Understanding Business and Management Research

Answer

Management Research

EXECUTIVE SUMMARY

Organizational excellence remains one of the most desired, yet elusive business variable in the world. While considerable effort has been offered to delineate the effects of senior management team (SMT) on firm-wide performance of firms have been conducted. However, there is a dearth of clarity on the issue as well as a lack of common ground on the issue. In conformity with several studies that view perceived performance as a function of numerous variables, both from within and without the business premises. As a result, most investigations on the topic are suited for the study of performance of externally influenced. Nevertheless, some scholars have suggested a view that suggests that performance can be internally influenced as well. Current research provides a critical review of extant literature to obtain critical data on the impact of SMT character traits on firm performance

Key words: firm performance, SMT characteristics.

INTRODUCTION

Organizational performance has been the focal point of research for decades. In an attempt to explore different antecedents of positive firm output, the traits of senior management teams (SMTs) have emerged as a primal area of interest. Indeed, past research on the relationship between SMT characteristics on organizational performance have yielded inconclusive results. While some studies have established positive correlation between TMT characteristics and organizational outcomes significant amounts of literature have yielded no significant connections.  This review draws from Echelon Theory, resource based view, and dynamic capability view to explore connections between SMT characteristics and organizational outcomes.

LITERATURE REVIEW

This paper draws from empirical reviews of various literatures to present contemporary research findings on the impact of SMT characteristics on organizational performance.  It provides several findings on the correlation between the various variables. The impact of SMT traits on profitability continues to attract research interest (Milana and Maldaon 2015; Yohannes, Ayako and Musyoki 2016). However, notwithstanding the amount of interest in this area, the findings are largely diverse (Milana and Maldaon 2015). Inferentially, it is apparent that there is no consensus on the association between existence and implication of the connection between SMT traits and firm-wide outcomes. Moreover, various scholars have deployed various approaches to quantify SMT characteristics and measurements of organizational performance. Empirical findings from many scholars on SMT traits have been heavily weighted in favor of Hambrick and Mason’s (1984) “Upper Echelons theory”. The theory postulated that firm performance in terms of approaches and efficiency are congruent with “values and cognitive bases” of a small clique of people in the management.  The Upper Echelon’s Theory puts significant focus on discernible management-level antecedents such as demographic factors including “age, longevity in the organization, functional background, education, socioeconomic roots, and financial position” (Hambrick and Mason, 1984).

Hambrick and Mason’s model deploys observable demographic factors such as delegation-related variables in the executive delegation process. In modern managerial contexts, executive delegation processes are actioned via a “perceptual or filtering process” culminate in managerial disposition (Hambrick and Mason, 1984). Executive dispositions tend to affect strategic decisions as well as managerial actions. The implications of Hambrick and Mason’s research have added some impetus to the study of the said characteristics from various perspectives, yielding inconclusive outcomes in the process. Similar studies by Hambrick &Mason (1984) have established favorable correlation between typical SMT cognitive competencies and globally credible organizational performance outcomes. However, contradictory findings by DiazFernandez, Gonzalez-Rodriguez and Pawlak (2014), show that variations in academic achievement had adverse and substantial influence on organizational performance and no significant impact on “functionality and cognitive diversity”. This research outcome seems to contradict the postulations of the Upper Echelon theory and the theoretical predictions of Setiyono and Tarazi (2014). Nevertheless, these studies displayed rather weak impact of transnational exposure diversity on business outcomes. Instead, the studies showed that firms were more concerned with staff academic level rather than the diversity of degree programs. While investigating the variable-nationality variable, similar studies did not find any connection between SMT nationality and organizational outcomes. This finding seems to contradict suppositions of the cultural dimensions which delineate some national cultures as more bellicose with respect to others. Yet, findings by Yohannes, Ayako and Musyoki (2016), are consistent with postulations of the Upper Echelons theory insofar as SMT demographic traits and organizational outcomes are concerned. The study found that SMT demographic factors impact organizational outcomes. On the other hand, the control variables had a quantitatively significant net positive impact on organizational outcomes and such outcomes cannot be fully described by those traits. The direction their research was on “educational level, educational background, experience, age, and gender” (Yohannes, Ayako and Musyoki (2016). In addition, some studies have revealed adverse connection between corporate tenure, age and internationalization of concerned SMTs (Yohannes, Ayako and Musyoki, 2016). These studies appear to validate the view that younger, recently hired SMT team members had a higher propensity for internationalization in contrast to their older and more experienced colleagues. This is attributed to the tendency of older SMT members to show superior risk taking tendencies, flexibility, and information-processing competences.  This position has also been validated by Philemon & Kessy (2016), who posits that younger leaders display greater likelihood of espousing possibilities of working overseas as well as urbane lifestyles. Similar views by Philemon and Kessy (2016) seem to endorse the view that ages of SMT members affect firm outcomes. These findings were moderately validated by Wasike, Machuki, Aosa and Pokhariyal (2015) found no statistically significant correlation between demographic data on SMT members and organizational outcomes. On the other hand, the researchers concluded that behavioral factors had statistically significant net positive impact on firm outcomes. Further, cross-sequential research by Philemon and Kessy (2016), on impact of SMT traits on organizational profitability showed that demographic traits had positive impact organizational outcomes. The results showed that youthfulness, duration of exposure to the industry, and educational level had a net positive impact on organizational outcomes. The research findings showed that youthful SMT members from privileged socioeconomic status and a minimum tertiary level education seemed to impact firms positively. Correspondingly, another study by Colombelli (2015) concluded that youthful and erudite organizational leaders had net positive impact on organizational performance. Additionally, studies by Setiyono and Tarazi (2014) on the 38 Indonesian commercial banks argue that the presence of female SMT members had a modest influence on the standard of performance. Similarly, ethnically diverse SMTs yielded lower organizational performances as well.  Other findings on impact of SMT gender composition on firm performance seemed to dispute earlier research. For instance, empirical review by Dezso and Ross (2012) revealed that women in SMTs tend to inspire positive frim outcomes. The surprisingly weak connection between ethnic inclusivity in SMTs and performance has been outlined by Mark, Pons & Suri (2015) among others. Some other studies by Marimuthu and Kolandaisamy (2019) focusing on of blue-chip firms in Malaysia, found no connection between “gender, ethnicity and performance”. Professional experience of SMT members had a positive connection with organizational performance (Cannella, Park and Lee 2008). Functional diversity, “educational diversity” and longevity were positively linked to better performance outcomes (Setiyono and Tarazi, 2014). Finally, a study by Yang and Wang (2014) while investigating the influence of SMT traits on organizational performance established that “age, gender and working experience” had a significantly positive impact on “entrepreneurial strategic orientation”.

