Top Management Team Composition Research Articles

Unlocking subsidiary performance: exploring the impact of subsidiary TMT composition, PCN tenure and subsidiary age

PurposeThe purpose of this paper is to study the relationship between subsidiary manager’s demographic characteristics and performance, while incorporating the subsidiary context. We draw upon upper echelon theories and International Business theories to understand this relationship.Design/methodology/approachUsing a dataset based on listed Multinational subsidiaries in India we use linear regression to establish the relationship between subsidiary external performance (host market performance), subsidiary internal performance and subsidiary manager’s demographic characteristics.FindingsWith our data set we find a positive relationship between percentage of host country nationals (HCN) in the Top Management Team (TMT) and subsidiary host market performance and that subsidiary age moderates this relationship. We also find an inverted U-shaped relationship between parent country nationals (PCN) tenure and subsidiary performance.Research limitations/implicationsOne of the limitations is that our study views the strategy process through the Upper Echelons (UE) theory lens, as a clearly specified planning process that associates strategy with intentionality. The opportunity that emanates at lower levels can turn an intended strategy into something different than what was started.Practical implicationsThe findings in this paper can be the basis for decision making on the constitution of leadership teams.Originality/valueThere is a dearth of empirical evidence and studies on TMTs in the subsidiary, particularly from the non-North American context. Using a unique data set of listed multinational subsidiaries in India, the paper explores the impact of TMT demographics such as tenure of the TMT and age of the subsidiary operations on the performance of the subsidiary.

Narcissism at the CEO–TMT Interface: Measuring Executive Narcissism and Testing Its Effects on TMT Composition

Extant strategic leadership literature has established the substantial and nuanced implications of narcissism in chief executive officers (CEOs) for firm outcomes, and psychological research on narcissism in groups highlights the importance of narcissism for interpersonal dynamics. However, there is little research on strategic leaders’ narcissism and the CEO–top management team (TMT) interface, especially related to its configuration by way of TMT composition. In this article, we therefore study two issues. First, we examine how CEO narcissism directly affects two aspects of TMT composition—the narcissism of newly appointed TMT members and TMT turnover. Second, we consider the moderating effect of TMT narcissism on the relationship between CEO narcissism and TMT turnover. To be able to test our theory, we develop and extensively validate a novel measure based on LinkedIn profiles that allows us to capture the narcissism of non-CEO executives. We find substantial support for our predictions in a large sample of executives of S&P 1500 corporations across a 5-year time frame. We discuss the contributions and implications of our findings for the literatures on executive narcissism, TMT composition, and the CEO–TMT interface.

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.

Research on the Impact of Executive Characteristics on Enterprise Digital Transformation：Moderating Effects Based on the Level of Enterprise Risk-taking

Using a sample of A-share listed companies in Shanghai and Shenzhen from 2013 to 2019 and based on upper echelons theory, this paper explores the impact of executives' overseas background, academic background and financial background on enterprise digital transformation, and also examines the moderating effects of enterprise risk-taking. It finds that executives' overseas background, academic background and financial background are all positively associated with enterprise digital transformation. Furthermore, enterprise risk-taking can enhance the positive relationship between executives' overseas background, academic background and enterprise digital transformation, but weaken the positive impact of executives' financial background on enterprise digital transformation. These findings possess theoretical significance in enriching studies in related domains, so as to offer important practical insights into optimizing top management team composition and facilitating the digital transformation of companies.

Structural power of female executives and retailer profitability: A contingent resource-based perspective

Although the retail sector already has a much larger presence of female executives than other industry sectors, it remains unclear whether female executives should be endowed with more power to be effective leaders in the top management team (TMT) of a retail organization. Drawing on the TMT structural power perspective, we argue that structural power of female executives (SPFE) is crucial to improve a retailer’s operating performance measured by profitability. We find that SPFE is indeed positively associated with retailer profitability. Further, drawing on the contingent resource-based view, we hypothesize and find that comparable store sales and industry munificence positively, while inventory turnover negatively, moderate the relationship between SPFE and retailer profitability. Taken together, our research has important implications for public retailers to manage their TMT composition and power allocation.

