Abstract
This study contributes to the emerging dialogue on the relationships between top management team (TMT) functional background diversity, organizational ambidexterity and company performance. Although small firms (SEs) represent a fundamental component of every nation’s economy, to our knowledge SEs have never been considered as specific units of analysis in the context of this dialogue. Therefore, logistic regression was applied to a sample of 502 Italian manufacturing SEs, 244 operating in the fashion industry and 258 operating in other low technology industries. The principal findings are the following: i) there is a significant and positive relationship between SE TMT diversity and SE organizational ambidexterity; ii) the chief executive officer’s (CEO’s) functional background and power act as moderators in this relationship; iii) there is a significant and positive relationship between SE organizational ambidexterity and SE performance and this relationship is positively moderated by the level of complexity of the industry environment.
Highlights
Small firms (SEs) represent a fundamental component of every nation’s economy
To our knowledge, the emerging dialogue on the relationships between top management characteristics, the chief executive officer (CEO)’s role, organizational ambidexterity and performance has mainly focused on large firms, only exceptionally on small and medium sized firms (e.g., Lubatkin, Simsek, Ling, & Veiga, 2006), on young entrepreneurial firms (Parida, Lahti, & Wincent, 2016), and on new ventures (Song & Jin, 2017), but never on SEs
The highly significant and positive relation found between SE Top Management Team (TMT) diversity and SE ambidexterity is fully coherent with these considerations
Summary
SEs have their own specific characteristics, which are markedly different from those of larger firms. SEs have a “personal” character, with the majority shareholder and the chief executive officer (CEO) who are often one and the same person (Burke & Jarrat 2004; Ciampi, 2015; Ciampi & Gordini 2013). From this it follows that SEs normally act quicker and are more reactive when facing environmental challenges. To our knowledge, the emerging dialogue on the relationships between top management characteristics, the CEO’s role, organizational ambidexterity and performance has mainly focused on large firms, only exceptionally on small and medium sized firms (e.g., Lubatkin, Simsek, Ling, & Veiga, 2006), on young entrepreneurial firms (Parida, Lahti, & Wincent, 2016), and on new ventures (Song & Jin, 2017), but never on SEs
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