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Book part

Albert A. Cannella and Tim R. Holcomb

The upper-echelons model of Hambrick and Mason ((1984). Academy of Management Review, 9, 193–206) launched a new area of research and provided the first overall…

Abstract

The upper-echelons model of Hambrick and Mason ((1984). Academy of Management Review, 9, 193–206) launched a new area of research and provided the first overall theoretical framework for use in understanding how the experiences, backgrounds, and values of senior executives in organizations can influence the decisions that they make. The model is typically assumed to be what Rousseau ((1985). In: B. M. Staw, & L. L. Cumming (Eds), Research in organizational behavior (Vol. 7, pp. 1–37). Greenwich, CT: JAI Press) calls “multi-level,” as it describes how both individuals and top management teams (TMTs) make decisions in line with their preferences, biases, and values; the same model is applicable to both individuals and groups. However, the levels issues in the model have never been subjected to rigorous analysis. This chapter juxtaposes levels concepts and theories on the upper-echelons model, in an effort to highlight its strengths as well as its weaknesses. While the majority of researchers use the model to describe team-level decision making, the analysis presented here reveals that the model is inherently individual-level in focus, and several important limitations must be overcome before the model will provide a full explanation of team-level decision making.

Details

Multi-Level Issues in Strategy and Methods
Type: Book
ISBN: 978-1-84950-330-3

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Article

Wein-Hong Chen, Min-Ping Kang and Bella Butler

Penrose’s argument regarding the managerial constraint on continual expansion over two consecutive periods is termed the “Penrose effect,” a relatively less investigated…

Abstract

Purpose

Penrose’s argument regarding the managerial constraint on continual expansion over two consecutive periods is termed the “Penrose effect,” a relatively less investigated premise in Penrose’s growth theory. The purpose of this paper is to empirically re-examine the Penrose effect from the perspective of upper echelons theory and investigated how top management team (TMT) composition influences the continual growth of a firm.

Design/methodology/approach

This study empirically tested the hypotheses based on a sample of listed manufacturing firms operating in Taiwan, a newly industrialized economy in the Asia–Pacific region. Moderated hierarchical regression analyses were applied to test hypotheses.

Findings

The empirical results suggest that low TMT diversity (in terms of educational, functional and team tenure diversity) is likely to engender a situation in which the Penrose effect might occur. Additionally, the results indicate that the proportion of functional executives plays a significant role in influencing the growth trend over two consecutive periods and may soften the impact of the Penrose effect.

Practical implications

This paper suggests that appropriate structuring of TMTs and appropriate management of their members’ backgrounds and team tenure diversity can help firms overcome the Penrose effect and grow continually. Furthermore, the proportion of functional executives in a TMT is influential.

Originality/value

This paper uniquely contributes to the theoretical and empirical development of Penrose’s growth theory, upper echelons theory and resource-based view concerning managerial resources.

Details

Management Decision, vol. 57 no. 1
Type: Research Article
ISSN: 0025-1747

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Article

Won Seok Lee, Choongbeom Choi and Joonho Moon

This study aims to investigate how upper echelon theory accounts for franchising by selecting the top management team to proxy for the upper echelon and using age, tenure…

Abstract

Purpose

This study aims to investigate how upper echelon theory accounts for franchising by selecting the top management team to proxy for the upper echelon and using age, tenure, education, equity ownership and stock options as its main attributes.

Design/methodology/approach

The sample was drawn from the Execucomp and Compustat databases and from other publicly accessible resources (e.g. LinkedIn and Business Week, in addition to Annual 10-K reports). A total of 29 restaurant companies were used for data collection, which covered the period of 2000-2013. A panel feasible generalized least squares (FGLS) regression was used to analyze the data.

Findings

The study found a significant moderating effect of the degree of internationalization on the relation between the attributes of the upper echelon (e.g. tenure, education and share ownership) and franchising decisions.

Research limitations/implications

The results verified that top managers in the restaurant industry with more tenure and share ownership become more risk averse when they operate under riskier conditions, whereas highly educated restaurant top management teams tend to take more risks in strategic decision-making.

Originality/value

This study expanded internationalization research to upper echelon theory and into the arena of franchising.

