Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-23T04:11:11.808Z Has data issue: false hasContentIssue false
  • English
  • Français

The effects of TMT faultline configuration on a firm’s short-term performance and innovation activities

Published online by Cambridge University Press:  03 August 2015

Xiao-Yun Xie ,
Wei-Liang Wang  and
Zhen-Jiang Qi
Xiao-Yun Xie
Affiliation:
School of Management, Zhejiang University, Hangzhou, Zhejiang, China
Wei-Liang Wang
Affiliation:
School of Management, Zhejiang University, Hangzhou, Zhejiang, China
Zhen-Jiang Qi*
Affiliation:
School of Management, Zhejiang University, Hangzhou, Zhejiang, China
*
Corresponding author: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Faultline configurations in top management teams are of vital importance in predicting firm outcomes. Grounded in faultline theory, we hypothesise the positive effects of faultlines through the dual routes of coordination and information processing under conditions of various subgroup configuration types. Second-hand data from publicly traded Chinese information technology firms are used to test our hypotheses. The results demonstrate that TMT faultline strength is positively related to a firm’s short-term performance only when both the number and the balance of subgroups are high and is positively related to a firm’s innovation activities only when the number of subgroups is high and the balance of subgroups is low. This study contributes to faultline theory by enriching the connotation of faultlines with the configurational perspective and advancing the debate on the effects of team faultlines as we reveal the benefits of TMT faultlines.

