Top Management Team Diversity Research Articles

The impact of top management team members diversity on corporations’ performance and value: evidence from emerging markets

The study contributes to understanding the impact of top management team (TMT) member diversity on corporations’ performance and value in emerging markets. It examines three dimensions of diversity in TMT: gender, education, and foreign nationalities, providing insights into how these factors influence corporate performance and value. The study’s quantitative analysis of 70 non-financial corporations from Brazil, Egypt, India, Russia, Saudi Arabia, South Africa, and Turkey from 2013 to 2022 using cross-sectional unit analyzes helps establish empirical evidence on the relationship between TMT diversity and corporate performance in emerging markets. Study’s findings can inform corporations in emerging markets about the importance of promoting diversity in their top management teams to improve performance and value. The study found a significant impact of top management team diversity based on education and foreign nationalities but a non-significant impact on gender on some key performance indicators (KPIs). The study can explain the non-significant impact of gender according to shifting the prevailing theory from sexual selection theory to prospect theory. On the other hand, the study believes that the optimal mass of diversification, or the weight of members with diverse backgrounds, determines whether the impact of diversification is positive (it leads to increased creativity, innovation, problem-solving ability, talent attraction and retention, and employee engagement and productivity) or negative (it leads to increased organizational conflict and communication difficulties). If it is less than this mass, the benefits of diversity are limited, but if the mass is greater than it, the harms of diversity are greater than the benefits. The study also highlights the need for future research in the area of diversity in top management and provides a plan outlining steps to enhance diversity in top management teams.

Influence of Strategic Oriention on Diversity of Top Management and Competitive Advantage of Insurance Companies

Whereas strategy literature presents ambiguous findings on the influence of top executives on firm outcomes, there is mixed evidence that several other dynamics can come into play to enhance or downplay this relationship. This study sought to address this gap by interrogating whether strategic orientation would impact the connection between top management team diversity and competitive advantage of insurance companies based in Kenya. 54 companies targeted were subjected to a cross sectional survey and from this, 41 availed a senior executive to complete the research questionnaire presented. Data gathered was subjected to analysis with the aid of statistical software for social sciences and regression analysis applied to test hypotheses. The impact of strategic orientation was tested through the Baron and Kenny approach. The findings revealed that top manager diversity and strategic orientation affected competitive advantage despite not fully accounting for its variability. Additionally,  strategic orientation presented a statistically significant effect and proved to be a moderator in the association between top management team diversity and competitive advantage.  These findings implied that policy makers and practitioners take guidance on the importance of designing teams with diverse members that can front effective strategies for market competitiveness. The results backed the perspectives in the upper echelon and resource advantage view since it established that when teams have diverse members and calculated strategic positions, they have the capability to attain competitive advantage. The study recommended that future studies take into consideration a longitudinal approach that enables observation and analysis of relationship among variables for a considerable duration.

Is the relationship between institutional distance and subsidiary performance moderated by top management team? Evidence from Chinese multinational enterprises

Institutional distance is well-recognised as having a significant influence on MNE subsidiary performance in host countries. However, there is less clarity as to how the institutional distance is managed by top management teams of MNEs. Specifically, it is not known whether the previous work experiences of the top management team (TMT) can moderate how institutional distance impacts subsidiary performance. The purpose of our research is to address the research question, how do different work experiences among the TMT moderate the relationship between institutional distance and subsidiary performance? To empirically answer this question, we use a sample of 6119 Chinese MNE subsidiaries with 34,870 TMT managers. We apply ordinary least square (OLS) regression and bias-corrected and accelerated bootstrap (BCa) to the data. The results indicate that the strength of the negative relationship between institutional distance and MNE subsidiary performance is conditional on the different work experiences of the TMT. We show that the negative relationship between institutional distance and MNE subsidiary performance is strengthened with an increase in expatriates in the TMT who have home country work experience (β = −0.346, p < 0.05) but mitigated with an increase of managers in the TMT who have host country work experience (β = 0.129, p < 0.01). Additionally, the negative relationship between institutional distance and subsidiary performance is weakened by increasing diversity of TMT’s international experience (β = 0.555, p < 0.01). Notably, the TMT’s international experience in weak-institution markets has a more salient mitigating effect on the negative relationship than work experienced gained in strong-institution markets. This study contributes to the integration of TMT perspective into institutional management and has practical implications for the staffing strategy of MNE subsidiaries.

