How does top management team diversity matter in abruptly dynamic environments?

    Wein-Hong Chen Affiliation
    ; Yi-Yuan Liu Affiliation


This study seeks to investigate how top management team (TMT) diversity as a double-edged sword influences a firm’s resilient performance in abruptly dynamic environments and how TMT group longevity moderates this relationship. Abruptly dynamic environment is characterized by low-frequency, substantial magnitude, and high-degree irregularity of change. Utilizing 168 listed electronics firms in Taiwan as the sample, this study incorporated the context of the 2008 global financial crisis as a naturally quasi-experimental setting and adopted a less investigated performance metric, firm resilient performance, to investigate how the two most researched types of TMT job-related diversity (i.e., educational and functional diversity) influence firm resilience in such environments. The results suggest that in abruptly dynamic environments, TMT job-related diversity negatively influences firms’ resilient performance, and TMT longevity significantly moderates this relationship. This study makes unique contributions to the upper-echelons literature by investigating the effect of TMT diversity in a naturally quasi-experimental setting featuring abrupt environmental dynamism.

Keyword : dynamic environments, global financial crisis, resilient performance, top management team diversity, uncertainty, upper echelons theory

How to Cite
Chen, W.-H., & Liu, Y.-Y. (2018). How does top management team diversity matter in abruptly dynamic environments?. Journal of Business Economics and Management, 19(3), 521-543.
Published in Issue
Nov 19, 2018
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Aiken, L. S., & West, S. G. (1991). Multiple regression: testing and interpreting interactions. Newbury Park, CA: Sage Publications.

Auh, S., & Menguc, B. (2005). Top management team diversity and innovativeness: the moderating role of interfunctional coordination. Industrial Marketing Management, 34, 249-261.

Bantel, K. A., & Jackson, S. E. (1989). Top management and innovations in banking: does the composition of the top team make a difference. Strategic Management Journal, 10, 107-124.

Beneito, P. (2006). The innovative performance of in-house and contracted R&D in terms of patents and utility models. Research Policy, 35, 502-517.

Bharadwaj, A. S., Bharadwaj, S. G., & Konsynski, B. R. (1999). Information technology effects on firm performance as measured by Tobin’s Q. Management Science, 45, 1008-1024.

Boerner, S., Linkohr, M., & Kiefer, S. (2011). Top management team diversity: positive in the short run, but negative in the long run. Team Performance Management, 17, 328-353.

Bricongne, J., Fontagne, L., Gaulier, G., Taglioni, D., & Vicard, V. (2012). Firms and the global crisis: French exports in the turmoil. Journal of International Economics, 87, 134-146.

Bui, H. T., Baruch, Y., Chau, V. S., & He, H. W. (2015). Team learning: the missing construct from a cross-cultural examination of higher education. Asia Pacific Journal of Management, 33, 29-51.

Cannella Jr., A. A., Park, J., & Lee, H. (2008). Top management team functional background diversity and firm performance: examining the roles of team member collocation and environmental uncertainty. Academy of Management Journal, 51, 768-784.

Carpenter, M. A. (2002). The implication of strategy and social context for the relationship between top management team heterogeneity and firm performance. Strategic Management Journal, 23, 275-284.

Carpenter, M. A., Geletkanycz, M. A., & Sanders, W. G. (2004). Upper echelons research revisited: antecedents, elements, and consequences of top management team composition. Journal of Management, 30, 749-778.

Certo, S. T., Lester, R. H., Dalton, C. M., & Dalton, D. R. (2006). Top management teams, strategy and financial performance: a meta-analytic examination. Journal of Management Studies, 43, 813-839.

Chang, M. C., Wang, Y. H., Hung, J. C., & Sun, C. (2015). R&D, patent arrangements, and financial performances: evidence from Taiwan. Periodica Polytechnica Social and Management Science, 23, 25-40.

Chau, V. S., Thomas, H., Clegg, S., & Leung, A. S. M. (2012). Managing performance in global crisis. British Journal of Management, 23, S1-S5.

Chung, C., & Luo, X. (2013). Leadership succession and firm performance in an emerging economy: successor origin, relational embeddedness, and legitimacy. Strategic Management Journal, 34, 338-357.

Covin, J., & Slevin, D. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10, 75-87.

