilize advice to modify current strategies and pursue exploratory innovation is still unclear. To uncover the importance of advice seeking, we delineate between external and internal advice seeking and investigate their impact on exploratory innovation. We also argue that top management team heterogeneity moderates the impact of advice seeking on exploratory innovation. Findings indicated that both external and internal advice seeking are important determinants of a firm's exploratory innovation. In addition, we observed that top management team heterogeneity facilitates firms to act upon internal advice by combining different perspectives and developing new products and services. Interestingly, heterogeneous top management teams appeared to be less effective to leverage external advice and pursue exploratory innovation.     

Conflict Management for Effective Top Management Teams and Innovation in China*

abstract Top management teams may be critical for developing organizations that can keep abreast of marketplace changes and innovate. Several streams of strategy research have argued that conflict and diversity promote top management team effectiveness. This study proposes that how top management teams manage conflict can greatly contribute to their effective leadership of organizational innovation. A total of 378 executives from 105 organizations in China completed measures of conflict management (cooperative, competitive, and avoiding) and productive conflict (an outcome of conflict). Separately, 105 CEOs from these firms indicated their team's effectiveness and their organization's innovativeness. Results support the theory that conflict management can contribute to making top management teams effective. Structural equation analysis suggests that cooperative conflict management promotes productive conflict and top management team effectiveness that in turn result in organizational innovation. These results, coupled with previous research, were interpreted as suggesting that cooperative conflict management is an important contributor to effective top management teams even in the collectivist culture of China.     

Effective teamwork at the top: the evidence from China

Effective teamwork is an important topic of human resource management, and how top-level managers work effectively as a team is critical to business success. Prior research indicates that the diverse background of top managers influences the effectiveness of their teamwork, and the effects of top management team (TMT) diversity on organizational innovation varies. In this study, we propose that functional team dynamics plays a crucial role in facilitating TMT effectiveness. On the basis of a sample of Chinese firms, our findings support the distinction between demographic and network diversities and the moderating effect of functional team dynamics on TMT diversity–firm innovation relationships.     

Organizational Transformation in Transition Economies: Resource-based and Organizational Learning Perspectives

ABSTRACT The capitalist and socialist societies of the twentieth century assigned firms different roles within their economic systems. Enterprises transforming from socialist to market economies thus face fundamental organizational restructuring. Many former state-owned firms in the transition economies of Central and Eastern Europe have failed at this task. These firms have pursued primarily defensive downsizing, rather than strategic restructuring, as a result of both internal and external constraints on restructuring strategies.
Building on the organizational learning and resource-based theories, we analyse strategies available to management in privatized, former state-owned enterprises in transition economies to restructure their organization. Both internal forces promoting or inhibiting the restructuring process, and external constraints arising in the transition context are examined. A model and testable propositions are developed that explain post-privatization performance. Implications of our research point to the ways in which firms should manage and develop their resource base to transform to competitive enterprises.     

Top managers in the digital age: Exploring the role and practices of top managers in firms' digital transformation

This study explores the role and facilitating actions of top managers in response to the digital transformation. Building on 27 in-depth interviews with top managers and close associates from large German firms, we find that top managers respond to the digital transformation by engaging in three key actions: understanding digitalization, setting the formal context for digitalization, and leading change. Moreover, findings emphasize that top management team support is essential in firms' digital transformation. Overall, this study contributes novel insights about the consequences of top managers for firms and establishes an initial foundation for investigating top managers in the digital age.     

Do Prior Experiences of Top Executives Enable or Hinder Product Market Entry?

How firms achieve entry into new‐to‐the‐firm product markets is an important but overlooked topic. Some aspiring entrants fail during product development, and they miss the opportunity to enter. In such contexts, firms often take action to de‐risk entry, for example, by drawing upon the experience of top executives with market‐specific expertise obtained in prior jobs. However, the empirical evidence from this study shows that beyond a narrow threshold, greater prior experience in the top executive team was associated with a greater likelihood of failed entry attempts among the firms that I tracked over two decades in the biotechnology industry. This result held across product markets with low and high degrees of dynamism. Based on the literature on dynamic managerial capabilities, where entry into new markets indicates managers’ ability to reconfigure organizational resources and adapt to a changing environment, this study’s main contribution is to illustrate how and why experience matters for entry.     

Ethical leadership and ambidexterity in young firms: examining the CEO-TMT Interface

To enrich the knowledge of the value of ethical leadership in a more entrepreneurial setting, we focus on technology-based young firms and theorize through the lens of CEO-TMT interface whether and how founder-CEOs’ ethical leadership influences young firms’ ambidexterity. We argue that founder-CEOs’ ethical leadership can enhance young firms’ ambidexterity in an indirect way, through promoting top management team (TMT) members’ advice-seeking behavior and team satisfaction. Data from a multi-source and time-lagged survey of founder-CEOs and all TMT members in 81 Chinese technology-based young firms supported our predictions. We discuss the theoretical and practical implications of our study to the extant research.

     

The glass ceiling in context: the influence of CEO gender,recruitment practices and firm internationalisation on the representation of women in management

This study examines macro‐level organisational determinants of women in management. Specifically, we examined organisational characteristics and strategies, including firm levels of internationalisation, firm foreign ownership, chief executive officer gender and the active recruitment of women, as predictors of an organisation's level of representation of women in management. Results from a survey of 278 firms indicated that the presence of a female chief executive officer and an organisation's active recruitment of women are positively associated with a firm's percentage of women in management while firm internationalisation and firm foreign ownership are negatively associated with the representation of women in management. Overall, these findings suggest that although firms exercise discretion with respect to hiring and promoting women, they are also constrained by the external environment and organisational characteristics. For example, firms with higher levels of firm internationalisation and that are foreign‐owned may limit their efforts and investment in the advancement of women into management.     

