Abstract
Based on Upper Echelons theory, this article makes use of a sample of 130 companies that experienced CEO succession due to performance decline to investigate whether the TMT heterogeneity impact on corporate performance and how the leadership structure of corporation moderates the relationship between them. It is shown that TMT age heterogeneity has a U-shaped relationship with corporate performance; TMT tenure heterogeneity and TMT educational levels heterogeneity have inverted U-shaped relationship with corporate performance; while the leadership structure of corporation has a moderating effect on the relationship between TMT age heterogeneity, TMT tenure heterogeneity and corporate performance. The findings of this study would be helpful to cultivate and construct the entrepreneurial TMT, and to design corporate leadership structure.
Highlights
Upper Echelons (UE) [1] theory holds that demographic characteristics of top management team (TMT) effectively reflect TMT members’ traits, including cognitive basis, value principle and insights which make effects on TMT members’ knowledge of business environment and strategic decisions as well as corporate performance
We can see that TMT age, tenure and education heterogeneity in the sample enterprises are high, as the values are 0.882, 0.629, 0.609
We find that TMT tenure, education heterogeneity have inverted U-shaped relationship with corporate performance
Summary
Upper Echelons (UE) [1] theory holds that demographic characteristics of top management team (TMT) effectively reflect TMT members’ traits, including cognitive basis, value principle and insights which make effects on TMT members’ knowledge of business environment and strategic decisions as well as corporate performance . Present literature pays more attention and makes research on TMT heterogeneity’s effects on corporate strategy and performance. While most researchers took external environmental characteristics as moderators or mediators to reveal mechanisms in TMT strategic. (2016) Study on TMT Heterogeneity’s Effects on Corporate Performance from the Perspective of Leadership Structure. There is rare study from the perspective of corporate internal governance mechanism
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