The firm is dead; long live the firm: Classifying firm survival after mergers and acquisitions

AbstractIdentifying the surviving firms following mergers and acquisitions (M&A) presents challenges in organizational research. The paper offers a solution to this issue by examining prior research on M&A and firm survival to identify three empirically‐relevant criteria—strategic intent, corporate name retention, and top management team composition—and integrate them into a process‐driven typology of firm survival following M&A. To demonstrate the utility of this method, we apply this typology to an industry rich with M&A activity: the United States telecommunications industry.

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.

Does Pay Disparity within Top Management Teams Lead to Bribery Activity? The Moderation of Demographic Diversity

Prior studies have suggested that a large pay gap within the top management team (TMT) can motivate executives to outperform each other and that such competition consequently enhances productivity. We argue that a high pay disparity elicits managerial negative efforts and promotes bribery activities, but this effect can be mitigated by demographic diversity in the TMT and also can be affected by the characteristics of the CEO–TMT demographic interface. Using a sample of listed Chinese firms, our empirical results show that pay disparity is positively associated with bribery expenditure and this association derives mainly from the vertical component when pay disparity is examined via its vertical and horizontal components. In addition, we found that the positive relationship between pay disparity and bribery is weakened when the non-CEO executives have diverse demographic characteristics, and it is strengthened if the CEO is demographically similar to the other executives. This study contributes to the literature on corruption and TMTs by revealing the implications of managerial incentives for firm bribery and by elucidating the role of TMT composition.

Activating the different sides of top management team faultlines in enterprise sustainable development: Is environmental responsibility a burden or boost to small and medium‐sized enterprises in China?

AbstractWhether environmental responsibility can promote corporate performance has always been a focus of debate in theory and practice. We address the dispute regarding the effect of environmental responsibility by focusing on small and medium‐sized enterprises (SMEs) in China. Furthermore, based on team faultline theory, we argue that top management team (TMT) faultlines and bankruptcy threat combine to affect the relationship between environmental responsibility and long‐term performance in SMEs. Using data from 410 Chinese companies listed on the Growth Enterprise Market (GEM) during 2011–2020, we find that SMEs that engage in more environmental responsibility tend to have worse long‐term performance. Additionally, this relationship varies depending on the conditions of TMT composition (i.e., faultlines) and situation (i.e., bankruptcy threat). Specifically, when the bankruptcy threat is high, TMT faultlines negatively affect the relationship between environmental responsibility and long‐term firm performance. However, TMT faultlines positively affect this relationship when the bankruptcy threat is low. This paper sheds new light on corporate environmental responsibility by adopting a theoretical perspective of TMT faultlines and identifying the specific situations in which TMT faultlines act.

International environmental complexity and the demand for generalists and specialists in executive selection

AbstractResearch SummaryThis study investigates the selection of generalists and specialists as an organizational response to the complexity of firms' international operations. Drawing on the concept of executive job demands, we identify institutional ambiguity and economic sophistication as two distinct sources of country environmental complexity resulting from a firm's foreign investment and predict how they affect the selection of new executives at multinational firms. Our hypotheses associate institutional ambiguity and economic sophistication with the appointment of executives with generalist and specialist backgrounds, respectively. We also examine how the two sources of environmental complexity interact and test multiple alternative specifications to enhance our understanding of environmental complexity as a determinant of executive job demands in the context of international business. Our empirical analyses are performed on a sample of 436 executive appointments occurring in 132 UK‐based manufacturing firms, observed between 2008 and 2018. Findings show general support for our main hypotheses. We discuss the theoretical and practical implications of our findings as well as directions for future research.Managerial SummaryThis study suggests that companies operating across different international environments through their subsidiary operations will be exposed to distinct demands that vary according to the type of environmental complexity. Our results reveal that companies tend to appoint top managers with specialist backgrounds when their focus is on economically sophisticated environments, whereas top managers with generalist backgrounds tend to be preferred in institutionally ambiguous environments. Our findings enhance our understanding of the demand for executive generalists and specialists in the international business context by showing that top managers' backgrounds are matched with the prevailing type of complexity deriving from the international operations of the firm, thus, questioning the widely held notion that executive generalists are generally preferred over specialists. Our study has important implications for the composition of top management teams and the shaping of executive career paths at multinational firms.