TMT’s Impact on Company Performance: Unraveling the Role of Strategic HRM Choices

Purpose: The article explores the intricate relationship between top management teams (TMTs), strategic HRM, and company performance. It investigates whether TMT attributes influence strategic HRM choices, ultimately contributing to improved company performance. The study introduces mediation models to unravel how two TMT strategic HRM choices mediate the relationship between TMT attributes and company performance. Design/Methodology/Approach: Conducting a nationwide study involving 150 Polish companies, the research collected data through surveys with 150 HR managers and 150 top managers. Statistical methods, including descriptive statistics, correlations, and regression analysis, were employed in the analytical framework to explore the hypothesized relationships. Findings: The study uncovers a positive correlation between TMT attributes and company performance. It identifies TMT emphasis on SHRM and curatorship of HR as pivotal mediators, showing that larger, diverse TMTs are inclined to prioritize gaining a competitive advantage through human resources, and address vulnerability challenges, positively impacting overall company performance. Research Limitations/Implications: Acknowledging limitations in the oversight of organizational processes, particularly translating top managers’ choices into company performance, the article highlights the need for further validation of the curatorship of HR measurement tools, and suggests incorporating objective financial data for comprehensive performance assessments in future research. Originality and Value: The study contributes valuable insights into the complex dynamics impacting company performance, examining key TMT attributes, and introducing the concept of “curatorship of human resources”. The novel perspective, alongside TMT emphasis on SHRM, proves pivotal in positively influencing overall performance, filling a significant gap in HRM literature.

Top management team diversity and adaptive firm performance: the moderating roles of overlapping team tenure and severity of threat

PurposeAlthough strategic scholars have made great effects to exploring the moderating roles of team interaction in explaining the effect of top management team (TMT) diversity, they have adopted seemingly conflicting theoretical perspectives to explain how it works. Drawing on ideas from the threat rigidity theory, the authors integrated these perspectives by proposing a contingency model in which the relationships between TMT diversity and adaptive firm performance depend on the matching between the internal context (i.e. overlapping team tenure) and external context (i.e. severity of threat).Design/methodology/approachThis study sampled 579 Chinese A-share listed companies that have been severely affected by the COVID-19 pandemic, and multilevel linear regression analysis was used to test the hypothesis.FindingsResults provided support for this hypothesis. Specifically, the interaction between TMT age/tenure diversity and overlapping team tenure is significant only when the severity of threat is high, while the interaction between TMT functional diversity and overlapping team tenure is significant only when the severity of threat is low.Originality/valueThe results of this study provide a comprehensive perspective to predict the performance impact of team diversity and contribute to diversity research and practice.

The more diverse, the better? Exploring the moderating role of hospitality top management team diversity on CSR-FP link

While top executives make strategic decisions for corporate social responsibility (CSR), the composition of top management team (TMT) in the relationship between CSR and FP has yet to be explored in the hospitality literature. Building on the upper echelons, human capital, and stakeholder theories, this study focuses on the moderating role of four TMT diversity types, gender, age, industry experience, and tenure, in the CSR-FP relationship. This study found that diversity in TMT age and industry experience positively moderate the CSR-FP relationship, while tenure diversity negatively moderates such relationship and gender diversity is not a significant moderator. This study sheds light on the benefit of a more diverse hospitality firm TMT in terms of CSR, which extends the theoretical discussion about the effect of CSR on FP. Hospitality industry practitioners and relevant stakeholders can be illuminated by the advantages of a more diverse TMT that can efficiently utilize CSR to contribute to FP.

