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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.

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.

As one of the most influential theories in strategic management, Hambrick and Mason’s Upper Echelons Theory has yielded significant conceptual and empirical advancements linking executive characteristics and perceptions to decision-making. Specifically, work on this theory consistently shows that CEOs’ decisions are biased by personal characteristics to the benefit and detriment of firms. While this stream of research links executive decision processes to outcomes such as executive dismissals, analyst evaluations, and press coverage, surprisingly little is understood about if and whether the information CEOs convey is subject to the same filtering process by a firm’s key evaluators. Thus, in this chapter, we aim to extend Upper Echelons Theory by positing that a double filtering process occurs whereby the cognitive aids CEOs use can be informed by not only their cognitive base and values but also the characteristics and priorities of those who evaluate the nonverbal and verbal signals they send. To do so, we build on recent conceptual and empirical advancements to make a case for the decision-making biases and tendencies that influence signal interpretation by three key evaluator groups internal and external to the firm: boards of directors, financial analysts, and the media. We conclude by considering the implications of evaluators’ information filtering and how this more holistic view of Upper Echelons decision-making can enable executive teams to be strategic with the cognitive aids they use to influence evaluations.

We thank Carpenter and Dalton and Dalton for their insights on our earlier chapter, and on the promise (and perils) of upper-echelons research in general. We set out to closely examine the levels issues in Hambrick and Mason's ((1984). Academy of Management Review, 9, 193–206.) original upper-echelons model, and the research initiatives that have applied this theoretical framework. We are encouraged by the initial reception that we have received from these authors. We continue to believe that top management teams (TMTs) are an important level of analysis for strategic leadership research, though the original upper-echelons model proposed by Hambrick and Mason cannot be directly applied at the team level. Our reply highlights several joint and individual concerns raised by the articles. We close by reiterating our call for continued analysis of the upper-echelons model.

Cannella and Holcomb ((this volume). In: F. Dansereau & F. J. Yammarino (Eds), Research in multi-level issues (Vol. 4). Oxford, UK: Elsevier Science) are unconvinced that top management teams (TMTs) are the appropriate level of analysis for upper echelons research and are, accordingly, unenthusiastic about the promise of multi-level analysis for research of this type. We agree and discuss (1) the fragility of agency theory as it pertains to TMT research, (2) various issues pertaining to TMT turnover (or lack thereof), (3) paradoxes in practice and theory regarding TMT homogeneity/heterogeneity, (4) the absence of boards of directors in the upper echelons perspective, and (5) the implications of these issues on the theory/conceptualization of TMTs and of the research dedicated to them. We question whether the variables, as currently configured, relied on in this literature are sufficiently developed to adequately test an upper echelons perspective, or to sensibly warrant a multi-level analytical approach.

Upper echelons research considers the relationship of top executives to organizational attributes or outcomes, vis-à-vis, their individual or group demographic characteristics such as tenure or experience. The upper echelons perspective is typically associated with the theorizing of Hambrick and Mason in their 1984 Academy of Management Review article, but also has much broader and deeper organizational theory roots as demonstrated by Pfeffer's (1983) earlier exhaustive review of organizational demography. Since the early 1980s, hundreds of upper echelons studies have been published – some explicitly invoking the upper echelons theoretical perspective, while others employing its underlying methodology of relying on executive demographic characteristics as proxies for executive and top management team (TMT) related constructs. This chapter examines three important features and their related challenges and opportunities in future upper echelons research. Specifically, we focus on (1) the identification of upper echelons constructs, (2) embedding those constructs in a meaningful way to develop new theory or better our understanding of extant theory, and (3) the related operationalization and measurement of those constructs that are eventually included in qualitative and quantitative analyses using TMT demographics. We conclude our chapter by drawing these three features together to provide a benchmark process to gauge the theoretical and methodological contributions of upper echelons-related work, and ultimately improve the chances of getting such research published.

The primary purpose of this chapter is to examine some old truths about leadership at the CEO level, and to summarize a new perspective based on charismatic leadership theory that could help cast light on this important area of strategic management. In so doing, we attempt to move charismatic leadership theory in some new directions by bridging micro-and macro-level conceptualizations. The upper echelons perspective from the strategic management literature is first summarized. We then identify problems in conceptualization and measurement that have served to limit the usefulness of this theoretical approach with regard to understanding the leadership role and effects of CEOs. We present two alternative new models that incorporate the constructs of strategic change, CEO charisma, and perceived environmental uncertainty. Data are also presented, suggesting mixed support for the models. Suggestions are made with regard to future quantitative and qualitative research.

This chapter examines Cannella and Holcomb's (this volume) multi-level analysis of Hambrick and Mason's ((1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9, 193–206) original upper echelons perspective, and the strategy formulation studies that have consequently employed that perspective. I highlight five key contributions made by Cannella and Holcomb (this volume), and suggest three supplementary avenues for inquiry. I close by arguing that if we are aiming to encourage researchers to move to a truly multi-level upper echelons model, then such a multi-level emphasis must encompass both strategy formulation and strategy implementation given their implicit interdependence.

Under currently uncertain and fast-changing environments, it is important for firms to supplement their main strategy with alternative ones so that they can quickly change courses of actions. Strategic flexibility is thus an important factor for the viability and success of firms. Although previous research has emphasized the need for strategic flexibility, some firms are reluctant to do so since it requires high investments. Existing studies on strategic flexibility have emerged from various disciplines and drawn on diverse theoretical perspectives. Due to the increasing importance of strategic flexibility, this chapter reviews and summarizes existing studies on strategic flexibility based on the applications of strategic flexibility in various business disciplines, including management and strategy, business entrepreneurship, and marketing. The authors also summarize different theoretical perspectives, including upper echelons theory, resource-based view theory, and dynamic capabilities theory, as well as their limitations.