The impact of strategic dissent on organizational outcomes: A meta‐analytic integration

Research summary: Strategic dissent represents divergence in ideas, preferences, and beliefs related to ideal and/or future strategic emphasis. Conventional wisdom in strategic management holds that such differences in managerial cognitions lead to higher‐quality strategic decisions, and thus to enhanced firm performance. However, 4 decades of empirical research have not provided consistent findings or clear insights into the effects of strategic dissent. Hence, we analyze the relative validity of predictions about these effects from both social psychological theories of group behavior and information processing perspectives on decision‐making. Then, we conduct a meta‐analytic path analysis (MASEM) based on current empirical evidence. Synthesizing data from 78 articles, we put to rest the notion that strategic dissent leads to positive outcomes for organizations and estimate how negative its effects actually are. Managerial summary: Top management teams (TMTs) set the tone and direction for their firms in important ways. Top managers, however, often disagree over fundamental issues related to strategy. Such strategic dissent affects how important decisions are made, and thus how the firm performs. In more specific terms and contrary to popular belief, strategic dissent creates not only dysfunctional relationships among top managers, but also disrupts the process by which these managers exchange, discuss, and integrate information and ideas in making strategic decisions. In short, firms have not yet generated value through numerous perspectives, ideas, and opinions among their top managers. We discuss interventions that could prove helpful in efforts to benefit from having diverse cognitions in a TMT.     

Strategic decision speed and firm performance

This 4‐year study examines the effect of strategic decision speed upon subsequent firm performance and identifies environmental and organizational characteristics that relate to decision speed. We draw upon strategic decision‐making theory and organization theory to propose that strategic decision speed mediates the relation between environmental and organizational characteristics and performance. Measures of business environment, organization structure, strategic decision speed, and firm performance (growth and profitability) were collected from 318 CEOs from 1996 to 2000. Structural equation modeling confirmed that fast strategic decision‐making predicts subsequent firm growth and profit and mediates the relation of dynamism, munificence, centralization, and formalization with firm performance. Copyright © 2003 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.     

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.     

The contingent effects of top management teams on venture performance: Aligning founding team composition with innovation strategy and commercialization environment

How does the relationship between founding team composition and venture performance depend on the venture's strategy and business environment? Using data from a novel survey of 2,067 firms, we show that while diverse founding teams tend to exhibit higher performance, this is not universally true. We find that founding teams that are diverse are likely to achieve high performance in a competitive commercialization environment. On the other hand, technically focused founding teams are aligned with a cooperative commercialization environment and when the enterprise pursues an innovation strategy. These results are robust to corrections for endogenous team formation concerns. The findings suggest that ventures cannot ignore founding team composition and expect to later professionalize their top management teams to align with their strategy and environment. Copyright © 2013 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.     

Top management team nationality diversity and firm performance: A multilevel study

This research reexamines the equivocal relationship between top management team (TMT) diversity and firm performance. Combining upper echelons theory with insights from institutional theory, we establish a new, timely dimension of TMT diversity—nationality diversity—and develop an integrated multilevel framework explaining how its performance implications vary across contextual settings. We find that nationality diversity is positively related to performance; and this effect is stronger in (a) longer tenured teams, (b) highly internationalized firms, and (c) munificent environments. More generally, our research demonstrates that the consequences of TMT diversity depend on the (1) specific attributes of diversity being considered and (2) firm and industry conditions under which strategic decisions take place. Copyright © 2012 John Wiley & Sons, Ltd.     

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 team inputs and intrateam processes on perceptions of team viability and member satisfaction in nascent ventures

A new venture team is a particular type of top management team neglected by the literature. This study investigated the effects of team inputs and processes on team members' perceptions of team viability and satisfaction in nascent ventures. These outcomes are important as they may be antecedents of team perseverance. The study of 51 new venture teams showed that the presence of a distinct leader was positively related to team satisfaction, while member diversity in educational backgrounds was positively related to perceived team viability. Intrateam processes of social integration and open communication were positively related to both perceived team viability and member satisfaction. Copyright © 2006 John Wiley & Sons, Ltd.     

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.     

