Leveraging Multinational Firm Performance through the Use of Diversified Top Management Teams

Leveraging Multinational Firm Performance through the Use of Diversified Top Management Teams

Güven Alpay (Bogaziçi University, Turkey) and Pinar Büyükbalci (Yildiz Technical University, Turkey)
DOI: 10.4018/978-1-4666-1812-1.ch011
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This chapter discusses the theoretical framework covering the relationship between top management team diversity determinants and certain organization-level variables in order to capture the essence of possible strategic outcomes. Accordingly, it attempts to summarize and clarify the theoretical and empirical literature regarding the effects of diversity on the functioning of top management teams. In this sense, the main aim of this study is to contribute to and improve the current literature on diversity through the viewpoint of strategic international business literature by directly focusing on the organizational unit—top management teams—which is responsible for formulating and implementing strategies that will leverage organizational performance in the long run.
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Diversity is traced in terms of several different dimensions. According to Loden (1996), there are “primary” and “secondary” dimensions that cause diversity (p. 16). Among primary dimensions are age, gender, ethnic heritage, race, mental/physical abilities and characteristics, and sexual orientation, while secondary dimensions consist of variables such as education, work style, family status, religion, income, work experience, and geographical location. Similar to this, Erhardt, Werbe,l and Shrader (2003) puts forth two general distinctions described by the observable (demographic—gender, age, race, and ethnicity based) and non-observable (cognitive—knowledge, education, values, perception, affection, and personality based) dimensions. In terms of contextual variables affecting the degree of diversity, Triandis (1996) emphasize the importance of cultural distance, level of adaptation, history of intergroup relations, acculturation, and isomorphic attributions.

Key Terms in this Chapter

Project Based Top Management Team: Type of temporary tmt, which consists of top level executives chosen to design a specific project or solve a specific complex problem.

Value Diversity: Diversity stemming from differences in basic values, preferences, and priorities of individuals.

Board of Directors: Corporate board members who are responsible to the shareholders for the successful governance of the firm.

Social Category Diversity: Diversity stemming from differences in the social class related attributes (age, race, gender, cultural heritage, etc.) Of individuals.

Top Management Team: The group of top-level executives performing tasks that are relevant to worldwide operational context of the multinational company.

Informational Diversity: Diversity stemming from differences in individuals’ knowledge and experience related background.

Executive Top Management Team: Type of permanent tmt including top-level executives whose main responsibility is the design and execution of worldwide strategies in a continuous sense.

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