Academic journal article Journal of Managerial Issues

Examining the Impact of Organizational Value Dissimilarity in Top Management Teams

Academic journal article Journal of Managerial Issues

Examining the Impact of Organizational Value Dissimilarity in Top Management Teams

Article excerpt

The chief executive officer (CEO) of an organization is generally held accountable for the firm's performance. However, the actual management of the firm is often shared among the top management team (TMT). The TMT is a small group of influential executives at the apex of the organization and is responsible for setting priorities, analyzing the environment, formulating strategies, and directing implementation (Hambrick, 1995). These tasks often involve decision processes that are unstructured, complex, and ambiguous (Finkelstein and Hambrick, 1996). Research has shown that the outcomes of such decision processes can be affected greatly by the characteristics of the team and its members.

According to Hambrick and Mason (1984), top managers make decisions that are consistent with their cognitive base, which is a function of their values and experiences. This cognitive base influences how individuals attend to ambiguous stimuli, how they interpret information, and their preferences for choices in strategic decision making. As a result, much TMT research has focused on composition and demography theory, which suggests that the composition of the TMT, with regard to various demographic characteristics, can explain TMT behavior and outcomes. The underlying premise in this work is that demographic characteristics are reasonable proxies for actual differences in cognitions, perceptions, and values (Carpenter et al., 2004). However, very little research on TMTs has actually examined cognitions, perceptions, and values directly (Barsade et al., 2000).

Organizational values are beliefs regarding desired objectives in the running of a business enterprise (Enz, 1988). Top management team members represent powerful subunits in an organization and may not uniformly agree on the importance of specific organizational values. However, consensus on the importance of organizational values among TMT members is deemed critical to organizational functioning. If members place different importance levels on values within the TMT, there may be a lack of shared understanding of priorities throughout the organization (Carpenter et al., 2004).

The purpose of this study is to examine the effects of dissimilarity in organizational values for TMT members. More specifically, the effects of two types of dissimilarity in values are investigated: (1) differences between a TMT member and his/her CEO and (2) differences between a TMT member and other members of the TMT. The impact of these two types of dissimilarity in organizational values on team conflict, team members' attitudes, and evaluations of the CEO's leadership effectiveness are explored with a sample of 31 CEOs and 133 TMT members. Figure 1 displays the model of relationships hypothesized in this study. A brief review of the literature on diversity in top management teams is presented in the next section, followed by supporting literature for the hypotheses on proposed effects of organizational value dissimilarity. Next, the research methodology and data analysis results are presented. The article is concluded with a discussion of implications of the results for practice and future research.

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Theory and Hypotheses

Studies on TMT composition have examined differences in demographic characteristics of members to infer differences in personal experiences, motivation, cognitive style, and values (Finkelstein and Hambrick, 1996). There are two seemingly conflicting perspectives about the implications of differences present in a TMT. One perspective suggests that executives that share similar characteristics are likely to operate from similar cognitive bases and values that increase the likelihood of agreement on goals critical to organizational success (Iaquinto and Fredrickson, 1997). The second perspective suggests that diversity in characteristics can lead to enhanced creativity and innovation by generating a wider variety of options in decision making (Cox et al. …

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