CEOs' cultural and demographic attributes and organisational performance of Indian SMEs: an upper echelon approach

Abstract

In this study, we examine the impact of organisational scanning (process of collecting information necessary to identify important events and trends impacting organisations) and strategic flexibility capabilities (ability to adapt to substantial, uncertain, environmental changes) of chief executive officers (CEOs) on organisational performance in Indian small and medium enterprises (SMEs). Based on upper echelon theory, we argue that cultural and demographic attributes of CEOs moderate this relationship. Our hypotheses are tested against a sample of 341 firms in the Indian auto components and textile industry. The positive influence of CEOs' organisational scanning and strategic flexibility on firm performance is confirmed. Findings reveal a significant moderating influence of uncertainty avoidance, long-term orientation, and functional background. No effect is found for CEOs religiosity and tenure. The implications for the upper echelon theory and managerial practice are discussed. Our results further provide interesting avenues for further research.