How does gender diversity in top management teams affect carbon disclosure and its quality: Evidence from the technological industry

This study assesses the impact of gender diversity in top management teams on voluntary carbon disclosure and carbon disclosure quality in the technological industry. We consider different senior management positions through a “multiteam system” approach. By crossing the MERIT500 and Carbon Disclosure Project databases, we build a sample of 138 technological firms over the 2014–2020 period. The results of the logistic and ordered logistic models show that gender diversity among top management teams can effectively improve voluntary carbon disclosure and its quality and can eventually contribute to achieving the transition to a low-carbon global economy. Our results confirm that women's participation on boards of directors has a positive impact on voluntary carbon disclosure and its quality. Women CEOs and women in top operational management positively influence voluntary carbon disclosure, whereas board chairwomen have no influence on carbon disclosure and its quality. Reaching a 30 % threshold among top management teams positively impacts voluntary carbon disclosure and its quality. Overall, our results support our “multiteam system” approach and the use of critical mass theory to fully measure the effects of gender diversity among top management teams.

Influence of Gender Diversity, Age, Education, and Work Experience Top Management Team on Intellectual Capital Performance: Empirical Study on Sector Companies Banking in 2021-2022

The aim of this research is to analyze the influence of Gender Diversity, Age, Education and Work Experience on Intellectual Capital Performance. The sample used in this research consisted of 23 companies selected using purposive sampling. This research uses quantitative methods and the research object is banking companies listed on the Indonesian Stock Exchange for the 2021-2022 period. The research method used is Common Effect Model (CEM) panel data which is processed using the Eviews version 12 application. The data used is in the form of annual reports and financial reports for the period 2021-2022. This research uses multiple regression analysis. The variables in this research are Disclosure of Intellectual Capital (Y), Gender Diversity of the Female Top Management Team (X1), Age of the Top Management Team (X2), Education of the Top Management Team (X3) and Work Experience of the Top Management Team (X4). The results of the statistical analysis show that partially the Gender Diversity Top Management Team Female variable has a positive and insignificant effect on Intellectual Capital Performance. The age of the Top Management Team has a negative and significant effect on Intellectual Capital Performance. Then, Top Management Team education has a positive and insignificant effect on Intellectual Capital Performance. Lastly, Top Management Team experience has a negative and insignificant effect on Intellectual Capital Performance.

Top management team career experience heterogeneity, digital transformation, and the corporate green innovation: a moderated mediation analysis

IntroductionDrawing upon upper echelon theory and the resource-based view, this study employs a moderated mediation model to investigate the moderating role and underlying mechanisms of digital transformation in the influence of top management teams (TMT) on corporate green innovation.MethodsOur analysis of panel data from 19,155 Chinese A-share listed companies (2011–2020) demonstrates that TMT career experience heterogeneity has a positive effect on green innovation, a relationship that is further strengthened by digital transformation.ResultsThis study shows the role of digital transformation in amplifying the effects of TMT diversity on green innovation and the crucial role of industry-academia-research collaboration as a mediator. Heterogeneity analysis highlights that non-state-owned enterprises (non-SOEs) show more agility than state-owned enterprises (SOEs) in leveraging heterogeneous TMT to drive green innovation. Conversely, green innovation in SOEs benefits more from digital transformation, which includes both its direct and indirect effects of digital transformation. Enterprises located in non-Yangtze River Economic Belt regions benefit more from digital transformation, demonstrating the importance of a balanced distribution of digital resources.DiscussionThis study provides novel insights into leveraging inclusive leadership and digital capabilities to enhance ecological sustainability. This study underscores the potential of diversified TMTs and digitalization technology integration to catalyze green innovation, which is critical for environmentally responsible transformation.

