Top Management Team Functional Diversity
and Firm Performance: The Moderating Role of
CEO Characteristics
Tine Buyl, Christophe Boone, Walter Hendriks and
Paul Matthyssens
University of Antwerp; University of Antwerp; Maastricht University; University of Antwerp
abstract
Past research indicates that the effect of TMT functional diversity on firm
performance is equivocal. We address this issue by focusing on the integrative role of the
CEO, postulating that the CEO’s expertise and background characteristics affect the TMT
functional diversity–firm performance relationship, because of their impact on the exchange
and integration of distributed knowledge within the TMT. Using a dataset of 33 Dutch and
Belgian Information Technology firms we investigate the moderating role of three sets of CEO
characteristics (functional background, status as founder, and shared experience with the other
TMT members) on the relationship between TMT functional diversity and firm performance.
Our results reveal that CEO and TMT characteristics do interact in realizing the potential
advantages of distributed TMT functional expertise.
INTRODUCTION
Hambrick and Mason’s (1984) ‘upper echelons’ perspective triggered numerous studies
on the impact of the demographic composition of an organization’s dominant coalition
on organizational performance (for a review, see Certo et al., 2006). Taking an
information-processing view (Certo et al., 2006; Edmondson et al., 2003; Finkelstein and
Hambrick, 1990; Hambrick, 1994), we focus on diversity in the TMT (top management
team) members’
functional background
, which is an important source of expertise among
executives (e.g. Bunderson and Sutcliffe, 2002). In the extant upper echelons research, it
is recognized that TMT functional background diversity may both benefit and hamper
organizational performance (Certo et al., 2006). On the one hand, functionally diverse
teams have a larger pool of perspectives, skills, and non-overlapping knowledge at their
disposal (Simons et al., 1999), and tend to have non-redundant peer networks increasing
access to unique information (Ancona and Caldwell, 1992), stimulating effective
Address for reprints
: Tine Buyl, University of Antwerp, Faculty of Applied Economics, Department of Man-
agement,
Antwerp
Centre
of
Evolutionary
Demography,
Prinsstraat
13,
2000
Antwerp,
Belgium
([email protected]).
© 2010 The Authors
Journal of Management Studies © 2010 Blackwell Publishing Ltd and Society for the Advancement of Management
Studies. Published by Blackwell Publishing, 9600 Garsington Road, Oxford, OX4 2DQ, UK and 350 Main Street,
Malden, MA 02148, USA.
Journal of Management Studies
48:1 January 2011
doi: 10.1111/j.1467-6486.2010.00932.x
decision-making (Certo et al., 2006). On the other hand, functional diversity might also
provoke team fragmentation, which is a major source of ineffective functioning of TMTs
(Hambrick, 1994; Hambrick and Mason, 1984).
