The linkage between TMT knowledge diversity and firm-level innovation: the role of organisational search scope and managerial discretion

Abstract

In this study, we develop a new perspective on the linkage between the knowledge base of the top management team (TMT) and innovation performance. Using longitudinal data on the patent activities of 120 firms in US manufacturing industries, we find that the knowledge diversity based on a TMT's prior experiences affects organisational innovation. Specifically, firms can achieve greater innovativeness if their top teams have a higher degree of knowledge diversity, i.e., a more generalised knowledge base. In addition, the degree of organisational search scope positively moderates this linkage between TMT knowledge diversity and firm innovation. In addition, we also found that the degree of managerial discretion at the industry level enhances the linkage between TMT knowledge diversity and firm innovation.