Women in top management teams and their impact on innovation

In this study, we integrate insights from the literature on top management team (TMT) composition, gender diversity, and cumulative innovation, and examine how TMT gender diversity (or women in TMTs) impacts firm innovation. We analyze a panel of U.S. firms over the period 2005–2019, exploiting U.S. state-level variation in support policies protecting the rights of female workers. We find that greater TMT gender diversity increases the number of innovations but decreases their impact. Furthermore, greater TMT gender diversity narrows the breadth of search (search becomes more local). We illuminate the multifaceted innovation outcomes of gender-diverse TMTs and highlight the risk-reducing effects of female TMT members in innovation contexts. Our study provides opportune innovation insights that are much needed in the current era, with the increasing presence of female executives in TMTs.

DEI at the Top? A Corporate Governance View on the Composition and Characteristics of Firm Leaders

Given the recent rise in conversations on social issues such as diversity, equity, and inclusion, in this symposium we first seek to focus on questions that ask how internal and external governance mechanisms can affect the composition (e.g., in terms of gender, race/ethnicity) of top management teams and boards – that is, who gets appointed to the leadership. In addition, echoing prior calls that much more needs to be done to understand the causes rather than the consequences of managerial characteristics if we seek to further our insights into how such characteristics eventually become manifested in firm outcomes, we also intend to have a discussion on how corporate governance mechanisms can shape the often-studied individual attributes (e.g., values, cognitions, even personalities) of top executives.

The Impact of Top Management Team Composition on Product Recall Risk

Removing faulty products from the market can have major financial and non-financial damages for firms. Nevertheless, it is still unknown how firms can prevent such product recalls. Drawing on the upper echelons theory, stating that firm outcomes are reflections of its top executives, our study examines the impact of top management team composition on the risk of a firm having a product recall for medical devices. Analyzing a large longitudinal dataset of S&P 500 firms, our results indicate that firms have a reduced risk to have a product recall if they have a senior executive that is responsible for operations, i.e., chief operations officer (COO), and increased risk if they have a senior executive responsible for innovation, i.e., chief technology officer (CTO). In addition, we show that the risk of a product recall decreases even further when the COO has a long tenure with the firm. Our findings contribute to theory and practice in several ways: Theoretically, we advance the product recall literature by giving insights about the importance of top management team composition for the likelihood for firms to experience product recalls. Furthermore, we contribute to upper echelons research by showing that functional managers can influence non-financial outcomes. For practitioners, we advance the understanding of the reasons for product recalls and possible prevention strategies.

Discounting Diversity While Pursuing Diversity: TMT Composition Effects on Executive Compensation

Despite there being a significant amount of practical and academic interest regarding the absence of gender diversity among top management teams (TMTs), the conditions under which it is most prevalent and why it persists remain poorly understood. We use abductive reasoning to propose a link between gender homogeneity in team composition and pay disparity in TMTs, investigating this relationship and its effects. Applying a multilevel compositional technique, we find that team composition associates with pay disparity, but that these effects are contingent on CEO gender. This pay disparity, in turn, triggers higher turnover rates, providing support for one explanation as of why a lack of gender diversity persists in TMTs. Finally, we discuss theoretical and practical implications of team compositional effects on TMT compensation and turnover.

