Top management teams and investment decisions: A study of executive experience and cultural diversity

Jeff Bredthauer,Brad Taylor,Max Dolinsky

doi:10.22495/cocv17i4art16

Abstract

We employ an empirical study of mining companies in Sub Saharan Africa (SSA) using the upper echelons theory (UET) to explore how the top management team (TMT) perceptions and experiences influence investment decisions. UET is used as it is consistent with the Uppsala internationalization model, which best fits mining companies. We assess past international experiences, nationality diversity, age, and education levels of the TMT in order to determine if these demographics impact the decision to invest in SSA countries. This study also assists in closing the gaps in the literature on how executive experiences impact the investment decision process in an international setting as well as how the cultural composition of the TMT influences corporate decisions.

Highlights

Hambrick and Mason (1984) introduced the upper echelons theory (UET) to assist in understanding how top management teams (TMT) make decisions
Greve, Nielsen, and Ruigrok (2009) stated that changes in geographical and cultural positions by financial companies is positively related to the level of both TMT nationality and international experience diversity, which is consistent with the findings reported by Heijltje, Olie, and Glunk (2003) and Van Veen and Marsman (2008)
This study proposes the following hypothesis: Hypothesis 2 (H2): The average age for a TMT member is negatively associated with the level of international diversification

Summary

Introduction

Hambrick and Mason (1984) introduced the upper echelons theory (UET) to assist in understanding how top management teams (TMT) make decisions. In the last five decades, multinational corporations (MNCs) have had to adapt to globalization and the increasing complexity that follows (Hitt, Li, & Xu, 2016; Tian & Slocum, 2015) This increasingly global landscape leads to ensuing pressures on top management to internationalize their firms, which puts an emphasis on selecting and retaining decision-makers with international experience (Nielsen & Nielsen, 2011). Hambrick and Mason (1984) were the first to consider the relationships between top managers‟ characteristics, firm performance, and growth. They developed a new concept entitled upper echelons theory (UET). Top managers are often selected for their positions because they possess demographic or social attributes lacking in the organization (Bany-Ariffin, McGowan, Tunde, & Shahnaz, 2014)

Methods

Results

Conclusion