Top Management Team Effectiveness Research Articles

Unpacking Charismatic Leadership of Top Management Teams: A Cross-Level Investigation

Do charismatic leadership behaviors of the top management team matter? While such behaviors of the CEO have been found to relate to a variety of positive performance- related outcomes at the firm and individual levels, the leadership literature remains largely silent about the transferability of the charismatic leadership concept to top management teams. According to the upper echelon theory, however, the top management team (TMT) is instrumental in shaping performance outcomes. This makes studies on TMTs and their way of leading organizations particularly relevant. Therefore, this study aims to unpack the effects of TMTs’ charismatic leadership behaviors. Drawing on cross-level data from 274 employees working in 59 organizations, we found that charismatic leadership behaviors of TMTs positively predict their employees’ affective commitment. Moreover, this cross- level relationship is revealed to be jointly moderated by the employees’ frequency of interactions with their TMT and their organization’s ethical climate (i.e., profit versus caring climate). Thus, this study demonstrates the concept of charismatic leadership effectively applied in TMTs, offering important implications for scholars and practitioners.

Top management team expertise and corporate real earnings management activities

This study investigates the effects of top management team (TMT) expertise on real earnings management (REM) activities by examining a hand-collected data set that contains 4,690 firm-year observations from Taiwanese listed firms during 2006 to 2010. The results of this study show that the percentages of TMT members possessing master's degrees (PMS) and managing core functional areas (CORE) negatively relate to REM activities, whereas the percentage of TMT members possessing a CPA certificate (PCPA) has the opposite effect. We also find that the PMS and CORE effects are mainly demonstrated through the channel of raising firm performance and thereby reduce managers' incentives to manage earnings. In addition, the effect of TMT expertise on REM activities becomes weaker with increasing firm age. Finally, the outcomes of several robustness tests, such as suspect firm analyses, endogeneity analyses, employing other TMT expertise variables, and additionally controlling for accrual-based earnings management also support our results.

How Does Executive Strategic Human Resource Management Link to Organizational Ambidexterity? An Empirical Examination of Manufacturing Firms in China

Despite a plethora of studies that demonstrate the positive impact of strategic human resource management on firm performance, existing knowledge of the processes through which such gains can be achieved remains limited. This study aims to extend our knowledge by investigating the mechanism through which a teamwork-oriented executive strategic human resource management system impacts organizational ambidexterity. Specifically, by integrating the resource-based view and information-processing theory, we examine the mediating role of top management team effectiveness and the moderating role of knowledge-sharing intensity from middle managers to top management teams. Drawing on a multiple-source and multiple-respondent survey from 144 manufacturing firms in China, we show that top management team effectiveness partially mediates the effect of the executive strategic human resource management system on organizational ambidexterity. Moreover, knowledge-sharing intensity from middle managers to top management teams strengthens the effect of the executive strategic human resource management system on organizational ambidexterity. © 2016 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]

The Impact of Top Management Team Characteristics and Board Service Involvement on Team Effectiveness in High-Tech Start-Ups

In this paper, we unite upper echelon theory and the attention based view of the firm to provide a deeper understanding of which top management team (TMT) characteristics, directly, or indirectly through board service involvement, result in TMT effectiveness in high-tech start-ups. In order to do so, we build upon data collected from 103 Norwegian academic spin-outs. The findings demonstrate that diversity and cohesion among TMT members directly and positively affect TMT effectiveness, and that board service involvement mediates the relationship between TMT diversity and TMT effectiveness. Finally, we find that higher proportions of board outsiders positively moderate the relationship between board service involvement and TMT effectiveness.

Where Do Heterogeneity Effects Come From? The Missing Link between Executive Tenure and Choice

This study set out to explore the reasons behind the effects of top management team (TMT) heterogeneity. We tested our hypotheses using a sample of U.S. public pharmaceutical firms, focusing on ten...

Performance effects of top management team gender diversity during the merger and acquisition process

Purpose– The purpose of this paper is to uncover the performance effects of top management team (TMT) gender diversity in the merger and acquisition (M&A) process. To do so, an integration of the upper echelons perspective and the M&A process literature is offered to consider the “double-edge sword” of gender diversity on both pre- and post-integration performance. Additionally, the boundary effects of acquirer experience on the TMT gender diversity-performance relationship is examined.Design/methodology/approach– The hypotheses are tested in a sample of 310 acquisitions by Fortune 1,000 companies. Multiple regression analysis is utilized to test the effects on the two different performance variables.Findings– The findings reveal that TMT gender diversity is beneficial to pre-integration performance, but hinders post-integration performance. Additionally, the findings provide evidence that acquirer experience can overcome the negative effects of gender diversity in post-integration performance.Originality/value– This study contributes to a better understanding of the double-edge sword of TMT gender diversity by providing evidence that performance implications depend on the performance variable of interest. Specifically in the M&A context, gender diversity has differing effects on pre- and post-integration performance.