Managerial determinants of decision speed in new ventures

This study helps to explain why some new ventures make strategic decisions more quickly than others. Drawing on life course theory and human capital theory, I develop a model of how entrepreneurs' individual characteristics affect new venture decision speed. I test the model using survey data from 98 Internet startups and their founder/managers. Results show that firms made faster decisions when they were managed by older entrepreneurs and by those with prior entrepreneurial experience. In addition, exploratory analyses indicating that fast decision‐making firms were more likely to close may indicate that prevailing theory in this area is contextually limited. Copyright © 2005 John Wiley & Sons, Ltd.     

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.     

Postacquisition turnover among U.S. top management teams: an analysis of the effects of foreign vs. domestic acquisitions of U.S. targets

An analysis of postacquisition top management turnover among 168 cross-border and 102 purely domestic acquisitions, and a control group of 120 nonacquired U.S. firms, revealed that turnover rates in firms acquired by non-U.S. acquirers were significantly higher than in firms acquired by other U.S. firms or the control group. Further, the timing of postacquisition turnover differed in the foreign vs. domestic acquisitions. Finally, the nationality of the foreign acquirer was found to be an important predictor of turnover in certain acquisition categories. Theoretical and practical implications are discussed. © 1997 by John Wiley & Sons, Ltd.     

Strategic decision-making processes: the role of management and context

This paper investigates the relationship between the process of strategic decision-making and management and contextual factors. First, drawing on a sample of strategic decisions, it analyzes the process through which they are taken, into seven dimensions: comprehensiveness/rationality, financial reporting, rule formalization, hierarchical decentralization, lateral communication, politicization, problem-solving dissension. Second, these process dimensions are related to (1) decision-specific characteristics, both perceived characteristics and objective typologies of strategic decisions, (2) top management characteristics, and (3) contextual factors referring to external corporate environment and internal firm characteristics. Overall, the results support the view that strategic decision processes are shaped by a multiplicity of factors, in all these categories. But the most striking finding is that decision-specific characteristics appear to have the most important influence on the strategic decision-making process, as decisions with different decision-specific characteristics are handled through different processes. The evident dominance of decision-specific characteristics over management and contextual factors enriches the traditional ‘external control’ vs. ‘strategic choice’ debate in the area of strategic management. An interpretation of results is attempted and policy implications are derived. © 1998 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.     

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.     

Strategic consensus and performance: the role of strategy type and market‐related dynamism

This paper examines the link between consensus among senior managers and performance at the SBU level and considers factors which may moderate the strength of this relationship. Using data from a cross‐national study in three industry sectors, the authors find that consensus increases the performance of the SBU in the case of a differentiation strategy but not in the case of a low‐cost strategy. Additionally, the relationship between consensus on a differentiation strategy and performance is negatively influenced by dynamism of the market. This research thus clarifies and extends prior consensus research by indicating the conditions under which consensus positively affects performance. For managers, our results indicate that investing managerial time in obtaining consensus is more important for a differentiation than for a low‐cost strategy and is particularly important when using a differentiation strategy in a stable environment. Copyright © 1999 John Wiley & Sons, Ltd.     

Performance effects of top management team demographic faultlines in the process of product diversification

Expanding into new product areas is an important part of the growth strategy of many firms, but there is still more to learn about how it affects firm performance. We believe that as the top management team (TMT) is responsible for coordinating product expansion, looking there can yield valuable clues. We argue that diversification entails significant additional information processing and that this strains top managerial resources. We hypothesize that task‐related faultlines within the TMT may help it cope with product expansion while bio‐demographic faultlines may hinder it. We find support for these hypotheses on a longitudinal sample of 2,730 expansion steps made by 61 German firms between 1985 and 2007: task related faultline strength increases performance when diversifying, while bio‐demographic faultline strength decreases it. Copyright © 2012 John Wiley & Sons, Ltd.     

Collaboration and technology linkages: a strategic supplier typology

This study uses frameworks from the strategic management and operations strategy literatures to explore the relationships among collaboration, technology, and innovation in small and medium‐sized manufacturers. Statistical analysis of the responses of 200 New Hampshire manufacturing companies in four SIC code industries (fabricated metals, industrial equipment, electrical and electronic equipment, and instruments) leads to the development of a strategic supplier typology which is useful in explaining the differences in the composition and performance of various types of suppliers. Copyright © 2000 John Wiley & Sons, Ltd.