Top Management Team Power Distribution,the Diversification Strategyand Enterprise Performance

The object of traditional research on the enterprise management team is always limited to the CEO or general manager of the enterprise,who is thought to be the core of entire firm as business manager and have a significant impact on the business decision and performance.However,the development of the economy increases the dynamic nature and uncertainty of the business environment.To make the right decision is far beyond the capacity of individual leader,and more and more rely on the whole top management team.The top management team is the core of the decision-making of the entire enterprise and is in the leading position in the enterprise.Therefore,the further study of the top management team is very necessary and meaningful.Previous studies have paid more attention to the demographic characteristics of management team members,such as age,educational level,etc.,and the heterogeneity of these characteristics.It is thought that the differences between the individual members of the top management team can bring vast resources of information to the enterprise.The difference between these information resources will have different effects on the enterprise,which leads to different strategic results and performance levels.But they focus less on the influences of the differences of power among the top management team on the enterprise.The power of the management team members usually indicates the resources of the enterprise controlled by members and the differences in power among members means that the distribution of the resources is not equal.The distribution of the power within the top management team directly determines how the enterprise resources will be invested in the enterprise production and operation.Therefore,the distribution of power within the top management team has more vast information resources and has a significant influence on the development of the company.This paper uses eight power indicators for principal component analysis to measure the distribution of the power of the executive team and to examine the impact of the power distribution among the management team on the enterprise performance.The upper echelons theory proposed by Hambrick and Mason(1984)thinks that the power distribution of the top management team will affect strategic choices of the enterprise and have further influences on the enterprise performance through the implementation of the strategy.With the rise of the knowledge economy and the development of information technology,the dynamic of the business environment is increasing,and the strategic decision of enterprise is more complicated and diversified.Many companies find that they must constantly adjust their business strategy,in order to obtain the advantage in the complex and ever-changing external market competition environment.When the company decided to adjust their strategy,the first thing is to focus on diversification strategy.Diversification strategy is an important strategic decision of enterprises,which is a kind of competitive strategy widely adopted by Chinese listed companies.The choice of diversification strategy is very important to the survival and development of enterprises.Based on the theory of upper echelons theory,this paper takes the data of Shanghai and Shenzhen A-share manufacturing industry from 2010 to 2014 as a sample and analyzes the relationship among the top management team power distribution,the diversification strategy and the enterprise performance with the empirical analysis of multiple linear regression.The study found that under the cultural background of China,the uneven power distribution of top management team play an active role and is positively related to the performance of enterprises.It is found that the uneven power distribution of thetop management team in the state-owned enterprises is positively related to the performance of the enterprises.The uneven power distribution in non-state-owned enterprises is also positively correlated with the performance of the enterprises,but not significant.Further study of diversified strategy found that the uneven distribution of power was negatively correlated the diversified level of enterprise,the degree of diversification was negatively correlated with enterpriseperformance.And to a certain extent,the diversificationstrategy is the mediator variables between the power distribution of top management team and the enterpriseperformance.