Antecedents and Consequences of Top Management Team Diversity: Expanding the Upper Echelons Research Stream
Series
Dissertationen / Universität St. Gallen
Type
doctoral thesis
Date Issued
2014
Author(s)
Abstract
Top managers' characteristics play a key role in affecting organizational outcomes, yet the question of how organizations can build and benefit from diverse top management team (TMT) composition remains unanswered. This dissertation examines both antecedents and consequences of TMT diversity and, by focusing on the interface between the chief executive officer and the top management team (CEO-TMT), provides new insights into the upper echelons research stream. In particular, in four cumulative studies the dissertation explores: (a) the current state of research on the CEO-TMT interface and its contribution to the upper echelons literature; (b) the role of different selection strategies (external hiring versus internal promotion) as antecedents of diverse TMT composition; (c) the moderating impact of individual level dissimilarity and career experience diversity on the relationship between external CEO succession and firm performance; and (d) the firm performance effects of TMT diversity faultlines and the moderating role of CEOs' characteristics.
The empirical setting is based on 310 large listed firms headquartered in four European countries (Germany, the Netherlands, Switzerland and the United Kingdom) over the period 2005 to 2009. Four key findings are drawn from the papers. First, to adequately understand the antecedents and consequences of TMT composition, upper echelon researchers should pay careful attention to the interaction between the attributes of the CEO and the characteristics of other top managers. Second, different selection strategies act as key determinants of TMT composition. Organizations build diverse TMT membership by selecting dissimilar executives from inside the firm, rather than from the external labor market. Third, CEOs hired from the external labor market have a negative impact on firm performance after their appointment, except if they are demographically similar to other TMT members and possess diverse career experience. Fourth, to realize the performance benefits of TMT diversity faultlines, firms need to match the attributes of the CEO with those of other senior executives.
Overall, the central message of the dissertation is that firms should continue to embrace TMT diversity but, at the same time, they should not assume that the benefits of diverse TMT composition will be activated automatically. To enhance performance benefits from TMT diversity, firms should pay careful attention to the selection strategies through which they alter diverse TMT membership over time, as well as to the importance of the team leader (i.e., the CEO) in reducing team diversity costs and in realizing performance advantages.
http://verdi.unisg.ch/www/edis.nsf/SysLkpByIdentifier/4270/$FILE/dis4270.pdf
The empirical setting is based on 310 large listed firms headquartered in four European countries (Germany, the Netherlands, Switzerland and the United Kingdom) over the period 2005 to 2009. Four key findings are drawn from the papers. First, to adequately understand the antecedents and consequences of TMT composition, upper echelon researchers should pay careful attention to the interaction between the attributes of the CEO and the characteristics of other top managers. Second, different selection strategies act as key determinants of TMT composition. Organizations build diverse TMT membership by selecting dissimilar executives from inside the firm, rather than from the external labor market. Third, CEOs hired from the external labor market have a negative impact on firm performance after their appointment, except if they are demographically similar to other TMT members and possess diverse career experience. Fourth, to realize the performance benefits of TMT diversity faultlines, firms need to match the attributes of the CEO with those of other senior executives.
Overall, the central message of the dissertation is that firms should continue to embrace TMT diversity but, at the same time, they should not assume that the benefits of diverse TMT composition will be activated automatically. To enhance performance benefits from TMT diversity, firms should pay careful attention to the selection strategies through which they alter diverse TMT membership over time, as well as to the importance of the team leader (i.e., the CEO) in reducing team diversity costs and in realizing performance advantages.
http://verdi.unisg.ch/www/edis.nsf/SysLkpByIdentifier/4270/$FILE/dis4270.pdf
Language
English
Keywords
Upper Echelons
Top Management Teams
Diversity
CEOs
HSG Classification
contribution to scientific community
Refereed
No
Publisher
St. Gallen
Number
4270
Start page
167
Subject(s)
Division(s)
Eprints ID
234666