Details

International Journal of Culture, Tourism and Hospitality Research, vol. 12 no. 1
Type: Research Article
ISSN: 1750-6182

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Article

Fabian Hattke and Steffen Blaschke

The purpose of this paper is to evaluate the influence of top management team diversity on academic excellence in universities. Academic excellence is conceptualized as…

Abstract

Purpose

The purpose of this paper is to evaluate the influence of top management team diversity on academic excellence in universities. Academic excellence is conceptualized as successfully gaining funds for inter-organizational research collaborations, interdisciplinary graduate schools and high-ranked scientific reputation.

Design/methodology/approach

The study applies upper echelon theory to universities. Three hypotheses are developed: (overall) top management team heterogeneity is positively associated with successful funding of excellence clusters, (overall) top management team heterogeneity is positively associated with successful funding of graduate schools and (overall) top management team heterogeneity is positively associated with academic reputation. The empirical study is based on a cross-sectional dataset with a time lag, covering characteristics of 75 German public universities from 2008 to 2013. Multiple-regression analysis is applied to test the hypotheses.

Findings

Our results indicate that disciplinary and educational diversity of upper echelons has a positive effect on the outcomes. Other top management team characteristics (age, gender, etc.) show no significant effects. Besides top management team composition, we find that a high number of faculties and a broad inclusion of internal status groups (students, tenured faculty, academic and administrative staff) and external stakeholders in decision making processes may enhance academic excellence of universities.

Research limitations/implications

First, the study contributes to the body of literature concerned with higher education. It is situated at the crossroads of management studies and higher education research, unlocking strategic management theorizing for the public context. Furthermore, the study contributes to the body of literature on strategic leadership in pluralistic organizations. It highlights the importance of heterogeneous governance structures and modular organization designs for achieving academic excellence.

Practical implications

The paper may inform practitioners in administrative or leading positions and policy-makers concerned with higher education. The more diverse a top management team is in terms of multiple disciplinary backgrounds, the more likely they succeed in driving the university toward academic excellence.

Originality/value

The study is among the first to evaluate the influence of top management teams in universities with a quantitative research design.

Details

Team Performance Management: An International Journal, vol. 21 no. 3/4
Type: Research Article
ISSN: 1352-7592

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Article

Junli Yu, Shelagh M.R. Campbell, Jing Li and Zhou Zhang

The Chief Financial Officer (CFO), despite being a critical organization member responsible for ensuring quality of financial reporting, audit and compliance, is…

Abstract

Purpose

The Chief Financial Officer (CFO), despite being a critical organization member responsible for ensuring quality of financial reporting, audit and compliance, is under-researched. Grouped as a member of top management teams (TMS) in studies, factors influencing decision making in this group rely on static measures of characteristics without regard for dynamic and longitudinal influences of career trajectories and industry occupational group memberships. The relationship between the high-tech industry as a site of notable reported internal control (IC) weakness and influences on CFOs requires closer examination. The paper aims to discuss these issues.

Design/methodology/approach

The study draws together the upper echelons theory and occupational communities (OCs) to explore the impact of shared values and behavioral norms from different sources on executive decision making. Internal and external sources of OC are proposed and their influence on activities with respect to corporate IC is tested. The sample of 1,573 firm/year observations includes high-tech firms listed on major US exchanges was developed using data from five distinct databases. Executives’ biographic information was manually collected.

Findings

Results indicate that senior financial executives belong not only to their firm and its culture but also to OCs that extend beyond the firm. Membership in professional credential granting occupational groups has less impact on effective IC than experience in the high-tech industry. In combination, multiple OCs show evidence of compound and counteracting effects on IC. The OC that arises in the high-tech industry makes a measurable positive difference in the quality of IC in sample firms, in contrast with the OC among credentialed accounting and financial professionals.

Research limitations/implications

This quantitative study of OC reveals the differential impact of different sources of OC and contributes to the literature on TMS a new framework for examining decision making. OC is typically studied through qualitative methods and, thus, potential exists to further explore the specific nature and dynamics of the OCs identified in this study.

