The influence of top management team heterogeneity on firms' competitive moves

Donald C. Hambrick, Theresa Seung Cho, Ming Jer Chen

Research output: Contribution to journalArticlepeer-review

1034 Scopus citations

Abstract

This paper explores the executive origins of firms' competitive moves by focusing on top management team characteristics, specifically on team heterogeneity, rather than on the more often studied environmental and organizational determinants of such behaviors. Arguing that competitive actions and responses represent different decision situations, we develop propositions about how heterogeneity may enhance some competitive behaviors but impair others. With a large sample of actions and responses of 32 U.S. airlines over eight years, we find results that largely conform to our propositions. The top management teams that were diverse, in terms of functional backgrounds, education, and company tenure, exhibited a relatively great propensity for action, and both their actions and responses were of substantial magnitude. Heterogeneous teams, by contrast, were slower in their actions and responses and less likely than homogeneous teams to respond to competitors' initiatives. Thus, although team heterogeneity is a double-edged sword, its overall net effect on airline performance, in terms of changes in market share and profits, was positive.

Original languageEnglish (US)
Pages (from-to)659-684
Number of pages26
JournalAdministrative science quarterly
Volume41
Issue number4
DOIs
StatePublished - Dec 1996

All Science Journal Classification (ASJC) codes

  • Arts and Humanities (miscellaneous)
  • Sociology and Political Science
  • Public Administration

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