Top management team diversity impact on financial performance: Evidence from VW Group affiliated firms

Abstract Diversity within top management teams (TMTs) has significant implications for firm financial performance, particularly in dynamic industries like the automotive sector. This paper analyzes the relationship between TMT diversity and financial outcomes in companies associated with the Volkswagen Group, operating in an intensely competitive market marked by technological advancements. This comprehensive paper synthesizes studies investigating the correlation between TMT diversity and financial performance within the automotive domain. Employing quantitative approaches, these studies assess demographic factors such as gender, age, ethnicity, and educational background. The analysis unveils distinct patterns of impact. Gender diversity within TMTs exhibits a positive influence on financial performance, with heightened profitability and increased market value being notable outcomes. Age diversity shows a nuanced trend, with moderate levels enhancing strategic decision-making capabilities and fostering innovation. Increased ethnic diversity within TMTs is associated with elevated innovation and overall firm performance. Furthermore, educational diversity within TMTs is found to bolster firm performance, underscoring its pivotal role in strategic decision-making and innovation. By offering a comprehensive synthesis of TMT diversity’s connection to financial performance within the Volkswagen Group’s context, this paper contributes novel perspectives. The study emphasizes the methodologies utilized, outlines key findings, and underscores the original contributions made by existing research. This study illuminates the profound influence of TMT diversity on shaping strategic decisions and fostering innovation in the automotive sector. Importantly, it highlights the crucial role of TMT diversity in driving positive financial outcomes.

Top Management Team Functional Diversity and Management Forecast Accuracy

SYNOPSISIn this study, I examine whether top management team (TMT) between-member and within-member functional diversity affect management earnings forecast accuracy. Between-member functional diversity refers to the heterogeneity of functional experts on a TMT and within-member functional diversity refers to the aggregate functional breadth of TMT members. I find that both types of functional diversity are positively associated with management forecast accuracy. Further cross-sectional analyses show that these positive associations are significant only when firms face greater information uncertainty, when TMTs are more decentralized, and when TMT members have longer joint team tenure. These findings are consistent with the information-processing perspective that TMT functional diversity can facilitate information processing and sharing and thus improve management forecast accuracy. This study contributes to the literature by shedding light on how TMT members with various functional backgrounds work together in shaping financial disclosure quality.Data Availability:Data are available from the public sources cited in the text.

Gender diversity and collaboration with universities: drivers of innovation in family firms

PurposeThis paper provides empirical evidence for how gender diversity in top management teams (TMTs) and collaboration with university and technological centres lead to innovation outcomes. The authors review past research on these concepts and illustrate their individual and joint effects on process innovation specifically in the unique context of family firms (FFs).Design/methodology/approachThe authors used a sample of 788 Spanish manufacturing family firms in 2016 and applied logistic regression models since the dependent variables are dummies.FindingsThe authors found a positive relationship between gender-diverse TMTs, process innovation and research and development (R&D)-based process innovation. Similarly, the collaboration with university technological centres is positively associated with higher innovation outcome of FFs. In addition, the authors also found that the presence of women in TMTs shapes the relationship between the collaboration with university technological centres and process innovation.Originality/valueThis paper contributes to the research on collaborative innovation in FFs by emphasizing the collaboration with university technological centres, an external partner often ignored by this stream of literature. This research also responds to the calls for further study of the effect of the heterogeneity of the TMTs on the innovation outcome of FFs, from the perspective of the resource-based view (RBV) of the firms.

