Strategic leadership and executive innovation influence: an international multi‐cluster comparative study

This study investigates the relationship of strategic leadership behaviors with executive innovation influence and the moderating effects of top management team (TMT)'s tenure heterogeneity and social culture on that relationship. Using survey data from six countries comprising three social cultures, strategic leadership behaviors were found to have a strong positive relationship with executive influence on both product–market and administrative innovations. In addition, TMT tenure heterogeneity moderated the relationship of strategic leadership behaviors with executive innovation influence for both types of innovation, while social culture moderated that relationship only in the case of administrative innovation. Copyright © 2005 John Wiley & Sons, Ltd.     

CEO tenure and organizational performance: an intervening model

While CEO job tenure is seen as influencing firm performance, the intervening mechanisms that govern this influence have remained largely unexplored. Given that individuals in the firm most closely influenced by the CEO are members of the top management team (TMT), we focus on the CEO‐TMT interface as one important intervening mechanism. Specifically, our tested model suggests that CEO tenure indirectly influences performance through its direct influences on TMT risk‐taking propensity and the firm's pursuit of entrepreneurial initiatives. Results from structural equation modeling are consistent with this model and support its associated hypotheses. In the discussion, we trace the implications of our study for research and practice. Copyright © 2007 John Wiley & Sons, Ltd.     

Utilizing the firm's resources: How TMT heterogeneity and resulting faultlines affect TMT tasks

While theory and evidence show that firms' competitive actions mediate the resource‐performance relationship, details of top managements' roles in shaping resource utilization choices have been underemphasized. We address this oversight by integrating top management team heterogeneity and any resulting faultline strength with the resource‐action‐performance model to investigate how TMT composition differentially affects the model's two linkages. Specifically, we argue that TMT heterogeneity positively affects the resource‐action linkage, yet negatively affects the action‐performance linkage. Moreover, when heterogeneity begets strong faultlines, all such positive effect is lost. Supportive evidence from the in‐vitro medical diagnostic substance manufacturing industry allows us to discuss how our findings contribute to upper echelons theory, as well as the emerging stream on resource utilization. Copyright © 2014 John Wiley & Sons, Ltd.     

Top management team compensation: the missing link between CEO pay and firm performance?

In this research we discuss the relationship between CEO and top management team (TMT) member compensation, and explore the implications of TMT pay for firm performance. Specifically, we suggest that firm performance may benefit due to agency and group behavioral issues when top management team member pay is aligned—alignment is defined as the degree to which TMT member pay reflects (1) shareholder interests and (2) key political and strategic contingencies within the firm. In support of our theorizing, we found CEO pay to be related to TMT pay; TMT compensation, in turn, predicted performance (i.e., return on assets and Tobin's q) when aligned with shareholder interests and internal contingencies. Moreover, the effect of CEO pay on future firm performance was dependent on top team pay. Copyright © 2002 John Wiley & Sons, Ltd.     

Top management team incentive heterogeneity,strategic investment behavior,and performance: A contingency theory of incentive alignment

Research summary : We develop and test a contingency theory of the influence of top management team (TMT) performance‐contingent incentives on manager–shareholder interest alignment. Our results support our theory by showing that although TMTs engage in significantly higher levels of acquisition investment when their average incentive levels increase, investors' responses to those large investments are generally negative. More importantly, however, we further find that within‐TMT incentive heterogeneity conditions that effect, such that investors evaluate TMTs' large acquisition investments more positively as the variance in those top managers' incentive values increases. Thus, within‐TMT incentive heterogeneity appears to increase manager–shareholder interest alignment, in the context of large acquisition investments. Managerial summary : We find that as the average value of TMTs' incentives increase, relative to their total pay, they invest more in acquisitions and investors' respond negatively to the announcement of those deals. However, we further show that investors respond more positively to acquisitions announced by TMTs whose members' incentive values vary (some TMT members hold higher incentives and others hold lower). Results imply that when TMT members hold differing incentives levels, they approach investments from divergent perspectives, scrutinize those investments more heavily, and make better decisions, relative to TMTs with similar incentives. They also suggest that boards seeking tighter manager–shareholder interest alignment may benefit from introducing variance into TMT members' incentive structures, as doing so appears to create divergent preferences that can improve team decision making. Copyright © 2016 John Wiley & Sons, Ltd.     

