Top Management Team Heterogeneity And Firm Performance: An Empirical Research On Chinese Listed Companies

Top management team is very important to firm performance and organization development since it takes the mission of establishing and implementing corporate strategies. Research on top management team is also a widely concerned topic by scholars and managers in recent years. The studies on the relationship between top management team heterogeneity and firm performance are fruitful. However, existing empirical results are not explicit and consistent enough. The reason is that research methods are limited and several important moderating or intervening variables are neglected in those researches. Moreover, existing researches are from the developed countries that may restrict the application and popularization of the theory. Inconsistencies of TMT heterogeneity/ performance relationships in prior researches show the necessity for further research.The purpose of this study is to apply the basic theory of top management team (Upper Echelons Theory) in the unique social context of China and analyze the relationship between top management team heterogeneity and firm performance. Meanwhile, this research introduces several important moderator variables in order to avoid the limitations of existing domestic researches.After reviewing existing literatures, this empirical research advances a research model and proposes relevant hypotheses. 356 China listed companies of Shanghai and Shenzhen is taken as a whole sample. Data is analyzed by SPSS (Version 11.5). The results are as following:Firstly, top management team tenure heterogeneity and functional experience heterogeneity are both negative related to firm performance.Secondly, there is positive moderate relationship between the interaction on diversification and top management team tenure heterogeneity.Thirdly, there is negative moderate relationship between the interaction on proportion of state owned stock and top management team education background heterogeneity.Fourthly, there is negative moderate relationship between the interaction on industry dynamic and top management team functional experience, age heterogeneity.Fifthly, the average age of top management team is negatively related to firmperformance.Chinese institutional context and cultural traditions are quite unique. Analyzing the relationship of top management team heterogeneity and firm performance under Chinese social backgrounds while several moderator variables being introduced, this research may manifest the limitations of Upper Echelons Theory and broaden the application of this theory in China. It also contributes to a better understanding of the influence of Chinese top management team characteristics. The results enrich the contents of top management team research. The selecting of the moderator variables and data procession method in this empirical research provides a new angle for further top management team research in China.