Keywords

top management teamfaultlinesconfigurationsubgroup
Type
Research Article
Information
Journal of Management & Organization , Volume 21 , Issue 5 , September 2015 , pp. 558 - 572
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.Google Scholar
Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.Google Scholar
Barkema, H. G., & Shvyrkov, O. (2007). Does top management team diversity promote or hamper foreign expansion? Strategic Management Journal, 28(7), 663–680.Google Scholar
Bezrukova, K., Jehn, K. A., Zanutto, E. L., & Thatcher, S. M. (2009). Do workgroup faultlines help or hurt? A moderated model of faultlines, team identification, and group performance. Organization Science, 20(1), 35–50.Google Scholar
Bezrukova, K., Thatcher, S., Jehn, K. A., & Spell, C. S. (2012). The effects of alignments: Examining group faultlines, organizational cultures, and performance. Journal of Applied Psychology, 97(1), 77–92.Google Scholar
Bresman, H., & Zellmer-Bruhn, M. (2013). The structural context of team learning: Effects of organizational and team structure on internal and external learning. Organization Science, 24(4), 1120–1139.CrossRefGoogle Scholar
Brewer, M. B. (1991). The social self: On being the same and different at the same time. Personality and Social Psychology Bulletin, 17(5), 475–482.Google Scholar
Bunderson, J. S., & Boumgarden, P. (2010). Structure and learning in self-managed teams: Why “bureaucratic” teams can be better learners. Organization Science, 21(3), 609–624.Google Scholar
Bunderson, J. S., & Reagans, R. E. (2011). Power, status, and learning in organizations. Organization Science, 22(5), 1182–1194.Google Scholar
Cao, Q., Simsek, Z., & Zhang, H. (2010). Modelling the joint impact of the CEO and the TMT on organizational ambidexterity. Journal of Management Studies, 47(7), 1272–1296.Google Scholar
Carmeli, A. (2008). Top management team behavioral integration and the performance of service organizations. Group & Organization Management, 33(6), 712–735.Google Scholar
Carmeli, A., & Schaubroeck, J. (2006). Top management team behavioral integration, decision quality, and organizational decline. The Leadership Quarterly, 17(5), 441–453.Google Scholar
Carton, A. M., & Cummings, J. N. (2012). A theory of subgroups in work teams. Academy of Management Review, 37(3), 441–470.Google Scholar
Carton, A. M., & Cummings, J. N. (2013). The impact of subgroup type and subgroup configurational properties on work team performance. Journal of Applied Psychology, 98(5), 732–758.Google Scholar
Choi, J. N., & Sy, T. (2010). Group-level organizational citizenship behavior: Effects of demographic faultlines and conflict in small work groups. Journal of Organizational Behavior, 31(7), 1032–1054.Google Scholar
Connelly, C. E., Zweig, D., Webster, J., & Trougakos, J. P. (2012). Knowledge hiding in organizations. Journal of Organizational Behavior, 33(1), 64–88.Google Scholar
Cooper, D., Patel, P. C., & Thatcher, S. M. (2013). It depends: Environmental context and the effects of faultlines on top management team performance. Organization Science, 25(2), 633–652.Google Scholar
Cramton, C. D., & Hinds, P. J. (2004). Subgroup dynamics in internationally distributed teams: Ethnocentrism or cross-national learning? Research in Organizational Behavior, 26, 231–263.Google Scholar
Cui, H., & Mak, Y. T. (2002). The relationship between managerial ownership and firm performance in high R&D firms. Journal of Corporate Finance, 8(4), 313–336.Google Scholar
Davis, J. P., & Eisenhardt, K. M. (2011). Rotating leadership and collaborative innovation recombination processes in symbiotic relationships. Administrative Science Quarterly, 56(2), 159–201.Google Scholar
De Jong, S. B., Van der Vegt, G. S., & Molleman, E. (2007). The relationships among asymmetry in task dependence, perceived helping behavior, and trust. Journal of Applied Psychology, 92(6), 1625–1637.Google Scholar
Drach-Zahavy, A., & Somech, A. (2001). Understanding team innovation: The role of team processes and structures. Group Dynamics: Theory, Research, and Practice, 5(2), 111–123.Google Scholar
Edmondson, A. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44(2), 350–383.Google Scholar
Gardner, H. K., Gino, F., & Staats, B. R. (2012). Dynamically integrating knowledge in teams: Transforming resources into performance. Academy of Management Journal, 55(4), 998–1022.Google Scholar
Gibson, C., & Vermeulen, F. (2003). A healthy divide: Subgroups as a stimulus for team learning behavior. Administrative Science Quarterly, 48(2), 202–239.Google Scholar
Greve, H. R. (2003). A behavioral theory of R&D expenditures and innovations: Evidence from shipbuilding. Academy of Management Journal, 46(6), 685–702.CrossRefGoogle Scholar
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206.CrossRefGoogle Scholar
Harrison, D. A., & Klein, K. J. (2007). What’s the difference? Diversity constructs as separation, variety, or disparity in organizations. Academy of Management Review, 32(4), 1199–1228.Google Scholar
Hitt, M. A., Hoskisson, R. E., & Kim, H. (1997). International diversification: Effects on innovation and firm performance in product-diversified firms. Academy of Management Journal, 40(4), 767–798.Google Scholar
Hogg, M. A., & Terry, D. I. (2000). Social identity and self-categorization processes in organizational contexts. Academy of Management Review, 25(1), 121–140.Google Scholar
Hutzschenreuter, T., & Horstkotte, J. (2013). Performance effects of top management team demographic faultlines in the process of product diversification. Strategic Management Journal, 34, 704–726.Google Scholar
Kaczmarek, S., Kimino, S., & Pye, A. (2012). Board task-related faultlines and firm performance: A decade of evidence. Corporate Governance: An International Review, 20(4), 337–351.Google Scholar
Kim, H., Kim, H., & Lee, P. M. (2008). Ownership structure and the relationship between financial slack and R&D investments: Evidence from Korean firms. Organization Science, 19(3), 404–418.Google Scholar
Klein, K. J., & Kozlowski, S. W. (2000). From micro to meso: Critical steps in conceptualizing and conducting multilevel research. Organizational Research Methods, 3(3), 211–236.Google Scholar
