The relationship between top management teams and innovative capacity in companies

Abstract

Purpose

The aim of this research is two‐fold: to examine the effects of certain characteristics of top management teams (TMTs) on innovative performance in their companies; and to determine if this influence is direct or if it is influenced by other factors, such as the existence of strategic consensus in the team.

Design/methodology/approach

The research is developed using Upper Echelon Theory. This study was conducted with a sample of 100 companies from innovative sectors. Different regression analysis were undertaken in order to test the established hypotheses.

Findings

Three main conclusions can be drawn from this research. First, it cannot be stated that all types of diversity related to TMT activity or work have a positive effect on innovation in companies. In this way, diversity in TMT tenure appears to have a negative influence. Second, the incidence of diversity on innovation cannot be direct in all cases. Therefore, functional diversity has a positive effect on innovation, but always when there is a context of strategic consensus in the management team. Finally, TMT educational level exerts a positive effect on organizational innovation degree, independently on processes, which may occur within the team.

Originality/value

The paper has tried to improve and clarify the contributions about the direct relationship model proposed by Upper Echelon Theory between TMT demographic characteristics and innovation. The results have confirmed, in support of the critics of the theory that it is necessary to introduce and analyze, along with demographic variables, other factors and processes which affect TMT decision making.

Citation

Camelo‐Ordaz, C., Hernández‐Lara, A.B. and Valle‐Cabrera, R. (2005), "The relationship between top management teams and innovative capacity in companies", Journal of Management Development, Vol. 24 No. 8, pp. 683-705. https://doi.org/10.1108/02621710510613726