The relationship between the demographic composition of the top management team and strategic clarity was analyzed using data from a sample of retail banks. The demographic characteristics of education, homogeneity in age and tenure, and heterogeneity in educational major and functional background were analyzed. Controlling for organizational size and firms' performance, banks with a clear strategy are characterized by top management teams that are heterogeneous on education major and functional background. These results suggest support for the benefits of cognitive diversity for top managers engaged in strategic decision making.
Get full access to this article
View all access options for this article.
References
1.
AldrichJ. H.NelsonF. D. (1984) Linear probability, LOGIT, and PROBIT models. Beverly Hills, CA: Sage.
2.
AndrewsK. R. (1971) The concept of corporate strategyHomewood, IL: Dow Jones-Irwin.
3.
BantelK. A.JacksonS. E. (1989) Top management and innovations in banking: does the composition of the top team make a difference?Strategic Management Journal, 10(Special Issue), 107–124
4.
BlauP. M. (1977) Inequality and heterogeneityNew York: Free Press.
5.
BottgerP. C.YettonP. W. (1988) An integration of process and decision scheme explanations of group problem solving performanceOrganizational Behavior and Human Decision Processes, 42, 234–249.
6.
BourgeoisL.J. (1980) Performance and consensus. Strategic Management Journal, 1, 227–248
7.
ChildJ. (1972) Organization structure, environment, and performance: the role of strategic choice. Sociology, 6, 1–22.
8.
DearbornD. C.SimonH. A. (1958) Selective perception: a note on the department identifications of executives. Sociometry, 21, 140–144.
9.
DessG. G. (1987) Consensus on strategy formulation and organizational performance: competitors in a fragmented industry. Strategic Management Journal, 8, 259–277.
10.
DessG. G.DavisP. (1984) Porter's (1980) generic strategies as determinants of strategic membership and organizational performance. Academy of Management Journal, 27, 467–488.
11.
DollingerM. J. (1984) Environmental boundary spanning and information processing effects on organizational performance. Academy of Management Journal, 27, 351–368.
12.
FilleyA.HouseR.KerrS. (1976) Managerial process and organizational behavior. Glenview, IL: Scott Foresman.
13.
FinkelsteinS.HambrickD. C. (1989) Chief executive compensation: a study of the intersection of markets and political processes. Strategic Management Journal, 10, 121–134.
14.
GuptaA. K.GovindarajanV. (1984) Business unit strategy, managerial characteristics, and business unit effectiveness at strategy implementation. Academy of Management Journal, 27, 25–41.
15.
GuzzoR. A.SheaG. (1991) Group performance and intergroup relations in organizations. In DunnetteM. D. (Ed.), Handbook of industrial/organizational psychology. Vol. 2. (2nd ed.) Palo Alto, CA: Consulting Psychologists Press. Pp. 269–313.
16.
HageJ.DewarR. D. (1973) Elite values versus organizational structure in predicting innovation. Administrative Science Quarterly, 18, 279–290.
17.
HambrickD. C.MasonP. A. (1984) Upper echelons: the organization as a reflection of its top managers. Academy of Management Review, 9, 193–206.
18.
HambrickD. C.SchechterS. (1983) Turnaround strategies for mature industrial product business units. Academy of Management Journal, 26, 231–248.
19.
HoffmanR. L. (1959) Homogeneity of member personality and its effect on group problem-solving. Journal of Abnormal and Social Psychology, 58, 27–32.
20.
HoffmanR. L.MaierN. R. M. (1961) Quality and acceptance of problem solutions by members of homogeneous and heterogeneous groups. Journal of Abnormal and Social Psychology, 62, 401–407.
21.
HollandJ. L. (1976) Vocational preferences. In DunnetteM. D. (Ed.), Handbook of industrial/organizational psychology. Chicago, IL: Rand McNally. Pp. 521–570.
22.
HrebiniakL. G.JoyceW. F. (1985) Organizational adaptation: strategic choice and environmental determinism. Administrative Science Quarterly, 30, 336–349.
23.
JanisI. L. (1972) Victims of groupthink. Boston, MA: Houghton Mifflin.
24.
KahalasH.GrovesD. (1979) An exploration of graduate business students' values. Journal of Industrial Psychology, 6, 18–24.
25.
LawrenceP. R.LorschJ. W. (1967) Organization and its environment. Boston, MA: Harvard Univer. Press.
26.
LottB. E.LottA. J. (1965) Group cohesiveness and interpersonal attraction: a review of relationships with antecedent and consequent variables. Psychological Bulletin, 64, 259–309.
27.