The Criticality of C-Suite Team Intelligence (TQ) in Economic Value Creation

Eighty-five percent (85%) of board directors reported they are generally dissatisfied with their top management team’s ability to generate results. This reflects the generally-held belief that the top management team (TMT) has a significant impact on firm results, however, a direct correlation between TMT effectiveness based demographic elements including compositional diversity, education, experience, colocation, and team size, to financial outcomes, in past research, has been inconclusive. This study examines the relationship between Top Management Team (TMT) behavioral characteristics – namely Team Intelligence (TQ) – and corporate profitability. Using team as the unit of analysis, our study explains the critical impact of TQ on corporate financial performance. Employing a survey comprised of a new comprehensive measure of team dynamic, as well as existing measures for collective team outcomes, we collected data from 123 upper echelon executives of public companies. Our objective was to understand how TQ impacts the ability of TMTs to leverage the knowledge and experience of the team to generate measurable economic value. This quantitative study reveals a strong and significant predictive relationship between TMTs and economic value creation, isolating a key driver of a firm’s relative profitability performance, and predicting if the organization out- or underperforms their competitors. The implication of this study is that a reliable and valid method to assess the TQ of the TMT now exists and allows us to understand the current contribution to and future potential for economic value creation from corporate executives.

The Effects of Top Management Team’s Attention on Firm Performance: The Moderating Role of External and Internal Boundary Conditions

The Effects of Top Management Team’s Attention on Firm Performance: The Moderating Role of External and Internal Boundary Conditions

Structural interdependence within top management teams: A key moderator of upper echelons predictions

Studies of the effects of top management team (TMT) composition on organizational outcomes have yielded mixed and confusing results. A possible breakthrough resides in the reality thatTMTs vary in how they are fundamentally structured. Some are structured such that members operate independently of each other, while others are set up such that roles are highly interdependent. We examine the potential for three facets of structural interdependence—horizontal, vertical, and reward interdependence—to resolve ambiguities regarding effects ofTMTheterogeneity. Based on a sample ofTMTs in technology firms, we find that the three facets of structural interdependence are potent moderators of two classic predictions: the positive association betweenTMTheterogeneity and member departures, and betweenTMTheterogeneity and firm performance. Copyright © 2014 John Wiley & Sons, Ltd.

The contingent effects of top management teams on venture performance: Aligning founding team composition with innovation strategy and commercialization environment

How does the relationship between founding team composition and venture performance depend on the venture's strategy and business environment? Using data from a novel survey of 2,067 firms, we show that while diverse founding teams tend to exhibit higher performance, this is not universally true. We find that founding teams that are diverse are likely to achieve high performance in a competitive commercialization environment. On the other hand, technically focused founding teams are aligned with a cooperative commercialization environment and when the enterprise pursues an innovation strategy. These results are robust to corrections for endogenous team formation concerns. The findings suggest that ventures cannot ignore founding team composition and expect to later professionalize their top management teams to align with their strategy and environment. Copyright © 2013 John Wiley & Sons, Ltd.

Does Collectivism Affect Environmental Ethics? A Multi-level Study of Top Management Teams from Chemical Firms in China

This study tests the effects of top management team (TMT) member collectivistic values and TMT dissatisfaction with the financial situation on the environmental ethics of TMT members. We also examine the moderating effect of collectivistic values on the relationship between financial dissatisfaction and environmental ethics. Analyses of multi-level and source data show that financial dissatisfaction of the TMT negatively affects TMT members’ environmental ethics. However, TMT members’ individual collectivism can increase TMT members’ environmental ethics. Analyses also show that TMT members’ collectivism moderates the relationship between financial dissatisfaction and environmental ethics across individual and team levels.

Effects of Top Management Team Heterogeneous Background and Behavioural Attributes on the Performance of New Ventures

Using the data collected from 527 new ventures in China, this research evaluates the effects of top management team (TMT) heterogeneous background and behavioural attributes on firm's performance. Behavioural aspects of cognitive and emotional conflicts within the team are served as mediators. The results of the study indicate that the TMT functional background heterogeneity is positively related to both cognitive conflicts and emotional conflicts within the TMT. Moreover, team conflicts are found to mediate the effects of TMT functional background diversity on new ventures' performance. However, TMT functional background diversity alone is not significantly related to financial performance or growth performance of new ventures. Copyright © 2013 John Wiley & Sons, Ltd.

TMT Potency and Strategic Decision‐Making in High Technology Firms

abstractConfidence is necessary for effective top management team (TMT) functioning, however overconfidence or hubris has been associated with poor outcomes. Researchers have struggled to untangle questions of how much confidence is functional and whether there are different forms of confidence. Using data from a field study of 54 public high‐technology firms we provide a richer understanding of the complex influence of one type of confidence, TMT potency on strategic decision‐making. Specifically, using a field study of TMTs of 54 public high technology firms we find potency at least partially mediates the relationship between TMT experience and knowledge, TMT interaction process, and strategic decision speed. Post‐hoc analysis of high potency teams suggests that potency may be either functional – leading to high performance, or dysfunctional – resulting in low performance. Potency appears to be a multi‐faceted construct consisting of both level and domain boundedness. We offer propositions that begin to untangle the origins of functional versus dysfunctional potency or hubris.

