IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v55y2009i2p165-180.html
   My bibliography  Save this article

Top Management Team Diversity and Firm Performance: Moderators of Functional-Background and Locus-of-Control Diversity

Author

Listed:
  • Christophe Boone

    (Faculty of Applied Economics, University of Antwerpen, 2000 Antwerpen, Belgium)

  • Walter Hendriks

    (Faculty of Economics and Business Administration, Maastricht University, 6200 MD, Maastricht, The Netherlands)

Abstract

Past research on the relationship between top management team (TMT) compositional diversity and organizational performance has paid insufficient attention to the nature of TMT team processes in interaction with TMT diversity. We fill this gap by studying how three team mechanisms (collaborative behavior, accurate information exchange, and decision-making decentralization) moderate the impact of TMT diversity on financial performance of 33 information technology firms. We focus on two fundamentally different forms of TMT diversity: functional-background (FB) and locus-of-control (LOC). We argue that the former has the potential to enhance decision quality and organizational performance, whereas the latter might trigger relational conflict, and is, therefore, potentially detrimental to firm effectiveness. The ultimate aim of our study is to analyze which team processes help to transform distributed FB knowledge into high-quality decisions and organizational effectiveness, and which help avoid the potential detrimental effects of LOC diversity. We find that a TMT's collaborative behavior and information exchange are necessary conditions to unleash the performance benefits of FB diversity, but do not interact with LOC diversity. In addition, decentralized decision making spurs the effectiveness of functionally diverse teams, while at the same time reinforces the negative consequences of LOC diversity on firm performance.

