Empirical Study Of The Effect TMT Functional Heterogeneity On Corporate Entrepreneurial Orientation

The huge success of start-up inspires those established firms to reflect, how can they get rid of the problem stuck with big entrepreneurs and bring back the energy by committing a second time undertaking? Taking this issue into consideration, and inspired by Upper Echelons Theory, this paper chooses TMT functional heterogeneity as a research subject and analyses the influence it has on corporate entrepreneurial orientation. At the same time, three factors were brought into consideration as moderating variables and they are managerial discretion, organizational slack and environmental dynamism. In order to test all those hypotheses mentioned above,534 observing items listed manufacturing firms at Shanghai and Shenzhen Stock Exchange are gathered during the period from 2009 to 2013. Then, multiple regression was performed and the results are as following:Firstly, there exist an inverted-U shape between TMT functional heterogeneity and corporate entrepreneurial orientation. When the heterogeneity of managers’ functional background is medium, the team will have both structure advantage and procedure advantage. Secondly, it has been proved that managerial discretion and organizational slack have significantly positive influences on the main effect. Lastly, the regression result showed that, the coefficient of the interaction term composed by square of TMT’s functional heterogeneity and environmental dynamism is not significantly, which means the moderating effect of environmental dynamism on the main effect does not exist. The reasons why the above relationship does not exist needs further studying.The results of this article have, on the one hand, richen the studies on TMT’s functional heterogeneity’s impact on corporate entrepreneurial orientation, and on the other hand, make beneficial attempt to test the moderating effect of a non-linear link. For practitioners, the results of this paper demonstrate that medium amount of functional heterogeneity is favorable for corporate entrepreneurial orientation. In addition, managerial discretion and organizational slack have significantly influence on the inverted-U shape between TMT functional diversity and corporate entrepreneurial orientation.