Daniel, F., Lohrke, F. T., & Fornaciari, C. J. (2004). Slack resources and firm performance: a meta-analysis. Journal of Business Research, 57, 565-574.

Davis, J. L., Bell, R. G., Payne, G. T., & Kreiser, P. M. (2010). Entrepreneurial orientation and firm performance: the moderating role of managerial power. American Journal of Business, 25, 41-54.

Demsetz, H., & Lehn, K. (1985). The structure of corporate ownership: causes and consequences. The Journal of Political Economy, 93, 1155-1177.

Díaz-fernández, M. C., González-rodríguez, M. R., & Simonetti, B. (2016). The role played by job and non-job-related TMT diversity traits on firm performance and strategic change. Management Decision, 54, 1110-1139.

Dolmans, S. A. M., van Burg, J. C., Reymen, I. M. M. J., & Romme, A. G. L. (2014). Dynamics of resource slack and constraints: resource positions in action. Organization Studies, 35, 511-549.

Eggers, J. P., & Kaplan, S. (2013). Cognition and capabilities: a multi-level perspective. Academy of Management Annals, 7, 295-340.

Eisenhardt, K. E. (1989). Making fast strategic decisions in high-velocity environments. Academy of Management Journal, 32, 543-576.

Eisenhardt, K. E., & Sull, D. N. (2001). Strategy as simple rules. Harvard Business Review, 79, 107-116. Retrieved from httpss://

Finkelstein, S., & Hambrick, D. C. (1996). Strategic leadership: top executives and their effects on organizations. St. Paul, MN: West Publishing Company.

Hambrick, D. C. (2007). Upper echelons theory: an update. Academy of Management Review, 322, 334-343.

Hambrick, D. C., Cho, T. S., & Chen, M. (1996). The influence of top management team heterogeneity on firms’ competitive moves. Administrative Science Quarterly, 41, 659-684.

Hambrick, D. C., & MacMillan, I. (1985). Efficiency of product R&D in business units: the role of strategic context. Academy of Management Journal, 28, 527-547.

Hambrick, D. C., & Mason, P. M. (1984). Upper echelons: the organization as a reflection of its top managers. Academy of Management Review, 9, 193-206.

Harrison, D. A., Price, K. H., & Bell, M. P. (1989). Beyond relational demography. Academy of Management Journal, 41, 96-107.

Hauschild, S., Knyphausen-Auseß, D. Z., & Rahmel, M. (2011). Measuring industry dynamics: towards a comprehensive concept. Schmalenbach Business Review, 63, 416-454.

Heavey, C., & Simsek, Z. (2017). Distributed cognition in top management teams and organizational ambidexterity: the influence of transactive memory systems. Journal of Management, 43, 919-945.

Hitt, M. A., & Tyler, B. B. (1991). Strategic decision models: integrating different perspectives. Strategic Management Journal, 12, 327-351.

Homberg, F., & Bui, H. T. M. (2013). Top management team diversity a systematic review. Group & Organization Management, 38, 455-479.

Hough, J. R., & White, M. A. (2003). Environmental dynamism and strategic decision‐making rationality: an examination at the decision level. Strategic Management Journal, 24, 481-489.

International Monetary Fund. (2018). World economic outlook (April 2018). Retrieved from

Jarzabkowski, P., & Searle, R. H. (2004). Harnessing diversity and collective action in the top management team. Long Range Planning, 37, 399-419.

Judge, W. Q., & Miller, A. (1991). Antecedents and outcomes of decision speed in different environmental contexts. Academy of Management Journal, 34, 449-463.

Kauer, D., Waldeck, T. C. P., & Schäffer, U. (2007). Effects of top management team characteristics on strategic decision making: shifting attention to team member personalities and mediating processes. Management Decision, 45, 942-967.

Koopmann, J., Lanaj, K., Wang, M., Zhou, L, & Shi, J. (2016). Nonlinear effects of team tenure on team psychological safety climate and climate strength: implications for average team member performance. Journal of Applied Psychology, 101, 940-957.

Kor, Y. T. (2003). Experience-based top management team competence and sustained growth. Organization Science, 14, 707-719.

Lee, H., & Park, J. (2006). Top management team diversity, internationalization, and the mediating effect of international alliances. British Journal of Management, 17, 195-213.

