BRIEF LITERATURE REVIEW
In their 1984 paper, Hambrick and Mason (Hambrick & Mason, 1984) lay the foundations of top management research, or what they call Upper Echelons Theory. This theory explores how the strategies and effectiveness of firms are related to the characteristics of their top managers.
The basic argument states that complex decisions cannot be economically optimized, and behavior dominates. So, the more complex the decision the more the idiosyncrasies of decision makers matter. In their argument, they note that the composition of the entire top management team (TMT) matters, not just the CEO. It makes sense to examine the team as a whole and to not just focus on the chief executive; in particular, heterogeneity in the TMT, and power differentials, can have a substantial effect on outcomes (Hambrick, 2007).
In addition, the importance of the CEO – and their character – depends on managerial discretion. When an executive has more discretion, upper echelon characteristics will have a larger effect on outcomes. Higher demands on an executive will force them to rely more on their experience and instincts, which makes character matter more.
SOME AREAS TO EXPLORE
While this literature review is brief, there are some potential areas to explore further in order to determine where the gaps are. For instance:
- The literature discusses the CEO’s personal characteristics and demographics of Top Management Teams. Some of the literature has addressed the team as a whole.
- Papers explored revolving characteristics: (Briscoe, Chin, & Hambrick, 2014; Chatterjee & Hambrick, 2007; Chin, Hambrick, & Treviño, 2013; Hayward & Hambrick, 1997; Wiersema & Bantel, 1992)
- Papers explored revolving the team: (Hambrick, Cho, & Chen, 1996; Knight, Pearce, & Smith, 1999; Smith, Smith, & Olian, 1994; Tihanyi & Ellstrand, 2000; Wiersema & Bantel, 1992)
- Managerial discretion is discussed as an important concept that explains the influence managers have. I am wondering what other concepts have been identified (beyond environment).
- Papers explored discussing managerial discretion and the environment: (Carpenter, 2002; Collins & Clark, 2003; Crossland & Hambrick, 2011; Finkelstein & Hambrick, 1990; Haleblian & Finkelstein, 1993; Priem, 1990; Wiersema & Bantel, 1993)
- Strategic Change is very relevant and is discussed in some papers I read. I am curious to read what other types of change is discussed in the literature. In particular, I am curious to read if response to uncertain environments has been addressed.
- Papers explored: (Carpenter, 2002; Cho & Hambrick, 2006; Wiersema & Bantel, 1992)
NEXT STEPS – IDENTIFYING GAPS
This literature review builds on the content discussed in class, with a very high-level review a few other highly cited TMT papers in the top strategic management journals.
In order to move my understanding of the gaps in this literature forward, and thus my ability to make a theoretical contribution, I will continue to do a more targeted literature search with the following topics in mind:
- Personal characteristics and team composition.
- Next, I will further narrow my literature review search for knowledge of top management teams.
- The kind of knowledge and training the TMT can make a difference in how they interpret the environment, how they perceive problems, and create solutions.
- I hope to see if I can identify some gaps revolving the kind of knowledge of TMT.
- I also hope to learn about the kinds of roles in TMT.
- Managerial discretion.
- Next, I will continue to narrow my search to understand managerial discretion and the environment better.
- Change.
- Strategic change is purposeful. I wonder how the literature addresses change that is in response to a change that not planned or foreseen.
SOME RESEARCH QUESTIONS
Some very preliminary research questions revolving top management teams include:
- How and when do organizations create new TMT roles? Is this in response to a difficult environment? If so, does it make a difference in the outcomes of the firm? Or are these positions mostly ceremonial? Do they negatively impact the firm?
- Do TMT with less traditional roles perform better? For instance, some organizations have created positions such as Chief Integrations Officer, Chief Business Officer.
- Some organizations have very specialized products. I wonder if having credentials in those specific areas makes a difference in the performance of the CEO or TMT.
These questions are contingent on a closer and more detailed examination of the literature.
CITES
Briscoe, F., Chin, M., & Hambrick, D. (2014). CEO Ideology as an Element of the Corporate Opportunity Structure for Social Activists. Academy of Management Journal.
Carpenter, M. (2002). The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance. Strategic Management Journal. R
Chatterjee, A., & Hambrick, D. (2007). It’s all about me: Narcissistic chief executive officers and their effects on company strategy and performance. Administrative Science Quarterly.
Chin, M., Hambrick, D., & Treviño, L. (2013). Political Ideologies of CEOs The Influence of Executives’ Values on Corporate Social Responsibility. Administrative Science
Cho, T., & Hambrick, D. (2006). Attention as the mediator between top management team characteristics and strategic change: The case of airline deregulation. Organization Science.
Collins, C., & Clark, K. (2003). Strategic human resource practices, top management team social networks, and firm performance: The role of human resource practices in creating organizational. Academy of Management Journal.
Crossland, C., & Hambrick, D. (2011). Differences in managerial discretion across countries: how nation‐level institutions affect the degree to which ceos matter. Strategic Management Journal.
Finkelstein, S., & Hambrick, D. (1990). Top-management-team tenure and organizational outcomes: The moderating role of managerial discretion. Administrative Science Quarterly.
Haleblian, J., & Finkelstein, S. (1993). Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion. Academy of Management Journal.
Hambrick, D. (2007). Upper echelons theory: An update. Academy of Management Review.
Hambrick, D., Cho, T., & Chen, M. (1996). The influence of top management team heterogeneity on firms’ competitive moves. Administrative Science Quarterly.
Hambrick, D., & Mason, P. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review.
Hayward, M., & Hambrick, D. (1997). Explaining the premiums paid for large acquisitions: Evidence of CEO hubris. Administrative Science Quarterly.
Knight, D., Pearce, C., & Smith, K. (1999). Top management team diversity, group process, and strategic consensus. Strategic Management
Priem, R. (1990). Top management team group factors, consensus, and firm performance. Strategic Management Journal.
Smith, K., Smith, K., & Olian, J. (1994). Top management team demography and process: The role of social integration and communication. Administrative Science
Tihanyi, L., & Ellstrand, A. (2000). Composition of the top management team and firm international diversification.
Wiersema, M., & Bantel, K. (1992). Top management team demography and corporate strategic change. Academy of Management Journal.
Wiersema, M., & Bantel, K. (1993). Top management team turnover as an adaptation mechanism: The role of the environment. Strategic Management Journal.