An Ecological Perspective on the Antecedents to and on the Consequences of the Top Management Team Diversity
The present proposal is the continuation of the work performed under the current grant, which focuses on inter-firm mobility as a trigger of changes in top management team (TMT) diversity. Three main limitations of the existing literature have been advanced so far. First, demographic research has relied on samples of organizations belonging to different industries and on cross-sectional research designs. Second, recognizing entrances and exits of managers as key triggers of tenure heterogeneity would allow to better capture the relation between TMT diversity and organizational performance. Third, the focus on internal processes reduced the attention to the broader context within which the organization is embedded (i.e., to its environment). By and large, the empirical results obtained from the current grant suggest that a dynamic and multi-level modelling of top management teams is essential to understand the consequences of TMT diversity for long term organizational performance (see Pennings and Wezel, 2010). During the last year, the PhD student hired on the current project (i.e., Chanchal Balachandran) has also elaborated on the drivers of employee mobility with particular attention to environmental dynamics. One chapter of his dissertation deals with this matter. The results of this paper suggest the importance of ecological variables (e.g., number of organizational foundings and failures and organizational diversity) for the number of mobility events observed in the Dutch auditing industry. The present proposal aims at illustrating the other chapters of Chanchal´s dissertation which move to the organizational level and reflect on the antecedents and the consequences of TMT diversity. When dealing with the antecedents of mobility, the ASA (Schneider, 1987) and the organization demography approach (Pfeffer, 1983) are natural benchmarks. While dealing with different levels of analysis (i.e., the individual and the organization), and theoretical home-base (i.e., psychology and sociology), both approaches claim that organizations become internally homogeneous over time. But as employees have a clear preference for similar others, under which conditions heterophilous reproduction will be favoured and become beneficial for performance? Despite numerous calls, we still do not know much about the antecedents of TMT composition (for a few exceptions see Keck and Tushman, 1993; Haveman, 1995; Boone et al., 2004; Boeker and Wiltbank, 2005). Moreover, a substantial disagreement about the effects of TMT diversity on organizational performance does exist (see e.g., Nielsen, 2009 for a review). In particular, few studies have pointed to the environment as a critical moderator of the relation between TMT diversity and performance (e.g., Keck, 1997; Eisenhardt and Schoonoven, 1990), but employing static considerations to justify its effects (Beckman and Burton, 2010). The two remaining chapters of Chanchal´s dissertation aim at addressing these limitations and at exploring the role of environmental dynamics -- and in particular of legitimation and competition (see Hannan and Freeman, 1989; Carroll and Hannan, 2000) for the study of the antecedents and of the performance consequences of TMT diversity. The information collected on the Dutch accounting sector across different levels of analyses, i.e., managers, organizations and the population as a whole, continue to serve as the testing ground for the propositions advanced.