Academic journal article IBAR

The Impact of the Top Management Team on the Sales Growth Performance of International Divisions of US Multinational Enterprises Operating in the Republic of Ireland

Academic journal article IBAR

The Impact of the Top Management Team on the Sales Growth Performance of International Divisions of US Multinational Enterprises Operating in the Republic of Ireland

Article excerpt

Abstract

This paper examines the relationship between top management team demography, team process and the sales growth performance of a sample of international divisions of US multinationals operating in Ireland. Demographic and team process characteristics were found to have both direct and indirect effects on sales growth.

Introduction

In a concerted effort to move beyond a simple examination of singular leaders at the top of organisations, recent research (Bantel & Jackson 1989; Hambrick 1981; Hambrick & Mason 1984; Smith et al 1994) has cast its net wider to focus on the cluster of executives who comprise the "dominant coalition" (Cyert & March, 1963) in organisations. Thus, according to Hambrick (1994), the expression "top management team", entered the organisation literature in about 1980 and has been pervasive ever since. The logic of the necessity for such teams is that it is difficult for any one individual to gather, assimilate and act upon all of the information that is needed to make strategic decisions and consequently effective strategic management is best achieved through the bringing together of a group. Recently popularised organisational forms emphasise the concept of the top team as a pivotal lever for sustained competitive advantage. Bodies of literature associated with the excellence school (Peters & Waterman 1982; Moss Kanter 1983; Quinn Mills 1991), the high performance movement (Lawler 1986; Hanna 1988; Buchanan & McCalman 1989) and the resource based view of the firm (Barney 1991; Roth,1995) dedicated to expanding the principles of the value chain (Porter 1985) have all embraced the team concept as a means of delivering flexibility, continuous improvement and sustainable competitiveness. This collective group at the top of the organisational hierarchy will almost invariably have more influence on the course of the firm than any other group in the organisation (Hambrick, 1994; Pucik et al,1989). Thus Hambrick (1994:174) predicts that "for those interested in explaining organisational outcomes, analytic attention to the group of executives at the top will not be misplaced".

While there is an obvious and growing interest in TMTs and although the late 1980s witnessed a significant evolution of academic interest in the multinational enterprise (Kogut, 1980; Bartlett & Ghoshal, 1986; Hoffman, 1988, Lobel, 1990), there has been little previous research on such teams in foreign divisions of US multinational enterprises. As Chang (1993: 1) argues this represents a rich research opportunity: The dramatic growth of multinational enterprises since W. W. II has significantly affected the economy of virtually all industrialised nations. With subsidiaries operating in different countries, MNEs face a degree of complexity and cultural diversity that far exceeds those faced by domestic corporations. This diversity and complexity increases the importance of building a body of knowledge about the effective management of multinational enterprises. TMT issues are of crucial importance in this setting since corporate headquarters must depend on TMTs in the subsidiary for the creation of acceptable operating results (Ancona & Nadler 1989; Marsick & Cederholm,1988). Furthermore the TMT is particularly important in such companies because of the particular problems that they face. Complex dynamic environments (Bartlett & Ghoshal, 1986; Tung & Miller, 1990), tensions regarding the degree of autonomy afforded the subsidiary (Hoffman,1988; Wickham,1989), intersubsidiary rivalry (Hoffman,1988; Prahalad & Doz,1987), cross cultural puzzles (Lauren,1986) and expatriate mal-adjustment (Mendenhall & Oddou,1985; Morley et al 1996) are all multinational subsidiary issues that require strong coping mechanisms. The TMT is one such coping mechanism.

In relation to the growth of multinational companies in the Irish context, Donnelly (1985) notes that over the last 20 years such MNCs have been a key element in the development of the manufacturing base. …

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