Top Management Team Surface-Level Diversity, Strategic Change, and Long-Term Firm Performance: A Mediated Model Investigation

Jie Wu*, Orlando C. Richard, Xinhe Zhang, Craig Macaulay

*Corresponding author for this work

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Top management team (TMT) heterogeneity research has not yet clearly revealed whether surface-level diversity (i.e., national culture, gender, age) contributes to or detracts from a firm’s financial performance and has not focused on how strategic change frequency (number international diversification or refocusing activities) serves as an intervening mechanism. Based on a sample of 1,993 firms between 2003 and 2015, we examine the mediating role of strategic change frequency in the relationship between surface-level diversity and long-term firm performance. Grounded in the upper echelons perspective, we find that TMT surface-level diversity increases rather than decreases strategic change frequency. Furthermore, our results are consistent with our hypothesized positive relationship between strategic change frequency and long-term firm performance. More important, we also find support for a longitudinal-based mediation model in which strategic change frequency in terms of diversification/refocusing actions (Time 2) transmits the positive effect of TMT surface-level diversity (Time 1) to long-term financial performance (Time 3) without accounting for any moderated conditions suggesting that mediation models warrant more utilization in the upper echelons research and internationalization research domains. Implications for the upper echelons theory in a more global world as if relates to the often unexplored surface-level diversity are offered.

Original languageEnglish
Pages (from-to)304-318
Number of pages15
JournalJournal of Leadership and Organizational Studies
Volume26
Issue number3
Early online date17 May 2019
DOIs
Publication statusPublished - 31 Aug 2019

Keywords

  • age diversity
  • gender diversity
  • generational differences international diversification
  • mediated models
  • national culture diversity
  • strategic change
  • top management team heterogeneity

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