The role played by job and non-job-related TMT diversity traits on firm performance and strategic change

Abstract

Purpose– Despite an increasing number of studies focusing on workforce diversity, few consistent results and conclusions have yet been reached (Shoreet al., 2009). The purpose of this paper is to develop an integrative model of diversity, taking the Upper Echelon Theory further.Design/methodology/approach– The model proposed tests the influence of job-related and non-job-related (or task-related) top management team (TMT) diversity on firm performance and strategic change. The mediation effect of performance on the TMT diversity-strategic change relation is emphasized in the model. A covariance-based structural equation modelling has been used to test the relationships involved in the research model.Findings– An inverse relation between prior organizational performance and strategic change is found and some TMT diversity predictors appear to be more relevant than others in explaining performance and strategic change. In addition the mediator role of performance significantly influences the TMT diversity composition-strategic change relation.Originality/value– The paper makes several contributions to the existing literature on TMT diversity and the TMT diversity composition-firm performance-strategic change relation.