Structural interdependence within top management teams: A key moderator of upper echelons predictions

Studies of the effects of top management team (TMT) composition on organizational outcomes have yielded mixed and confusing results. A possible breakthrough resides in the reality that TMTs vary in how they are fundamentally structured. Some are structured such that members operate independently of each other, while others are set up such that roles are highly interdependent. We examine the potential for three facets of structural interdependence—horizontal, vertical, and reward interdependence—to resolve ambiguities regarding effects of TMT heterogeneity. Based on a sample of TMTs in technology firms, we find that the three facets of structural interdependence are potent moderators of two classic predictions: the positive association between TMT heterogeneity and member departures, and between TMT heterogeneity and firm performance. Copyright © 2014 John Wiley & Sons, Ltd.     

Opening the Black Box of Upper Echelons in China: TMT Attributes and Strategic Flexibility

Many scholars have suggested that strategic flexibility is a critical firm capability to survive in today's competitive arena. The decision to take strategic actions to make the firm more strategically flexible typically originates in the top management team (TMT). As the principal decision‐making unit of the firm, TMT members' information acquisition and processing capabilities and subsequent interpretation of environmental changes critically influence the decision to make the firm more strategically flexible to achieve a better fit with its market environment. Therefore, in order to understand how firms can adapt to environmental changes, scholars must study the sociopsychological processes of interaction among members of the TMT. This study examines the relationships between TMT's sociopsychological attributes (shared vision, social integration, and political ties) and strategic flexibility, which is decomposed into organizational flexibility and technological flexibility. The study further investigates how the level of competitive intensity can moderate the relationships. All the hypotheses are tested using structural equation models based on the survey data from 227 firms in China. The results show that organizational flexibility mediates the impact of TMT's social integration and political ties on technological flexibility. Surprisingly, a TMT's shared vision for the firm neither impedes nor facilitates the firm's effort in attaining the desired degree of organizational flexibility. However, TMT's shared vision does have a positive and direct impact on technological flexibility. Moreover, intense competition amplifies the positive impact of TMT social integration on the degree of organizational flexibility, but there is no significant moderating effect of competitive intensity on the relationship between a TMT's political ties and organizational flexibility. The results extend previous research by highlighting the importance of TMTs' sociopsychological attributes in driving technological flexibility, through the mediating impact of organizational flexibility.     

Rookies and seasoned recruits: How experience in different levels,firms, and industries shapes strategic renewal in top management

Research summary : This study explores the effect of knowledge integration on strategic renewal. In particular, it examines how executives from different levels and sources influence renewal when added to top management teams (TMT). In contrast to prior work, the study hypothesizes and finds that new outside rookies—those new to top management and the firm—are associated with higher firm growth than other types of executives. We also find that seasoned outsiders—those with prior TMT experience outside the focal industry—contribute to growth only when the existing TMT has a long tenure. The results suggest that the ability of the TMT to integrate new members varies by executive type and has an important effect on incremental strategic renewal. Managerial summary : Conventional wisdom holds that firms are better off hiring those who can demonstrate prior experience and skill in tasks as close as possible to the job. In the realm of the top management team (TMT), however, we find that many firms benefit from hiring rookies from other firms who are new to the top management team level. These candidates bring useful knowledge of the operations of competitors and other firms, and they are easier to socialize and integrate with the existing team. While more experienced senior leaders may bring valuable strategic knowledge, this study suggests that only top management teams with long shared experience can weather the disruption that they cause to realize the potential benefits. Copyright © 2016 John Wiley & Sons, Ltd.     

Chief strategy officers: Contingency analysis of their presence in top management teams

Drawing upon contingency theory, we analyze the antecedents and performance consequences of chief strategy officer (CSO) presence in top management teams (TMTs). We argue that strategic and structural complexity affects the decision to have a CSO in the TMT and its effect on firm performance. The results of a sample of S&P 500 firms over a five‐year period reveal that diversification, acquisition activity, and TMT role interdependence are positively associated with CSO presence. However, we also find that the structural choice to have a CSO in the TMT does not significantly affect a firm's financial performance. This first systematic analysis of CSO presence informs research on CSOs and contributes to the emerging literature on TMT structure. Copyright © 2013 John Wiley & Sons, Ltd.     

CEOs’ Transformational Leadership and Product Innovation Performance: The Roles of Corporate Entrepreneurship and Technology Orientation

