Digitalization and Firm Performance: The Moderating Role of Top Management Team Attributes

Abstract

Digitalization theoretically helps firms stimulate innovative potential, accelerate business optimization, and create market opportunities. However, not all firms that have implemented digitalization have realized the anticipated benefits. Many firms face challenges in mastering and sustaining digitalization's benefits. Given that the top management team (TMT) plays a significant role in digitalization, this article combines the resource-based view with upper echelon theory and explores the relationships among digitalization, TMT attributes, and firm performance. An analysis of survey data from 181 Chinese firms reveals the influences of positive firm performance from both internal digitalization related to process efficiency and external digitalization associated with social relations, with the former effect being larger than the latter. Moreover, regarding the two TMT attributes, informational diversity, rather than shared vision, has significant moderating effects on the above relationships. In particular, informational diversity enhances (weakens) the relationship between external (internal) digitalization and firm performance. This article contributes to the current technology-adoption literature by demonstrating the unique moderating mechanism of TMT attributes in the digitalization–performance relationship. The findings also help firms reexamine the structure of TMT members to facilitate digitalization's implementation.