The Relationship Between Cognitive Heterogeneity Of Top Management Team And Strategic Change In The Perspective Of Structure Inertia

The uncertainty of the environment requires companies to constantly change to stay competitive, strategic change is necessary for the survival and development of enterprises. There are many internal factors that affect enterprises strategic change, such as company size, age, life cycle and characteristics of the top management team. With the introduction of Upper Echelons Theory, researches on top management team and corporate strategy has become popular. Top management team is the main part of enterprise strategic change, the different cognitive basis and value of the team members have an indirect impact on the enterprise strategic change behavior. The existing research has not reached a consensus on the relationship between the cognitive heterogeneity of the top management team and strategic change. It may be caused by the different subjects and perspectives of the study, or some of the key factors are ignored.In the process of enterprise development, there will be a certain degree of structural inertia with the expansion of the scale. The enterprises are made to be unable to respond effectively and participate in the strategic change by structural inertia. They will be blocked by the structural inertia when they try to change. Therefore, this paper introduces the variable into the research of the relationship between the top management team cognition heterogeneity and the strategic change.This paper put forward the hypothesis and established the research model based on the literature reviewed, then come to conclusions through empirical analysis. Firstly, we analyzed the existing relevant literature and summarized the relationship between the variables, put forward the hypothesis and establish the research model. Secondly, we collected the data of small and medium-sized listed companies through the Wind, CSMAR and Sina Finance and Economics, Cninfo etc. Thirdly, we analyzed the effective data by SPSS17.0 statistical analysis software. Descriptive statistical analysis, correlation analysis and regression analysis were done. we explored the impact of top management team cognitive heterogeneity on strategic change and introduced the concept of structural inertia to explore the effect of structural inertia on the relationship between top management team cognitive heterogeneity and strategic change.Through 175 small and medium-sized listed companies’data from 2010 to 2013, we find that:Firstly, each dimension of the cognitive heterogeneity of top management team has a significant impact on the strategic change, but the specific effects are different. Age heterogeneity, tenure heterogeneity and functional background heterogeneity have a significant positive impact on strategic change, but the heterogeneity of educational background and strategic change is negatively correlated. The conclusion of this paper is not entirely consistent with the previous studies’. Secondly, we verify the regulation effect of the structural inertia on the top management team cognitive heterogeneity and strategic change. The structural inertia has a negative regulation on the relationship between tenure heterogeneity, functional background heterogeneity and strategic change and a positive regulation on the relationship between educational heterogeneity and strategic change. The moderating effect of the relationship between age heterogeneity and strategic change is not significant. Therefore, enterprises should not only focus on the influence of the construction of the top management team, but also pay attention to the structural inertia.This paper empirically studied the relationship between the top management team cognitive heterogeneity and strategic change and introduced the structure inertia as the moderator variable between them. It enriched the theory of Upper Echelons and strategic change to a certain degree and did a useful supplement to the existing research results. Furthermore, it also deepened our understanding of the structural inertia theory and provided new ideas for the selection of intermediate variables.