Title
Top management team diversity and firm performance: moderators of functional-background and locus-of-control diversity Top management team diversity and firm performance: moderators of functional-background and locus-of-control diversity
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Providence, R.I. :Institute for Operations Research and the Management Sciences ,
Subject
Economics
Source (journal)
Management science / Institute for Operations Research and the Management Sciences [Providence, R.I.] - Providence, R.I., 1954, currens
Volume/pages
55(2009) :2 , p. 165-180
ISSN
0025-1909
1526-5501
ISI
000263072200001
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
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.
E-info
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