Suggested Citation

  • Christophe Boone & Walter Hendriks, 2009. "Top Management Team Diversity and Firm Performance: Moderators of Functional-Background and Locus-of-Control Diversity," Management Science, INFORMS, vol. 55(2), pages 165-180, February.
    • Handle: RePEc:inm:ormnsc:v:55:y:2009:i:2:p:165-180
    DOI: 10.1287/mnsc.1080.0899
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.1080.0899
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.1080.0899?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Patricia Pitcher & Anne D. Smith, 2001. "Top Management Team Heterogeneity: Personality, Power, and Proxies," Organization Science, INFORMS, vol. 12(1), pages 1-18, February.
    2. B. De Brabander & G. Thiers, 1984. "Successful Information System Development in Relation to Situational Factors Which Affect Effective Communication Between MIS-Users and EDP-Specialists," Management Science, INFORMS, vol. 30(2), pages 137-155, February.
    3. Jonathon N. Cummings, 2004. "Work Groups, Structural Diversity, and Knowledge Sharing in a Global Organization," Management Science, INFORMS, vol. 50(3), pages 352-364, March.
    4. Kristina Dahlin & L. Weingart & P. Hinds, 2005. "Team diversity and information use," Post-Print hal-00480406, HAL.
    5. Christophe Boone & Bert De Brabander & Arjen Van Witteloostuijn, 1996. "Ceo Locus of Control and Small Firm Performance: an Integrative Framework and Empirical Test," Journal of Management Studies, Wiley Blackwell, vol. 33(5), pages 667-700, September.
    6. Harry G. Barkema & Oleg Shvyrkov, 2007. "Does top management team diversity promote or hamper foreign expansion?," Strategic Management Journal, Wiley Blackwell, vol. 28(7), pages 663-680, July.
    7. Diane L. Rulke & Joseph Galaskiewicz, 2000. "Distribution of Knowledge, Group Network Structure, and Group Performance," Management Science, INFORMS, vol. 46(5), pages 612-625, May.
    8. Gruenfeld, Deborah H & Mannix, Elizabeth A. & Williams, Katherine Y. & Neale, Margaret A., 1996. "Group Composition and Decision Making: How Member Familiarity and Information Distribution Affect Process and Performance," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(1), pages 1-15, July.
    9. Zeki Simsek & John F. Veiga & Michael Lubatkin & Richard N. Dino, 2005. "Modeling the Multilevel Determinants of Top management Team Behavorial Integration," Post-Print hal-02311805, HAL.
    10. Boone, Christophe & van Olffen, Woody & van Witteloostuijn, Arjen, 1998. "Psychological team make-up as a determinant of economic firm performance: An experimental study," Journal of Economic Psychology, Elsevier, vol. 19(1), pages 43-73, February.
    11. S. Trevis Certo & Richard H. Lester & Catherine M. Dalton & Dan R. Dalton, 2006. "Top Management Teams, Strategy and Financial Performance: A Meta‐Analytic Examination," Journal of Management Studies, Wiley Blackwell, vol. 43(4), pages 813-839, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tine Buyl & Christophe Boone & Walter Hendriks & Paul Matthyssens, 2011. "Top Management Team Functional Diversity and Firm Performance: The Moderating Role of CEO Characteristics," Journal of Management Studies, Wiley Blackwell, vol. 48(1), pages 151-177, January.
    2. Xiaoming He & Yaqun Yi & Zelong Wei, 2019. "New product development capabilities in China: the moderating role of TMT cooperative behavior," Asian Business & Management, Palgrave Macmillan, vol. 18(2), pages 73-97, April.
    3. Linlin Jin & Kristen Madison & Nils D. Kraiczy & Franz W. Kellermanns & T. Russell Crook & Jing Xi, 2017. "Entrepreneurial Team Composition Characteristics and New Venture Performance: A Meta–Analysis," Entrepreneurship Theory and Practice, , vol. 41(5), pages 743-771, September.
    4. Thomas Hutzschenreuter & Julian Horstkotte, 2013. "Performance effects of top management team demographic faultlines in the process of product diversification," Strategic Management Journal, Wiley Blackwell, vol. 34(6), pages 704-726, June.
    5. Nathan, Max, 2013. "Top team demographics, innovation and business performance: findings from English firms and cities 2008-9," LSE Research Online Documents on Economics 59250, London School of Economics and Political Science, LSE Library.
    6. Juan Pablo Diánez-González & Carmen Camelo-Ordaz, 2016. "How management team composition affects academic spin-offs’ entrepreneurial orientation: the mediating role of conflict," The Journal of Technology Transfer, Springer, vol. 41(3), pages 530-557, June.
    7. Sabina Nielsen, 2010. "Top Management Team Internationalization and Firm Performance," Management International Review, Springer, vol. 50(2), pages 185-206, April.
    8. Banal-Estañol, Albert & Macho-Stadler, Inés & Pérez-Castrillo, David, 2019. "Evaluation in research funding agencies: Are structurally diverse teams biased against?," Research Policy, Elsevier, vol. 48(7), pages 1823-1840.
    9. Fernanda Bethlem Tigre & Paulo Lopes Henriques & Carla Curado, 2022. "Building trustworthiness: Leadership self-portraits," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(6), pages 3971-3991, December.
    10. Li, Ganglei & Shao, Yunfei, 2023. "How do top management team characteristics affect digital orientation? Exploring the internal driving forces of firm digitalization," Technology in Society, Elsevier, vol. 74(C).
    11. Sonja Sperber & Christian Linder, 2018. "The impact of top management teams on firm innovativeness: a configurational analysis of demographic characteristics, leadership style and team power distribution," Review of Managerial Science, Springer, vol. 12(1), pages 285-316, January.
    12. Pham, Thuy-Dzung T. & Lo, Fang-Yi, 2023. "How does top management team diversity influence firm performance? A causal complexity analysis," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    13. Jana Drechsler & Jan-Thomas Bachmann & Andreas Engelen, 2019. "The effect of immigrants in the founding team on the international attention of new ventures," Journal of International Entrepreneurship, Springer, vol. 17(3), pages 305-333, September.
    14. Boone, C.A.J.J. & van Witteloostuijn, A. & van Olffen, W., 2003. "Team composition, leadership and information-processing behavior : a simulation game study of the locus-of-control personality trait," Research Memorandum 005, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    15. Jonathan Bundy & Ryan M. Vogel & Miles A. Zachary, 2018. "Organization–stakeholder fit: A dynamic theory of cooperation, compromise, and conflict between an organization and its stakeholders," Strategic Management Journal, Wiley Blackwell, vol. 39(2), pages 476-501, February.
    16. P. Jean-Jacques Herings & Herakles Polemarchakis, 2006. "Pareto Improving Price Regulation when the Asset Market is Incomplete," Studies in Economic Theory, in: Christian Schultz & Karl Vind (ed.), Institutions, Equilibria and Efficiency, chapter 12, pages 225-244, Springer.
    17. F. Pinar Acar, 2016. "The effects of top management team composition on SME export performance: an upper echelons perspective," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 24(4), pages 833-852, December.
    18. Kretinin, Andrey & Anokhin, Sergey & Wincent, Joakim, 2020. "Exploring the antecedents of franchise internationalization," Journal of Business Research, Elsevier, vol. 112(C), pages 422-430.
    19. Carmen Camelo & Mariluz Fernández‐Alles & Ana B. Hernández, 2010. "Strategic consensus, top management teams, and innovation performance," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(6), pages 678-695, September.
    20. Kerrissey, Michaela & Novikov, Zhanna & Tietschert, Maike & Phillips, Russell & Singer, Sara J., 2023. "The ambiguity of “we”: Perceptions of teaming in dynamic environments and their implications," Social Science & Medicine, Elsevier, vol. 320(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:55:y:2009:i:2:p:165-180. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.