Top management team gender diversity and firm risk-taking in the hospitality industry

PurposeThe purpose of this study is to investigate the link between top management team (TMT) gender diversity and firm risk-taking in hospitality companies. The study also links female leadership to risk-taking. Finally, this study examines the moderating effects of TMT incentive pay and TMT age on the relationship between TMT gender diversity and firm risk-taking.Design/methodology/approachThis study uses an unbalanced data set of 81 hospitality firms and 888 firm-year observations over the period of 1992–2020. The study uses fixed-effects regression estimation for primary analyses and addresses potential endogeneity concerns via two-stage least square regression with firm fixed-effects instrumental variable regression. Risk-taking is measured by total firm risk (i.e. the annualized volatility of daily stock returns). Main results are supported with alternative measures of firm risk and estimation methods.FindingsThe study finds that increasing TMT gender diversity leads to a reduction in firm risk-taking in the hospitality industry. Moreover, the study finds that hospitality firms led by a female CEO experience lower firm risk compared to firms led by a male CEO. Finally, the study finds evidence that the relationship between TMT gender diversity and firm risk is contingent on the level of incentive pay awarded to TMT members and the age of TMT members. Increasing incentive pay and aging executive teams decrease the risk reduction effect of TMT gender diversity.Practical implicationsThe findings of this study recommend that firm risk-taking in the hospitality industry is related to gender diversity in TMTs. Hence, the board of directors should pay attention to gender composition for executive positions for risk management. Moreover, the results also suggest that care should be exercised when using incentive pay to align the interests of managers and shareholders. Finally, the board of directors needs to consider both gender diversity and age of the TMT members for TMT composition to manage executives’ risk-taking behavior.Originality/valueThis study fills a research gap in the hospitality literature by providing empirical evidence for the link between TMT gender diversity and firm risk-taking. Additionally, the study introduces incentive pay and age of TMT as contingency factors for the link between TMT gender diversity and firm risk-taking.

Attracting talent through diversity at the top: The impact of TMT diversity and firms' efforts to promote diversity on employer attractiveness

At a time where firms encounter a “race for talent”, it is crucial for many MNCs to present themselves as attractive employers. Failing to position themselves in the international labor market can reduce firms' ability to acquire valuable international human capital, thereby generating disadvantageous organizational effects. Against this backdrop, drawing on signaling theory and employer branding literature, our paper aims to shed light on the association between nationality diversity in the executive suite and MNCs' employer attractiveness. Our lines of argument build on the notion that top management team composition can affect MNCs' efforts to promote diversity among their employees. This focus on diversity, in turn, can affect MNCs' employer attractiveness. Examining firms from various European countries, we find that top management team nationality diversity is positively associated with firms' employer attractiveness for foreign job seekers. We also show that a firm's efforts to promote diversity mediate the relationship between TMT nationality diversity and employer attractiveness. We therefore advance the academic debate on diversity as an employer branding tool and a means to enhance employer attractiveness. In practical terms, we also provide valuable insights for firms wishing to transform into (more) diverse entities.

The Impact of Human Critical Success Factor on ERP System Implementation

<p><em>Many researchers have investigated the critical success factors in ERP system implementation. The previous study has examined four primary human critical success factors (competence, behavior, team composition, and communication) and based on study literature performed by the author, there were many studies found that top management support also has crucial role in ERP implementation. The objective of this study is to examine the impact of top management support, competence, behavior, team composition, and communication in ERP implementation.</em><em>This study was conducted in three stages. First, review sources and scientific literature relevant to this research. Second, analyze the findings and recommendations of previous research to determine the component of variable x. Third, conduct research using a quantitative approach through a questionnaire survey. </em><em>Questionnaires were distributed to employees from various company that involved directly in ERP implementation. </em><em>This study found that all five variables positively correlated to project success and only team composition variable that significantly positively correlated to project success. This study offers ERP project managers the crucial factors needed to be concerned for the project success.</em></p><p><strong><em>Keywords: </em></strong><em>ERP, Human Critical Success Factors.</em></p><p><em><br /></em></p>

Exchanging knowledge in the TMT to realize more innovation opportunities: what can family firms do?