3.0 ANALYSIS, DISCUSSION AND EVALUATION OF RESEARCH METHODOLOGY

3.1 Introduction

This chapter defines the proposed methodology for data collection and evaluation for this study. The chosen methodology for this paper is systematic review of literature as pointed out in the literature review chapter. In principle, this chapter will present information on the way peer-reviewed journals and other pertinent literature was assessed. An outline of methodology and strategy utilized for literature search from approved websites, peer-reviewed journals and industry specific data.

3.2 Research Approach

            A controlled strategy will be deployed to establish the validity of the literature included in this study. Approved websites and peer-reviewed articles are the principal sources of information as well as relevant articles on senior management team characteristics and firm performance.

3.3 Search Period

Literature search was conducted for 30 days and was essentially restricted to peer-reviewed articles and other relevant data that were published not later than 2014.  However, older publications with appropriate scope of the topic of this research were considered as well.

3.4Search Databases and Key Terms

            The search was limited to scholarly sources from the following databases, namely, SSN, SCDU, SCOPUS, and Google Scholar, among others. The search wa narrowed to a limited number of search terms and phrases focused on strategic management, top management characteristics, top management team demographic characteristics on firm performance, Managerial characteristic and impact, female constitution in SMTs, Diversity and team performance, and functional background diversity and firm performance.

3.5Search Strategy

            On the basis of the outlined databases, 75 publications were reviewed. The search proceeded as follows: First, less detailed literature searches were limited to Google Scholar. Detailed and highly technical searches were done using SSN, SCOPUS, and SCDU. The search was limited to English publications. From this sources used, forty articles were peer-reviewed while others were obtained from websites and technical and non-academic sources. The publications are arranged in accordance to significance to the topic, date of publication and specificity. Details of the search are tabulated:

Table 1: Searches Conducted

The reviewer created some key criteria for inclusion and exclusion criteria. After the search was complete, the peer-reviewed journals and other approved materials were analysed and each abstract scrutinized to establish a standard for abstract reviewed to determine suitability for use.

Inclusion criteria: the referenced material was mainly peer-reviewed journals. Subsequent materials focused on strategic management, strategic leadership, and SMT characteristics, and organizational performance. Data must be not older than six years.

Exclusion Criteria:

            The exclusion standards primarily considered sources published in languages other than English. Additionally, considering the fact that the study focused on SMT characteristics and organizational performance, a fairly antique area of study, the researcher excluded articles published earlier than 2014, except those that had historical and theoretical context of the study.  Literature that had extremely general information on SMT impact on organizational performance was rejected.

            Before the search commenced, at the brainstorming level, proposed websites, numerous articles that had been omitted featured. The rest of the publications were subjected to rigorous search for key terms were not obtained from virtual database searches.

4. FINDINGS AND WHAT YOU HAVE LEARNT FROM THIS ASSIGNMENT

The current research yielded inconclusive results. Scrutiny of extant literature affirms that many researches established positive correlation between senior management teams and firm performance (Yang &Wang, 2014; Marx, Pons & Suri, 2015; Yohannes et al., 2016). On the other hand, some studies had no correlation between SMT characteristics and firm performance. Yet, other studies had very weak relationship between the two variables (Diaz-Fernandez, Gonzalez-Rudriguez & Pawlak, 2014; Colombelli, 2015). Finally, a significant number of researchers show that several studies yielded mixed outcomes, a trend attributed to differences in the choice of variables (Milana & Maldaon, 2015; Wasike et al., 2015).

4.0 RECOMMENDATION

From the foregoing chapters, it is apparent that differences in research findings and contradictory patterns have been established. Consequently, owing to the variances in research findings, it is apparent that there are gaps in research which call for more focused research to strengthen underlying variables which affect the final outcomes of research.