Kor, Y. Y. (2006). Direct and interaction effects of top management team and board compositions on R&D investment strategy. Strategic Management Journal, 27(11), 1081–1099.Google Scholar
Lau, D. C., & Murnighan, J. K. (1998). Demographic diversity and faultlines: The compositional dynamics of organizational groups. Academy of Management Review, 23(2), 325–340.Google Scholar
Lau, D. C., & Murnighan, J. K. (2005). Interactions within groups and subgroups: The effects of demographic faultlines. Academy of Management Journal, 48(4), 645–659.Google Scholar
Lepak, D. P., Takeuchi, R., & Snell, S. A. (2003). Employment flexibility and firm performance: Examining the interaction effects of employment mode, environmental dynamism, and technological intensity. Journal of Management, 29(5), 681–703.Google Scholar
Li, J., & Hambrick, D. C. (2005). Factional groups: A new vantage on demographic faultlines, conflict, and disintegration in work teams. Academy of Management Journal, 48(5), 794–813.Google Scholar
Lin, B. W., Lee, Y., & Hung, S. C. (2006). R&D intensity and commercialization orientation effects on financial performance. Journal of Business Research, 59(6), 679–685.Google Scholar
Mell, J., Van Knippenberg, D., & Van Ginkel, W. (2014). The catalyst effect: The impact of transactive memory system structure on team performance. Academy of Management Journal, 57(4), 1154–1173.Google Scholar
Meyer, B., & Glenz, A. (2013). Team faultline measures: A computational comparison and a new approach to multiple subgroups. Organizational Research Methods, 16(3), 393–424.CrossRefGoogle Scholar
Meyer, B., Schermuly, C. C., & Kauffeld, S. (In press). That’s not my place: The interacting effects of faultlines, subgroup size, and social competence on social loafing behaviour in work groups. European Journal of Work and Organizational Psychology, published online: 6 January 2015, doi:10.1080/1359432X.2014.996554.Google Scholar
Minichilli, A., Corbetta, G., & MacMillan, I. C. (2010). Top management teams in family – controlled companies: ‘Familiness’, ‘Faultlines’, and their impact on financial performance. Journal of Management Studies, 47(2), 205–222.Google Scholar
Molleman, E. (2005). Diversity in demographic characteristics, abilities and personality traits: Do faultlines affect team functioning? Group Decision and Negotiation, 14(3), 173–193.CrossRefGoogle Scholar
Ndofor, H. A., Sirmon, D. G., & He, X. (In press). Utilizing the firm’s resources: How TMT heterogeneity and resulting faultlines affect TMT tasks. Strategic Management Journal, published online: 3 September 2014, doi:10.1002/smj.2304.Google Scholar
O’Leary, M. B., & Cummings, J. N. (2007). The spatial, temporal, and configurational characteristics of geographic dispersion in teams. MIS Quarterly, 31(3), 433–452.Google Scholar
O’Leary, M. B., & Mortensen, M. (2010). Go (con)figure: Subgroups, imbalance, and isolates in geographically dispersed teams. Organization Science, 21(1), 115–131.Google Scholar
Phillips, K. W., Mannix, E. A., Neale, M. A., & Gruenfeld, D. H. (2004). Diverse groups and information sharing: The effects of congruent ties. Journal of Experimental Social Psychology, 40(4), 497–510.Google Scholar
Polzer, J. T., Crisp, C. B., Jarvenpaa, S. L., & Kim, J. W. (2006). Extending the faultline model to geographically dispersed teams: How colocated subgroups can impair group functioning. Academy of Management Journal, 49(4), 679–692.Google Scholar
Richard, O. C. (2000). Racial diversity, business strategy, and firm performance: A resource-based view. Academy of management journal, 43(2), 164–177.Google Scholar
Rico, R., Sánchez-Manzanares, M., Antino, M., & Lau, D. (2012). Bridging team faultlines by combining task role assignment and goal structure strategies. Journal of Applied Psychology, 97(2), 407–420.Google Scholar
Rico, R., Sánchez-Manzanares, M., Gil, F., & Gibson, C. (2008). Team implicit coordination processes: A team knowledge–based approach. Academy of Management Review, 33(1), 163–184.Google Scholar
Simons, T. L., & Peterson, R. S. (2000). Task conflict and relationship conflict in top management teams: The pivotal role of intragroup trust. Journal of Applied Psychology, 85(1), 102–111.Google Scholar
Thatcher, S. M. B., & Patel, P. C. (2011). Demographic faultlines: A meta-analysis of the literature. Journal of Applied Psychology, 96(6), 1119–1139.Google Scholar
Tuggle, C. S., Schnatterly, K., & Johnson, R. A. (2010). Attention patterns in the boardroom: How board composition and processes affect discussion of entrepreneurial issues. Academy of Management Journal, 53(3), 550–571.Google Scholar
Van der Vegt, G. S., De Jong, S. B., Bunderson, J. S., & Molleman, E. (2010). Power asymmetry and learning in teams: The moderating role of performance feedback. Organization Science, 21(2), 347–361.Google Scholar
Van Knippenberg, D., Dawson, J. F., West, M. A., & Homan, A. C. (2011). Diversity faultlines, shared objectives, and top management team performance. Human Relations, 64(3), 307–336.Google Scholar
Veltrop, D. B., Hermes, N., Postma, T. J. B. M., & De Haan, J. (2015). A tale of two factions: Why and when factional demographic faultlines hurt board performance. Corporate Governance: An International Review, 23(2), 145–160.CrossRefGoogle Scholar
Webber, S. S., & Donahue, L. M. (2001). Impact of highly and less job-related diversity on work group cohesion and performance: A meta-analysis. Journal of Management, 27(2), 141–162.Google Scholar
West, M. A., & Anderson, N. R. (1996). Innovation in top management teams. Journal of Applied Psychology, 81(6), 680–693.CrossRefGoogle Scholar
Wittenbaum, G. M., Stasser, G., & Merry, C. J. (1996). Tacit coordination in anticipation of small group task completion. Journal of Experimental Social Psychology, 32(2), 129–152.Google Scholar
Xie, X. Y., Wang, W. L., & Luan, K. (2014). It is not what we have, but how we use it: Reexploring the relationship between task conflict and team innovation from the resource-based view. Group Processes & Intergroup Relations, 17(2), 240–251.Google Scholar