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Functional diversity of top management teams and firm performance in SMEs: a social network perspective

Author

Listed:
  • Lulu Zhou

    (Southeast University)

  • Haiyan Huang

    (Nanjing Audit University)

  • Xiaolin Chen

    (Nanjing University of Finance & Economics)

  • Feng Tian

    (University of Newcastle)

Abstract

This paper adopts a social network perspective and divides the functional diversity of top management teams (TMTs) into intrapersonal functional diversity (IFD) and dominant functional diversity (DFD) to identify the impacts of these two types of functional diversity on firm performance in Chinese SMEs. It further explores the moderating effects of the internal network density and external bridging ties of TMTs. Based on questionnaires collected from 762 newly founded SMEs in China, the results show that IFD and DFD have positive effects on firm performance, that the network density within a TMT plays a positive moderating role in the relationship between TMT functional diversity and firm performance, and that the interaction between internal network density and external bridging ties plays a positive moderating role in the relationship between IFD and firm performance. Thus, it is recommended that new SMEs build TMTs with diverse functions. Moreover, TMTs should pay attention to the structural role of internal trust networks and the external role of bridging ties and give full play to their interactive functions.

Suggested Citation

  • Lulu Zhou & Haiyan Huang & Xiaolin Chen & Feng Tian, 2023. "Functional diversity of top management teams and firm performance in SMEs: a social network perspective," Review of Managerial Science, Springer, vol. 17(1), pages 259-286, January.
    • Handle: RePEc:spr:rvmgts:v:17:y:2023:i:1:d:10.1007_s11846-022-00524-w
    DOI: 10.1007/s11846-022-00524-w
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    More about this item

    Keywords

    TMT functional diversity; Social networks; Firm performance;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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