Top Management Team Members’ Decision Influence and Cooperative Behaviour: An Empirical Study in the Information Technology Industry

Organizational leadership is generally distributed between the chief executive officer (CEO) and the top management team (TMT) members. Building on this observation, we present an empirical investigation of the cues for CEOs to delegate decision‐making influence to particular TMT members. In the literature, explanations both based on expertise and driven by similarity are described. In this study, we reconcile both explanations by examining the moderating role of the TMT's level of ‘cooperative behaviour’ (collaboration and information exchange). We analyse when and in what circumstances TMT members’ expertise and similarity to the CEO regarding his/her functional background and/or locus‐of‐control predict their decision‐making influence. We postulate that TMT cooperative behaviour will advance the effect of expertise on TMT members’ decision influence but impede the effect of similarity to the CEO. Our hypotheses are tested on a data set of 135 TMT members from 32 Dutch and Belgian information technology firms. Overall, we find that our proposed research model is confirmed for technology‐oriented decisions. Furthermore, we draw exploratory conclusions about the effect of TMT cooperative behaviour on the systematic distribution of decision influence in TMTs.     

An Analysis of Strategic Determinants,Learning and Decision‐Making in Sino‐British Joint Ventures

This paper examines how partners’ strategic objectives, inputs and competencies affect the learning they achieve in joint ventures and their ability to influence decision‐making in such ventures. Quantitative and qualitative research in 20 Sino‐British joint ventures permits an investigation of these factors for both British and Chinese joint venture partners. Findings indicate that the transfer by British partners of technology and managerial expertise to joint ventures enhances their ability to achieve their strategic objectives by influencing decisions in such ventures. The learning achieved by British partners depends on their commitment of strategic inputs to joint ventures and is therefore associated with their influence. The case of Chinese partners is different, because they look to learn from the knowledge and resource inputs provided by the British partners. They therefore rely more on legal ownership rights to retain an influence over joint venture decision‐making. The achievement of Chinese partners’ strategic objectives depends more critically on the quality of the partnership itself.     

How Much do CEOs and Top Managers Matter in Strategic Decision‐Making?

This research note explores the influence of both CEO and top-management team (TMT) characteristics on the process of making strategic decisions (SDs). Empirical testing is based on a sample of 70 SDs in industrial enterprises operating in Greece, using a combination of interviews, questionnaires and archival data. The results suggest that (a) the characteristics of both the TMT and the CEO influenced the strategic decision-making process, but the former had more influence, (b) the TMT and CEO influenced different dimensions of the process, and (c) the broader context of SDs is more influential than either the CEO or the TMT. Among the most important factors was the TMT's 'aggressiveness' (commitment to beating the competition, attitude to innovation, willingness to take risks). The results lend support to the 'upper echelons' perspective, but suggest that in studying strategic decision-making processes both CEO and TMT characteristics should be considered, in conjunction with the broader context. Such an approach should provide a more reliable view of strategic processes and their evolving dynamics.     

The personality factor: how top management teams make decisions. A literature review

Past research has increasingly suggested that CEO/TMT personality can play a relevant role in influencing various external (e.g. firm performance) and internal (e.g. firm organizational structure) management outcomes. These promising results need appropriate systematization and discussion, which we aim at providing through a literature review based on rigorous inclusion/exclusion criteria. Our analysis shows great heterogeneity in regard to both the personality traits and the personality based management outcomes explored by the investigated population of studies. Thus, we specifically use the framework provided by the Five-Factor Model (FFM) of personality to codify the publications and this framework allows us to identify some possible theoretical trajectories. These trajectories mainly regard the empirical testing of the highlighted associations between CEO emotional stability, extraversion and conscientiousness with bureaucratization, strategic pro-activity and firm performance. Our article is primarily intended for those scholars and practitioners who want to improve their knowledge about psychology-based decision making and behavioural corporate governance through the understanding of how CEO/TMT personality can affect their strategic decisions.     

A Context‐sensitive Approach to Analysing Talk in Strategy Meetings

The talk of managers in meetings is central to organizational life and crucial to research in strategic management, as well as managerial and organizational cognition, sensemaking and decision‐making. To achieve full understanding, both the text and the context of discussion require systematic analysis, but most approaches treat context as everything that is known and observed beyond the immediate text. This obscures different readings of the text of meetings. To resolve this problem, the discourse historical approach (DHA) to critical discourse analysis is outlined as a framework within which researchers can analyse the text and context of talk in meetings. The primary contribution of this paper is to isolate four ‘levels of context’ as a heuristic framework within which discursive practices, strategies and texts can be located. By making explicit the levels of contextual analysis that are implicit in other methods, and illustrating the DHA using an episode of strategic discussion from a multinational company, this paper shows how researchers can use the approach to analyse the naturally occurring talk of senior managers in meetings, which is arguably the most important but yet under‐explored venue for strategizing.     