EFFECT OF TOP MANAGEMENT TEAM DIVERSITY ON FMCGs' PERFORMANCE

This study examined the effect of top management team diversity (captured by top management cultural diversity and top management gender diversity) on fast-moving consumer goods (FMCGs) performance. The study employed a survey design by administering a structured questionnaire to 520 FMCG employees of FMCGs. The research instrument (questionnaire) was administered to the targeted respondents in January 2023. The study employed a linear regression model with STATA version 14 software. The findings reveal that top management cultural diversity and top management gender diversity have positive and significant individual effects on FMCGs performance, with coefficients and probability values of β1 =0.342, P-value &lt; 0.0s, and β2 =0.594, P-value &lt; 0.05. The adjusted coefficient of determination (Adjusted R2) suggested that 46.1% variation in FMCGs performance is accounted for by top management team diversity elements (top management cultural diversity and top management gender diversity). Therefore, it can be concluded that top management team diversity (top management cultural diversity and top management gender diversity) significantly positively affect the performance of FMCGs. Therefore, the performance of FMCGs is determined by their level of diversity, particularly their top management's cultural diversity and top management's gender diversity. In line with the findings of this study, the following recommendations are made: FMCGs should encourage top management cultural diversity through the engagement of top managers from diverse cultural orientations, as this tends to enhance their performance. Additionally, FMCGs should encourage top management gender diversity through the engagement of top managers from diverse gender, as this tends to enhance their performance. Furthermore, the Manufacturers Association of Nigeria and government agencies should encourage diversity among FMCGs.

How do top management team characteristics affect digital orientation? Exploring the internal driving forces of firm digitalization

The top management team (TMT) plays a key role in the process of the firm digital transformation. However, few studies have focused on the impact of TMT characteristics on the digital orientation of firms. In this paper, we simultaneously explore the impact of the dispersion, aggregation, and background characteristics of TMT on the digital orientation of firms. Based on the upper echelons theory and strategic orientation theory, we propose that the diversity and average education level of TMT positively impact firms' digital orientation. The average age and tenure of TMT have a negative impact on the digital orientation of firms. The overseas and financial backgrounds of TMT members have a positive impact on the digital orientation of firms. Our hypothesis was tested using large-scale longitudinal data and computer-aided text analysis methods from Chinese listed companies. This paper provides useful supplements to early research on digital driving factors and digital orientation in emerging economies, and also provides more universal suggestions for digital practices in firms.

The influence of top management team diversity on Sustainable Development Goals (SDG) reporting: Evidence from Sri Lanka

AbstractMotivated by the limited attention given to the impact of top management teams on Sustainable Development Goals (SDGs), this study sets out to identify the extent to which companies engage in SDG reporting and assess the impact of top management team diversity on SDG reporting based on the upper echelons theory. The data were collected by analyzing the sustainability reports of the listed entities over a three‐year period and conducting semistructured interviews. Findings show that the average disclosures related to SDGs are still at a deficient level and that top management team diversity does not have an impact on SDG reporting in Sri Lankan companies. The qualitative evidence shows that the existing corporate sustainability strategies have been aligned with SDGs, rather than being reformulated or designed to integrate with the SDG targets. Hence, in Sri Lanka, SDG reporting is limited by the superficial attention given to them in corporate strategies. This is a pioneering study that investigates the relationship between top management team diversity and SDG reporting using an explanatory sequential approach.

TMT entrepreneurial passion diversity and firm innovation performance: the mediating role of knowledge creation

PurposeThis study extends the literature on top management team (TMT) diversity and innovation by introducing entrepreneurial passion diversity as an important TMT affective component in determining firm innovation performance. This paper draws on the knowledge-based view and proposes that TMT passion diversity, in terms of intensity separation and focus variety, may hinder the process of knowledge creation, and, in turn, reduce firm innovation performance.Design/methodology/approachThe authors conduct a questionnaire survey using a simple random sampling technique and collect data from 195 small- and medium-sized enterprises in China. Ordinary least squares regression and a structural equation model are applied to test the hypotheses.FindingsThis study finds that TMT passion intensity separation has a negative effect on firm innovation performance via knowledge exchange and knowledge combination. TMT passion focus variety has a negative effect on firm innovation performance via knowledge combination.Originality/valueThis study highlights the affective diversity of entrepreneurial passion in TMTs and clarifies the detrimental role of TMT entrepreneurial passion diversity in innovation and knowledge creation. It contributes new insights to the literature on TMT diversity, knowledge management and entrepreneurial passion.