What a Diverse Top Management Team Means: Testing an Integrated Model

Prior research has produced inconsistent results on the relationship between top management team (TMT) diversity and firm performance. Drawing on the information–social categorization framework, this study is designed to investigate both the mechanism and the contextual factors underlying the relationship between TMT cognitive diversity and firm performance by examining them in a unified model so as to better understand how a diverse TMT works. Based on a multi‐sourced survey of top managers from 118 Chinese firms, this study finds that team interdependence and team cohesion moderate in the linkage between TMT cognitive diversity and elaboration of task‐related information. In addition, TMT's elaboration of task‐related information mediates the interactive effects of TMT cognitive diversity and team interdependence on firm performance as well as the interactive effects of TMT cognitive diversity and team cohesion on firm performance.     

Supply chain management executives in corporate upper echelons

Supply chain strategies and their implementation have been recognized as a source of competitive advantage. According to the principle “structure follows strategy”, we expect the number of firms having supply chain management (SCM) functions represented on their top management team (TMT) to have increased in the past years. However, little is known about the degree to which executives responsible for SCM functions (i.e., Chief Supply Chain Officers) are present or absent in TMTs and if their presence is related to firm performance. Therefore, we study the TMTs of large US corporations and show that SCM is present in upper echelons, either through executives whose responsibilities explicitly include SCM or indirectly by executives, especially CEOs, who had acquired SCM experience in their previous positions. However, firms׳ operating margins are lower when a Chief Supply Chain Officer is present in the TMT.     

Top management team compensation in high-growth technology ventures

We examine the key compensation issues pertaining to the top management team that occur during the early stages of growth in new ventures, specifically those anticipating rapid growth such as in technology-intensive markets. Similar to other new ventures, high-growth technology ventures are small in size but they have a goal of rapid growth giving rise to a need for resources and managerial talent to sustain the growth. New ventures are likely to compete in the market with larger organizations for top management team members. As a result, new ventures in rapid growth technology markets experience some unique compensation challenges. Critical for these firms is the issue of distributing equity among members of the founding team and structuring compensation to attract and retain non-founder executives. Drawing from the human resource management and entrepreneurship literatures, this paper develops a set of propositions predicting top management team compensation strategies for rapidly growing new ventures. Directions for future research are also discussed.     

Japanese–American Joint Restructuring of National Steel Corporation

In 1984, NKK corporation, a leading Japanese steel maker, acquired from the National Intergroup Inc. (NII), an American holding company, its 50% equity interest in National Steel Corporation (NSC), the fourth largest integrated steel firm in the US. In spite of the US economic recovery that began in 1992, NSC continued to operate in deficit and in June 1994 NKK brought in a new management team consisting of six American executives and one Japanese executive. Since the third quarter of 1994, NSC has turned its financial performance around. In this paper, using Bayesian estimation procedures, we estimate the join point or the time at which the productivity of NSC's major production lines experienced an upward shift; if the join point occurs after an appropriate gestation period of the new management team, NSC's recovery may be said to be due to the efforts by the new management team. After confirming that indeed this is the case, we discuss how the management team achieved the turnaround. The organization of the paper is as follows. The next section presents the background. In the third section Bayesian procedures for estimating a join point are presented. In the fourth section we discuss restructuring at NSC and the Japanese Total Quality Control system. Conclusions are given in the final section. © 1997 John Wiley & Sons, Ltd.     

The Acquisition of Restructured Firms: An Illustration of Market Discipline?

We examine the relationship between chief executive officer (CEO) compensation and acquisition activity subsequent to corporate restructurings in a sample of 152 firms created by a voluntary corporate spin-off. We also investigate the linkage between these relationships and the stock market reaction to the initial restructuring announcements. Surprisingly, CEO wealth in the form of stock and options is strongly related to friendly and hostile acquisition activity, respectively. Moreover, the stock market appears to anticipate this subsequent acquisition activity. These results ask us to rethink our understanding of the motivational properties of equity ownership and the stock market's reaction to voluntary corporate spin-off announcements.     

Firm Performance,Governance Structure,and Top Management Turnover in a Transitional Economy*

abstract Recent research has argued that political and regulatory environments have a significant impact on corporate governance systems. In particular, countries with poor investor protection laws and weak law enforcement have low levels of corporate governance that manifests itself in substandard financial performance, management entrenchment, and the expropriation of minority shareholders. One implication of this research is that China will have poor corporate governance and entrenched managers as its legal system is relatively underdeveloped and inefficient. However, using data on top management turnover in China's listed firms, our results refute the prediction of entrenched management. We find evidence of very high turnover of company chairmen and there are many cases that we interpret to be forced departures. Our results show that chairman turnover is related to a firm's profitability but not to its stock returns. Turnover‐performance sensitivity is higher if legal entities are major shareholders but the proportion of non‐executive directors perversely affects it. We find no evidence that profitability improves after a change in chairman and this suggests that a firm's governance structure is ineffective as it is unable to recruit suitable replacements that can turn around its financial performance.