Li, H., & Li, J. (2009). Top management team conflicts and entrepreneurial strategy making in China. Asia Pacific Journal of Management, 26, 263-283.

Li, P. Y., & Lo, F. Y. (2017). Top management teams’ managerial resources and international diversification: the evidence under an uncertain environment. Management Decision, 55, 1999-2017.

Lin, E., Lin, T. M. Y., & Lin, B. (2010). New high-tech venturing as process of resource accumulation. Management Decision, 48, 1230-1246.

McKnight, D. H., Cummings, L. L., & Chervany, N. L. (1998). Initial trust formation in new organizational relationship. Academy of Management Review, 23, 473-490.

Menz, M. (2012). Functional top management team members: a review, synthesis, and research agenda. Journal of Management, 38, 45-80.

Milliken, F. J., & Martins L. L. (1996). Searching for common threads: understanding the multiple effects of diversity in organizational groups. Academy of Management Review, 21, 402-433.

Mousa, F. T., & Chowdhury, J. (2014). Organizational slack effects on innovation: the moderating roles of CEO tenure and compensation. Journal of Business Economics and Management, 152, 369-383.

Murray, A. I. (1989). Top management group heterogeneity and firm performance. Strategic Management Journal, 10, 125-141.

Naranjo‐Gil, D., Hartmann, F., & Maas, V. S. (2008). Top management team heterogeneity, strategic change and operational performance. British Journal of Management, 19, 222-234.

Nelson, R. R. (1982). The role of knowledge in R&D efficiency. Quarterly Journal of Economics, 97, 453-470.

Neter, J., Wasserman, W., & Kutner, M. H. (1985). Applied linear statistical models: regression, analysis of variance, and experimental design. Homewood, IL: R. D. Irwin.

Parola, H. R., Ellis, K. M., & Golden, P. (2015). Performance effects of top management team gender diversity during the merger and acquisition process. Management Decision, 53, 57-74.

Pelled, L. H. (1996). Demographic diversity, conflict, and work group outcomes: an intervening process theory. Organization Science, 7, 615-631.

Pelled, L. H., Eisenhardt, K. M., & Xin, K. R. (1999). Exploring the black box: an analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44, 1-28.

Prasad, B., & Junni, P. (2017). Understanding top management team conflict, environmental uncertainty and firm innovativeness: empirical evidence from India. International Journal of Conflict Management, 28, 122-143.

Sabatino, M. (2016). Economic crisis and resilience: resilient capacity and competitiveness of the enterprises. Journal of Business Research, 69, 1924-1927.

Sambharya, R. B. (1996). Foreign experience of top management teams and international diversification strategies of U.S. multinational corporations. Strategic Management Journal, 17, 739-746.<739::AID-SMJ846>3.0.CO;2-K

Stieglitz, N., Knudsen, T., & Becker, M. C. (2016). Adaptation and inertia in dynamic environments. Strategic Management Journal, 37, 1854-1864.

Taiwan Ministry of Economic Affairs. (2018). Information, professional & technical services, rental & leasing survey. Retrieved from

Tan, D., & Mahoney, J. T. (2005). Examining the Penrose effect in an international business context: the dynamics of Japanese firm growth in U.S. industries. Managerial and Decision Economics, 262, 113-127.

Valackiene, A., & Virbickaite, R. (2011). Conceptualization of crisis situation in a company. Journal of Business Economics and Management, 122, 317-331.

Van Geyt, D., Van Cauwenberge, P., & Vander Bauwhede, H. (2013). The impact of the financial crisis on insider trading profitability in Belgium. Journal of Business Economics and Management, 142, 363-385.

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, 141-162.

Weick, K. E., & Sutcliffe, K. M. (2007). Managing the unexpected: resilience performance in an age of uncertainty. San Francisco, CA: Jossey-Bass.

Yang, L., & Wang, D. (2014). The impacts of top management team characteristics on entrepreneurial strategic orientation: the moderating effects of industrial environment and corporate ownership. Management Decision, 52, 378-409.

Yoon, W., Kim, S. J., & Song, J. (2016). Top management team characteristics and organizational creativity. Review of Managerial Science, 10, 757-779.

Zollo, M., & Winter, S. G. (2002). Deliberate learning and the evolution of dynamic capabilities. Organization Science, 13, 339-351.