PurposeThis paper aims to examine the influence that family firms’ top management team (TMT) behavior and characteristics exert on their innovation opportunity realization.Design/methodology/approachData were collected through a survey addressed to a representative sample of Italian firms. The analyzed sample consists of 237 firms, 120 of which are family firms. A series of ordinary least squares models were used to test the four hypotheses.FindingsFamily firms realize fewer innovation opportunities than non-family firms. This result is fully mediated by the knowledge exchange in the TMT as follows: in family firms, the TMT exchanges less knowledge than in non-family firms, which drives their lower realization of innovation opportunities. In family firms TMT, the increase in the non-family members positively influences the TMT knowledge exchange, but only when the time the Chief Executive Officer (CEO) spends in searching for innovation opportunities outside the firm is low. The more the CEO search increases, the more this positive influence decreases, up to the point it becomes negative.Research limitations/implicationsThe study contributes to the literature on innovation, knowledge management and organizational design in family firms. Nevertheless, data were collected at a single point in time and in a single country.Practical implicationsThe study suggests family firms on how to foster the realization of innovation opportunities. A greater TMT knowledge exchange allows to realize more innovation opportunities and the TMT characteristics emerged as the drivers of this TMT knowledge exchange. As such, family firms should examine the interaction of their TMT composition in terms of non-family and family members with the effort that the CEO deploys to search for innovation opportunities outside the firm.Originality/valueEmpirical investigation of the link between family ownership, absorptive capacity and innovation performance by considering TMT behavior and characteristics.

Top management teams in international business research: A review and suggestions for future research

This article reviews and critically assesses the large and diverse literature on top management teams (TMTs) that has focused on international business (IB) issues. We apply an organizing framework that centers around four key elements of TMTs – TMT composition, structure, processes, and governance – and the most commonly studied IB-related choices and outcomes. This framework allows us to synthesize the contributions of the literature on TMTs in IB and identify opportunities for future research. The contributions of our review are threefold. First, we offer a roadmap for navigating the large and diverse literature on TMTs in IB. Second, we provide a systematic and critical evaluation of the key empirical and theoretical developments in this literature. Third, we highlight opportunities for future research to make theoretical and empirical advancements in each of the areas of our organizing framework. In these future research opportunities, we draw particular attention to the need to further contextualize TMT research in IB by proposing opportunities to more systematically incorporate the unique nature of the MNE and the external environment in which the MNE operates.

Inclusiveness in the Top Management Team: Facilitation or Obstruction to Enterprise Performance?

In recent years, with the deepening of Chinese enterprises’ participation in the global value chain, their top management teams pay more and more attention to improving their own diversification level. The number of executives with foreign nationalities and overseas study experiences in the top management team of listed companies is increasing. This is not only related to the pressure of institutional legitimacy faced by Chinese enterprises entering other countries, but also an important way for enterprises to obtain diversified knowledge and experience of other countries. Inclusiveness in the top management team is a follow-up study based on the diversity and heterogeneity of top management team composition, which provides a deeper explanation for the internal mechanism of strategic decision-making and formulation of diversified teams. However, heterogeneity is still the dimension of considering the characteristics of the top management team, and it does not involve the psychological or cultural categories such as team atmosphere, which is an important defect for the Chinese situation that emphasizes Confucian culture. Therefore, in the context of western scholars trying to expand the research of diversity management by introducing inclusiveness, Chinese scholars are also actively introducing inclusiveness into the field of organizational research. Most of the existing studies use methods such as questionnaire survey, which restricts the research on the samples of the top management team of listed companies. By constructing a variable that can reflect the inclusiveness in the top management team, this paper uses the second-hand data based on the annual reports of listed companies to measure the level of inclusiveness in the top management team, which provides a useful exploration for the research of inclusiveness in the top management team of listed companies, and finds the nonlinear influence（U-shaped relationship）of inclusiveness in the top management team on organizational performance, which means that there is a so-called “inclusiveness trap” in the top management team. Only when the top management team continues to increase the degree of inclusiveness and cross the trap, can it promote enterprise performance to rise. This paper expands the understanding of the relationship between inclusiveness in the top management team and organizational performance, and analyzes the two possible mechanisms of this phenomenon, so as to deepen the practical significance of relevant research. It also suggests that Chinese enterprises in the process of internationalization should strengthen their confidence and make efforts to push forward when their performance inevitably declines due to the improvement of inclusiveness. After crossing the “inclusiveness trap”, a win-win situation of both inclusiveness and enterprise performance is forthcoming.