MarchJ. G.SimonH. (1958) Organizations. New York: Wiley.
28.
McCainB. R.O'ReillyC. A.PfefferJ. (1983) The effects of departmental demography on turnover. Administrative Science Quarterly, 26, 626–641.
29.
MichelJ. G.HambrickD. C. (1992) Diversification posture and the characteristics of the top management team. Academy of Management Journal, 35, 9–37.
30.
MilesR. E.SnowC. C. (1978) Organizational strategy structure, and process. New York: McGraw-Hill.
31.
MurrayA. I. (1989) Top management group heterogeneity and firm performance. Strategic Management Journal, 10, 125–141
32.
NorburnD. (1986) GOGOs, YOYOs and DODOs: company directors and industry performance. Strategic Management Journal, 7, 110–117.
33.
NorburnD.BirleyS. (1988) The top management team and corporate performance. Strategic Management Journal, 9, 225–237.
34.
O'ReillyC. A.FlattS. (1989) Executive team demography, organizational innovation, and firm performance. Working paper, University of California, Berkeley.
35.
PfefferJ. (1983) Organizational demography. In CummingsL.StawB. (Eds.), Research in organizational behavior. Vol. 5Greenwich, CT: JAI Press. Pp. 299–357.
36.
PorterM. E. (1980) Competitive strategyNew York: Free Press.
37.
RobertsK. H.O'ReillyC. A. (1979) Some correlates of communication roles in organizations. Academy of Management Journal, 22, 42–57.
38.
RobinsonR. B.PearceJ. A. (1988) Planned patterns of strategic behavior and their relationship to business unit performance. Strategic Management Journal, 9, 43–60.
39.
RyderN. B. (1965) The cohort as a concept in the study of social change. American Sociological Review, 30, 843–861.
40.
SchroderH. M.DriverM. J.SteufertS. (1967) Human information processing. New York: Holt, Rinehart & Winston.
41.
ShawM. E. (1976) Group dynamics: the psychology of small group behavior. New York: McGraw-Hill.
42.
Sheshunoff Information Services, Inc. (1988a) The banks of Illinois. P.O. Box 13203, Capitol Station, Austin, TX 78711.
43.
Sheshunoff Information Services, Inc. (1988b) The banks of Indiana. P.O. Box 13203, Capitol Station, Austin, TX 78711.
44.
Sheshunoff Information Services, Inc. (1988c) The banks of Michigan. P.O. Box 13203, Capitol Station, Austin, TX 78711.
45.
Sheshunoff Information Services, Inc. (1988d) The banks of Minnesota. P.O. Box 13203, Capitol Station, Austin, TX 78711.
46.
Sheshunoff Information Services, Inc. (1988e) The banks of Ohio. P.O. Box 13203, Capitol Station, Austin, TX 78711.
47.
Sheshunoff Information Services, Inc. (1988f) The banks of Wisconsin. P.O. Box 13203, Capitol Station, Austin, TX 78711.
48.
SmithM.WhiteM. C. (1987) Strategy CEO specialization, and succession. Administrative Science Quarterly, 32, 263–280
49.
SnowC. C.HrebiniakL. G. (1980) Strategy, distinctive competence, and organizational performance. Administrative Science Quarterly, 25, 317–336
50.
TriandisH.HallE.EwenR. (1965) Member heterogeneity and dyadic creativity. Human Relations, 18, 33–55.
51.
VenkatramanN. (1989) Strategic orientation of business enterprises: the construct, dimensionality and measurement. Management Science, 35, 942–962.
52.
VenkatramanN.RamanujamV. (1986) Measurement of business performance in strategy research: a comparison of approaches. Academy of Management Review, 11, 801–814.
53.
WagnerW. G.PfefferJ.O'ReillyC. A. (1984) Organizational demography and turnover in top management groups. Administrative Science Quarterly, 29, 74–92.
54.
WalshJ. P. (1988) Selectivity and selective perception: an investigation of managers' belief structures and information processing. Academy of Management Journal, 31, 873–896.
55.
WanousJ. P.YoutzM. A. (1986) Solution diversity and the quality of group decisions. Academy of Management Journal, 29, 149–158.
56.
WiersemaM. F.BantelK. A. (1992) Top management team demography and corporate strategic change. Academy of Management Journal, 35, 91–121.
57.
ZanderA. (1977) Groups at work. San Francisco, CA: Jossey-Bass.
58.
ZengerT. R.LawrenceB. S. (1989) Organizational demography: the differential effects of age and tenure distributions on technical communication. Academy of Management Journal, 32, 353–376.