The Structural Origins of Interdependence in TMTs:When Does Executive Group Composition Matter?

Researchers have devoted considerable effort in examining the effects of top management team (TMT) composition on group processes and organizational outcomes. Unfortunately, findings have been mixe...

Effective teamwork at the top: the evidence from China

Effective teamwork is an important topic of human resource management, and how top-level managers work effectively as a team is critical to business success. Prior research indicates that the diverse background of top managers influences the effectiveness of their teamwork, and the effects of top management team (TMT) diversity on organizational innovation varies. In this study, we propose that functional team dynamics plays a crucial role in facilitating TMT effectiveness. On the basis of a sample of Chinese firms, our findings support the distinction between demographic and network diversities and the moderating effect of functional team dynamics on TMT diversity–firm innovation relationships.

Ethical Leadership

Ethical Leadership

Top management team diversity and strategic change

PurposeThe purpose of this paper is to describe the building of a theoretical model to explore how team pay disparity and resource slack moderate the effects of top management team (TMT) diversity on strategic change and if the moderating effects of resource slack differ in firms with a low or high level of pay disparity.Design/methodology/approachNine hypotheses are proposed and tested with a sample from 391 listed Chinese firms. Archival data are collected from annual reports to form the sample. The hypothesized model relationships are tested through regression analysis.FindingsThe findings show that pay imparity negatively moderates the effects of TMT diversity and resource slack also has important moderating effects. Furthermore, the moderating effects of resource slack differ in firms with low and high team pay imparity.Originality/valueTMT demography diversity has an important effect on strategic change. However, two conflicting views exist on the relationship. Although some literature suggests that diversity may be sources of explorative activities such as strategic change, others suggest that diversity may cause integration difficulty and thus has a negative effect on strategic change. This paper contributes to extant debate regarding the effects of TMT diversity on strategic change by including TMT pay imparity and resource slack to explain that the effect of diversity on strategic change is contingent on the level of pay imparity, resources slack, and their interactive effects. This research also contributes to understanding organization slack by reasoning that the moderating effect is contingent on pay imparity level.

Team and organizational resources, strategic orientations, and firm performance in a transitional economy

Firms in transitional economies are learning to develop strategies to exploit new market opportunities though bounded by their lack of market experience and resources as well as institutional and cultural heritage. This paper examines the managerial orientations of top managers in the transitional economy of China by focusing on a firm's team and organizational resources. Specifically, the following antecedents motivate a firm to put more emphases on strategic orientations: the firm has an effective top management team, strong managerial competences, and when the firm has ample endowment of slack resources, social network, and support from the institutional environment. Empirical results support that team orientation, managerial competence, social network, and local institutional support are instrumental in developing market-focused strategic orientations. In addition, strategic orientations with heavy emphases on overall low costs and product innovation relate to higher firm performance.

TOP MANAGEMENT TEAM, BOARD STRATEGIC INVOLVEMENT AND TEAM EFFECTIVENESS IN HIGH-TECH START-UPS

In this paper, we unite upper echelon and conflict theories to provide deeper understanding of how top management team (TMT) characteristics, and the interplay between TMT characteristics and board strategic involvement, result in venturing team effectiveness. In order to do so, we build upon data collected from 103 Norwegian academic spin-outs. The findings demonstrate that cohesion among TMT members affects TMT effectiveness positively, and that board strategic involvement mediates the relationship between TMT background diversity and TMT effectiveness. Higher levels of TMT diversity result in an increased involvement by the board, in turn resulting in higher TMT effectiveness. The paper concludes with practical and academic implications.

Top management team characteristics, R&D investment and capital structure in the IT industry

This paper is based on agency theory, resource-based and upper-echelons perspectives to examine the relationship between R&D investment and capital structure and the moderating effects of top management team (TMT) characteristics on the financing decisions of R&D investment in small and medium enterprises (SMEs). Using data for SMEs in Taiwan’s IT industry, we find that (1) SMEs involved in R&D activities tend to have lower debt levels and (2) TMT characteristics exert considerable influence on the R&D investment-financial leverage relationship in SMEs. One important implication of the empirical evidence is that for SMEs trying to compete on the basis of innovation, the TMT characteristics significantly influence financing decisions. As innovative activities increase, the selection and development of top executives, who are responsible for choosing an optimal capital structure that could keep financial costs low while providing sufficient financial resources for maintaining a continuous, uninterrupted rate of R&D, is crucial for SMEs.