Product innovation is an important research topic that has stimulated significant interest among management scholars and practitioners. Leadership has been suggested to be a critical factor affecting product innovation. Numerous studies have documented that transformational leadership positively influences product innovation performance, which is conceptualized as the degree to which a new product and/or service has achieved its market share, sales, rates of asset return, rates of investment return, and profit objectives. However, there is a lack of studies examining the specific means through which transformational leadership influences product innovation performance at the firm level. Therefore, this study aimed to investigate the processes through which such effect is achieved and to determine whether corporate entrepreneurship and technology orientation as intervening factors influence this effect. To test the hypotheses, data were collected from 151 matched top management team (TMT) members and chief executive officers (CEOs) from Chinese manufacturing firms. Two separate questionnaires were used to collect the data. TMT members’ questionnaire included measures of CEO's transformational leadership, whereas CEOs’ questionnaire included questions about corporate entrepreneurship, technology orientation, and product innovation performance. Hierarchical linear regression was used to test the hypothesized effects. The results of the analysis provided the support for the fully mediating role of corporate entrepreneurship on the relationship between CEOs' transformational leadership and product innovation performance. In addition, technology orientation was found to significantly moderate the CEOs' transformational leadership–corporate entrepreneurship linkage. Furthermore, the mediated moderation effect of corporate entrepreneurship on the relationships among CEOs’ transformational leadership, technology orientation, and product innovation performance was significantly supported. By studying leadership among CEOs, this study contributes to the research by elucidating the mechanisms through which transformational leadership influences product innovation performance. The mediating role of corporate entrepreneurship encourages managers to improve their leadership style so as to enhance the development of corporate entrepreneurship and innovation practices. The findings also show that technology orientation provides the conditions for the smooth translation of the CEO's transformational leadership into actual entrepreneurial activities. Hence, firms should prioritize technology orientation to optimize the implementation of transformational leadership so as to emphasize innovation and new venture creation.     

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.     

Testing a model of reasoned risk‐taking: governance,the experience of principals and agents,and global strategy in high‐technology IPO firms

Research on the governance of risky ventures, like the initial public offerings (IPOs) of high‐technology firms, has focused primarily on the relationship between governance mechanisms and firm performance. While such an emphasis is clearly important, it does little to shed light on potential relationships between governance and the strategies pursued by risky firms, nor does it take into account the complementary role of key stakeholders in affecting those strategies. To partially remedy this deficit we integrate agency and behavioral perspectives to develop a theory of ‘reasoned risk‐taking,’ whereby the nature of risks undertaken is a consequence of the interaction of governance mechanisms and stakeholder characteristics. We demonstrate our theory by predicting when corporate governance should be associated with strategic risk‐seeking beyond a firm's technical core—as seen in the degree to which it has expanded internationally. Surprisingly, even though venture capitalists (VC) are risk specialists, we find that technology‐based IPO firms are less likely (i.e., a negative relationship) to have extensive global sales when they are backed by a VC. In support of our reasoned risk‐taking theoretical framework, we find that VCs are indeed risk‐seeking when VC backing is complemented by the international experience of their board appointees, top management team (TMT) members, or both. IPO firms with significant insider ownership are similarly global risk‐seekers, and those effects are strongest with an internationally seasoned board and TMT at the helm. Copyright © 2003 John Wiley & Sons, Ltd.     

FOREIGN EXPERIENCE OF TOP MANAGEMENT TEAMS AND INTERNATIONAL DIVERSIFICATION STRATEGIES OF U.S. MULTINATIONAL CORPORATIONS

This paper extends upper echelon theory to the international business arena and tests the hypothesis that the foreign experience of top management team (TMT) members is associated with international diversification strategies. Regression analyses indicate that TMTs with a higher mean, greater heterogeneity, and a higher proportion of managers with foreign experience in 54 U.S. multinational corporations were significantly associated with the firm's international involvement.     

CEO political ideologies and pay egalitarianism within top management teams

Research summary : We examine the influence of CEO and compensation committee liberalism on top management teams (TMT ) pay arrangements. Given that politically liberal individuals tend to value egalitarianism, we test whether firms with liberal CEO s tend to (1) reduce pay dispersion among non‐CEO executives; and (2) reduce pay gaps between CEO and non‐CEO executives, and whether compensation committee liberalism moderates these relationships. We find some evidence of a direct effect of CEO liberalism on TMT pay arrangements as well as some interaction between CEO and compensation committee liberalism on the pay arrangements. This study provides a better understanding of the antecedents of TMT pay arrangements and empirical evidence showing the influence of values at the top of organization . Managerial summary : Do the values of the CEO and compensation committee influence the pay of other top managers? Our study provides evidence that political ideology affects top manager pay. We examine whether CEO liberalism produces more egalitarian pay arrangements among top managers, and whether the liberalism of the compensation committee affects that relationship. We find that CEO liberalism reduces differences in the total pay among top managers, but does not influence the difference between CEO total pay and the total pay of top managers. We also find that compensation committee liberalism strengthens the negative influence of CEO liberalism on differences in total pay among top managers. Finally, we find that CEO liberalism reduces the difference between CEO bonus pay and the bonus pay of other top managers . Copyright © 2016 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.     

