Top Management Team Search and New Knowledge Creation

Abstract

This article probes the vital role a top management team (TMT) plays in the coupling of knowledge elements assembled through local and nonlocal search into radically new, exploratory innovations and incrementally new, exploitative innovations. It theorizes that the materialization of exploratory and exploitative innovations from a firm's recombinatory stock of knowledge elements is contingent on the interplay between a TMT's experience diversity and its shared vision. Multigroup structural equation modeling of data from a large cross-section of firms in the Netherlands supports the theoretical model. We find that although greater variation in TMT experiences fosters exploratory innovations, lesser variation promotes exploitative innovations. A shared TMT vision moderates these relationships. We discuss the implications for research and practice.