Practical implications

The study highlights the role of broad affiliations and networks among senior financial executives which may have bearing on their ability to effectively manage IC. The role of these networks may also partially explain instances of CFO failure and thus dismissal. Knowledge of the role of OC may help boards of directors in the selection and promotion of senior financial officers of the firm.

Originality/value

The paper offers a different perspective on professional accounting expertise in one specific industry where incidence of IC weakness is high relative to other industries. Study results expand recent research on TMS to include sociological impacts of cohort groups. Despite generally weaker IC in the high-tech sector, this study demonstrates the value of exploring group membership within the industry as an important predictor of behavior. The result is a new perspective to CFO decision making which illustrates the relevance of OCs among upper echelons. The implications of findings for CFO recruitment and promotion are borne out in recent instances of senior financial executive failure in the sector.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 4
Type: Research Article
ISSN: 0951-3574

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Article

Won Seok Lee, Insin Kim and Joonho Moon

The purpose of this research is to account for the internationalization of restaurants. The conceptual framework of upper echelons theory is applied to identify the…

Abstract

Purpose

The purpose of this research is to account for the internationalization of restaurants. The conceptual framework of upper echelons theory is applied to identify the demographic determinants of internationalization among chief executive officers (CEOs).

Design/methodology/approach

Data from 30 restaurant firms for the period 1999-2013 were collected from a variety of sources, primarily Compustat and Execucomp, based on Standard Industrial Classification (SIC) code 5812, the annual 10-K and public information. A panel feasible generalized least squares model was used as the main instrument of analysis.

Findings

The findings indicate that the CEO gender and share ownership negatively affect the internationalization of restaurant companies, whereas size, the extent of franchising, the type of restaurant and stock options positively affect the degree of internationalization. Additionally, an inverted U-shaped relation exists between CEO tenure and the degree of internationalization.

Practical implications

The presented information may provide shareholders and boards of directors with valuable guidelines regarding the assignment of appropriate managers depending on the extent to which their companies are pursuing internationalization strategies.

Originality/value

Most studies in hospitality sectors have focused only on accounting-based measures to explain strategic decision-making, although proponents of upper echelons theory have argued that CEO attributes influence strategic decisions/changes. This study contributes to the literature on hospitality by identifying the effects of CEO characteristics on internationalization decisions.

Details

International Journal of Contemporary Hospitality Management, vol. 28 no. 12
Type: Research Article
ISSN: 0959-6119

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Article

Martin R.W. Hiebl, Bernhard Gärtner and Christine Duller

This paper aims to examine the relationship between characteristics of chief financial officers (CFOs) and enterprise resource planning (ERP) system adoption. Following…

Abstract

Purpose

This paper aims to examine the relationship between characteristics of chief financial officers (CFOs) and enterprise resource planning (ERP) system adoption. Following upper echelons theory, the authors theorize that CFO age, education, tenure and recruitment influence ERP system adoption, and that this relationship is moderated by the CFO being responsible for firm-wide information technology (IT) functions.

Design/methodology/approach

The empirical analysis is based on a survey of 296 large and medium-sized Austrian firms. Logistic regression analyses were used to test the association between CFO characteristics and ERP system adoption.

Findings

The authors find that firms with externally recruited CFOs have adopted ERP systems significantly more often than firms with internally promoted CFOs. Surprisingly, the results indicate that firms with less educated CFOs more often adopted an ERP system, and that the relationship between CFO characteristics and ERP system adoption is not moderated by the CFO being responsible for IT.

Research limitations/implications

This paper adds to the literature by corroborating case-based evidence that CFOs and their characteristics influence ERP system adoption. Extending previous research which indicates that CFO characteristics influence accounting practices, the authors show that CFO characteristics also influence technological innovation such as the adoption of ERP systems. Future research on technological innovation may therefore pay closer attention to the influence of CFOs.

Originality/value

This paper is the first to quantitatively test the influence of CFO characteristics on ERP system adoption.