Management heterogeneity,competitive interaction groups,and firm performance

One of the fundamental problems in strategic management is to map a heterogeneous set of firms in an industry into subsets of firms within which firms are homogeneous in their conduct and performance. The strategic group concept provides an answer to this intriguing question. Researchers in strategic group theory argue that firms within the same strategic group are behaviorally similar and thus tend to compete more fiercely within the group than across groups. In this paper, we focus on the question whether firms within the same group show similar decision‐making characteristics. Strategic‐choice theorists argue that top management teams in firms have substantial discretion in determining the future strategic contour of firms. Upper‐echelon theorists also argue that top managers are the strategists who set the direction of firms and the pace of competition in the industry. Further, they argue that top management team characteristics are an important element that determines the market niche in which a firm competes and the strategic direction a firm follows. Based on these arguments, we expect that there will be a significant link between grouping of firms by the patterns of competitive interactions and grouping of firms by top management team heterogeneity. Moreover, we argue that the closer the TMT heterogeneity of a firm is to the dominant heterogeneity in the competitive interaction group, the better it performs. Copyright © 2000 John Wiley & Sons, Ltd.     

CEO transformational leadership and firm performance: A moderated mediation model of TMT trust climate and environmental dynamism

This study examines the role of top management team (TMT) trust climate in the relationship between CEO transformational leadership (TFL) and firm performance under dynamic environments. The research results based on a sample collected from firms in Vietnam show that TMT trust climate is a key mediator which can convert CEO TFL into better performance outcomes. Moderated-mediation analyses further reveal that the mediating effect of TMT trust climate is more significant in less dynamic environments. Our study contributes to the TFL theory by identifying a critical mechanism that intervenes in the relationship between CEO-level TFL and firm performance. We reveal how CEOs exert leadership influence on subsequent TMT dynamics and performance outcomes by navigating external environments. Moreover, our study offers insights with regard to the trust theory by uncovering TMT-level intragroup trust as a mediator, and thus complements most of prior examinations that focus on the moderating role of trust in workplace team contexts.     

What is the benefit of TMT��s governmental experience to private-owned enterprises? Evidence from China

In China, the phenomenon of government officials entering business (xiahai)??government officials leave government organizations to enter into private-owned enterprises (POEs)??gives rise to an intriguing question: Why do POEs invite the participation of former government officials? Based on a sample of 100 Chinese POEs, our findings indicate that both the mean number of years of top management team??s (TMT) governmental experience and the number of top managers with governmental experience in a TMT are positively related to a POE??s political networking, which in turn contributes to POE performance. By doing so, this study adds governmental experience to the literature on TMT experience, and identifies the mechanism of governmental experience effect. Overall, we provide an underlying mechanism of the phenomenon of government officials entering business.     

TOP MANAGEMENT TEAM AGREEMENT ABOUT THE STRATEGIC DECISION PROCESS: A TEST OF SOME OF ITS DETERMINANTS AND CONSEQUENCES

The level of agreement among a firm’s top executives about how things are done in that firm has a variety of important implications. For example, agreement about a firm’s decision-making norms may allow members of the top management team (TMT) to focus on the substance of their most critical decisions and not get bogged down in debates about the process. In the present study, data from 65 firms in two industries were used to identify determinants and consequences of TMT agreement about the comprehensiveness of the strategic decision process. Results for consequences indicate that the level of TMT agreement was positively related to organizational performance. As for the determinants of agreement, organizational size was negatively related to agreement but past performance exhibited no association. Therefore, the results suggest that it is TMT agreement that influences performance, not the reverse. In addition, a surprising result was that firms in an industry with an unstable environment exhibited significantly more agreement about the process than did their counterparts in an industry whose environment was stable. © 1997 by John Wiley & Sons, Ltd.     

Top executive commitment to the status quo: Some tests of its determinants

Some top executives are more committed to the status quo—particularly to their organization's current strategy and leadership profile—than are others. Most empirical research on upper echelons treats psychological phenomena as a ‘black box’—the unobserved intervening mechanisms—that causes associations between more observable executive characteristics and organizational outcomes. In contrast, this paper attempts to directly examine the determinants of an important element of an executive's psychological orientation—commitment to the status quo (CSQ). We focus on a select set of variables which have been posited in prior research as determinants of executive CSQ, but which have not been directly tested for such a relationship. Based on a large-scale survey methodology, results suggest that an executive's tenure in an industry is a pronounced determinant of CSQ, and has significantly more impact than organizational tenure. As expected, the firm's current performance was found to be positively related to CSQ; this relationship was stronger in high-discretion than in low-discretion industries. Finally, the project reaffirms a well known human tendency: incumbent CEOs tend to believe that their eventual successors should be just like them.