Effects of Women in Top Management Teams on Corporate Wrongdoing: The Moderating Roles of Chairwoman and Female Relational Capital

In recent years, corporate wrongdoing has attracted widespread attention worldwide, and the media has vigorously debated whether senior management should be held accountable. Based on upper echelons theory, this study aims to investigate the relationship between women's representation in top management teams and corporate wrongdoing, as well as the moderating roles of the presence of a chairwoman and female relational capital. This research employs data from 333 small and medium-sized enterprises listed on the Shenzhen Stock Exchange in 2017 and mainly finds through regression analysis that: in small and medium-sized enterprises in China, women's representation in top management teams has a significant and negative impact on corporate wrongdoing; the presence of a chairwoman strengthens the negative effect, but female relational capital weakens the negative effect. This paper not only enriches research on female executives but also provides some references for companies to promote the construction of diverse top management teams.

Toward a Multidimensional and Multilevel Approach to Studying Gender Diversity in Upper Echelons and Firm Innovation

Despite the rapidly increasing research on the nexus between gender diversity in upper echelons and firm innovation, the scholarly understanding of this topic is far from complete. Although the burgeoning literature has generated valuable insights summarized in our paper—most fundamentally uncovering gender diversity’s positive effect on firm innovation—our review of extant research indicates that it suffers from several limitations. One such key limitation is that scholarship has predominantly theorized and measured the surface-level gender diversity in leadership relying on either gender stereotypes or a notion of innate gender differences when explaining why the inclusion of women on executive boards might make a difference for firm innovation, neglecting the intersection between surface-level gender diversity and deep diversity in top management teams. We develop a multilevel theory that calls attention to investigating intersections between these two constructs, the multidimensionality of firm innovation and gender diversity, and discussing the rationales for why and when diversity is likely to get at the heart of firm innovation. We also map out some methodological suggestions for how scholars could test our propositions. We hope our efforts to describe these paths will encourage their pursuit.

Drivers of sustainable business model innovations. An upper echelon theory perspective

This study explores the factors that drive the adoption of sustainable business model innovations (SBMIs). In this mixed-method (qualitative and quantitative) study, we draw on upper echelon theory to identify the factors that have led firms to switch from conventional products and processes to sustainable business innovation. This study of senior managers uses qualitative data to understand the mechanisms adopted by top management to make the switch to SBMIs. Data was gathered from 285 middle managers to empirically validate the theoretical model. The study concludes that in the top management team (TMT), ambidextrous learning has a positive association with the firm's decision to adopt SBMIs. However, TMT diversity and university-industry collaboration are positively associated with ambidextrous learning by top management and, subsequently, the adoption of SBMIs. Our findings also suggest that transformational leadership positively moderates the association between TMT diversity and ambidextrous learning. However, the impact on the relationship between collaboration and ambidextrous learning is negative.

Do top management team diversity and chief sustainability officer make firms greener? Moderating role of top management team behavioral integration

AbstractAchieving green innovation goals is a challenging task. Several scholars have tried to explore the important determinants of green innovation; however, this concept needs further exploration from the corporate governance perspective. Hence, this study aims at determining the role of a firm's top management team (TMT) composition regarding green innovation. Specifically, we explore the impact of TMT diversity and the presence of a chief sustainability officer (CSO) on green innovation with moderating role of TMT behavioral integration. Data was collected from the hotels' top management in Pakistan. The findings reveal that TMT diversity, CSO, and TMT behavioral integration positively impact green innovation. However, the impact of TMT diversity on green innovation will be stronger with TMT behavioral integration. This study adds value to the upper echelon theory and the literature on green innovation. That is followed by the managerial implications.