Details

Journal of Accounting & Organizational Change, vol. 13 no. 1
Type: Research Article
ISSN: 1832-5912

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Article

Anish Purkayastha, Sunil Sharma and Amit Karna

In this paper, the authors undertake a systematic analysis of multinationality–performance (M-P) literature published in the last decade, when antecedents for…

Abstract

Purpose

In this paper, the authors undertake a systematic analysis of multinationality–performance (M-P) literature published in the last decade, when antecedents for internationalization and moderators of the M-P relationship had attained a center stage in international business and international management research. Though M-P relationship is one of the most widely studied topics within international business literature, so far synthesis of the entire theoretical landscape is missing in extant literature.

Design/methodology/approach

Through keywords search process, the authors found 111 studies in management literature that look at internationalization, its antecedents, performance of internationalized firms, and moderators of the M-P relationship. The focus of this study is to identify theoretical foundations used to explain the antecedents and moderators in M-P relationship, in order to suggest the future research direction for the field. The authors classify the antecedents and moderators based on their theoretical underpinnings not only to identify commonly used theoretical foundations in the last 10 years of international strategy research but also to highlight potential areas for future research.

Findings

The authors’ analysis indicates that research on international strategy in the last decade was dominated by theory testing in the context of developed economies. The authors’ review suggests that majority of the antecedents and moderators in the M-P relationship are anchored within institutional theory, organizational structure, resource-based view, social capital, and upper echelon theory.

Originality/value

The authors’ findings are indicative of a rich research potential of M-P relationship in the contextual research setting of emerging markets while leveraging more diversified theoretical bases and multiple levels of research design.

Details

Cross Cultural & Strategic Management, vol. 27 no. 2
Type: Research Article
ISSN: 2059-5794

Keywords

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Article

Pablo Ruiz-Palomino, Felipe Hernández-Perlines, Pedro Jiménez-Estévez and Santiago Gutiérrez-Broncano

Drawing on the theories of servant leadership and upper echelons, this paper aims to highlight the mechanisms through which CEO servant leadership enhances firm…

Abstract

Purpose

Drawing on the theories of servant leadership and upper echelons, this paper aims to highlight the mechanisms through which CEO servant leadership enhances firm innovativeness in hotels. This study aims to test a multiple mediation model by considering the mediating role of encouragement of participation (EoPART) – a high-performance human resources (HR) practice – and employees’ voice (EVOICE) in sequence.

Design/methodology/approach

Data were collected from HR managers of 34 hotels in the hospitality industry in Spain, which represents an important international tourist destination. Two methods of rigorous data analysis were used (partial least squares [PLS], structural equation modeling and fuzzy-set qualitative comparative analysis [fs/QCA]), which enabled robust findings to be produced with minimal sample size requirements.

Findings

CEO servant leadership had a positive indirect effect on firm innovativeness in hotels, via the sequential application of EoPART and EVOICE.

Research limitations/implications

The findings provide new HR-related insights regarding the encouragement of firm innovativeness in hotels: CEOs can boost innovativeness in their hotels through the development of EoPART systems, which in turn favor EVOICE.

Originality/value

This is one of the first studies to analyze whether CEO servant leadership has an impact on innovativeness in hotels. Moreover, this study is the first to show the internal mechanisms (EoPART, EVOICE) through which CEO servant leadership encourages hotel innovativeness.

Details

International Journal of Contemporary Hospitality Management, vol. 31 no. 4
Type: Research Article
ISSN: 0959-6119

Keywords

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Book part

Claudia Bird Schoonhoven and Jennifer L. Woolley

Assessing the literature on top management teams (TMTs) published through 2004, we found a predominantly U.S.-centric set of studies on TMTs and the upper echelons

Abstract

Assessing the literature on top management teams (TMTs) published through 2004, we found a predominantly U.S.-centric set of studies on TMTs and the upper echelons perspective (Hambrick & Mason, 1984). Through 1996, this literature was virtually silent on the impact of increasing globalization of economic transactions on TMTs – surprising given emphases in strategy on multinational firms, their organizational forms, and modes of entry into foreign markets. We identify critical areas for research on international dimensions of TMTs, their relationships to national and organizational contexts, and their influence on firm outcomes in a world increasingly populated by firms addressing global markets.

Details

Managing Multinational Teams: Global Perspectives
Type: Book
ISBN: 978-1-84950-349-5

1 – 10 of over 2000