Decision-making Autonomy in UK International Equity Joint Ventures

This paper investigates approaches to decision making in international joint ventures (IJVs) from the perspectives of the transactions cost and resource‐based theories of the firm. In particular, the concept of autonomy in decision‐making in a sample of UK‐European equity joint ventures is examined. The study adopts a multi‐method personal interview and self‐administered questionnaire approach to examine managerial perceptions of decision‐making and autonomy in the parent firms and the joint venture. The findings show that there are differences in the perception of autonomy between each of the parent firms, and between the parent firms and the IJV management. When we unpack the nature of autonomy in detail, it is found that IJV managers have greater degrees of operational autonomy than strategic autonomy and that decision making by IJV managers takes place within the context of constraints set within the IJV's business plan. This confirms the transaction cost theory which posits that key internal markets (for management, technology and capital) will be under parent control and also supports the resource based view that key capabilities are protected under the business plan established by the parent firms. The influence on IJV autonomy of the moderating variables IJV performance and IJV duration are also examined.     

Evidence‐based Management in Practice: Opening up the Decision Process,Decision‐maker and Context

Evidence‐based management (EBM) has been subject to a number of persuasive critiques in recent years. Concerns have been raised that: EBM over‐privileges rationality as a basis for decision‐making; ‘scientific’ evidence is insufficient and incomplete as a basis for management practice; understanding of how EBM actually plays out in practice is limited; and, although ideas were originally taken from evidence‐based medicine, individual‐situated expertise has been forgotten in the transfer. To address these concerns, the authors adopted an approach of ‘opening up’ the decision process, the decision‐maker and the context (Langley et al. ( 1995 ). ‘Opening up decision making: the view from the black stool’, Organization Science, 6, pp. 260–279). The empirical investigation focuses on an EBM decision process involving an operations management problem in a hospital emergency department in Australia. Based on interview and archival research, it describes how an EBM decision process was enacted by a physician manager. It identifies the role of ‘fit’ between the decision‐maker and the organizational context in enabling an evidence‐based process and develops insights for EBM theory and practice.     

The Influence of Top Management Teams in the Strategic Orientation and Performance of Small and Medium‐sized Enterprises

Identifying which factors affect firms' performance is a critical issue in strategic management research. This paper addresses the influence of managerial team over the behaviour and performance of small and medium‐sized enterprises (SMEs). By treating top management team (TMT) characteristics as predictors of a firm's strategic orientation, we seek to provide a more complete understanding of how the characteristics of managerial teams shape decision‐making processes and SMEs' behaviours in order to successfully compete in low munificent environments. Based on primary data regarding managerial characteristics and firms' behaviours of a sample of 295 SMEs, our results confirm that a firm's strategic orientation plays a mediating role in explaining how TMT characteristics determine SMEs' performance.     

Strategic Influences of Technological Innovation in Greece

This exploratory paper analyses the ‘importance’ and ‘awareness’ of a set of established ‘strategic’ influences of technological innovation in the context of a European newly‐industrialized country. The author interviewed 105 Greek manufacturing firms (mainly SMEs) and measured their perceived innovation rate as well as 17 ‘strategic’ factors regarding top‐management practices and characteristics. Using correlation and regression analysis the initial group of factors was reduced to a subset of five ‘major importance’ influences of innovation, namely: incorporation of technology plans in the business strategy, managerial attitude towards risk, perceived intensity of competition and rate of change of customer needs, and finally status of the CEO (owner‐CEOs were associated with higher innovation rate than appointed CEOs). The ‘statistical’ results are exploratory and have to be treated with caution, as they are highly dependent on the accuracy of the respondents' perception of their company's innovation rate and top‐management practices and characteristics. The ‘statistical’ results were then compared with the managers' perception on the important factors determining innovation (also measured during the interviews). Overall the perceptual analysis confirmed the significance of the statistically important variables, with the exception of a disagreement in the direction of association between the status of the CEO and the rate of innovation. In general, top‐management characteristics proved more important ‘strategic’ influences of innovation for the Greek SMEs than corporate practices. The study also indicated that the important influences of innovation were generally scarce in the Greek institutional context. The highly innovative companies were the ones to overcome country‐specific innovation barriers such as the low supply of technology, the low level of competition and the risk‐averse national culture.     

Harnessing Diversity and Collective Action in the Top Management Team

Diversity has become an important issue at all levels of the company from the boardroom to the back office. It is increasingly apparent that diversity is vital to productivity, with academic research indicating an important link between diverse top management team (TMT) composition and corporate performance. However, the nature of this link remains elusive, as there is little accessible research that can help top teams to evaluate how diversity impacts on their strategic capacity. This paper seeks to fill this gap by developing a conceptual framework, illustrated with case examples, to explain the relationships between TMT diversity and TMT collective action. As collective action is difficult to attain from top teams that are high in diversity, six practical processes are developed from this framework for establishing and exploiting top team strategic capacity. The paper concludes by outlining the theoretical implications of the framework.

It is the range of skills and attributes acquired through a diversity of experiences and backgrounds that combine to create a cohesive and effective board.¹

     

Twice as Smart? The Importance of Managers’ Formative‐Years’ International Experience for their International Orientation and Foreign Acquisition Decisions

This study examined how top management team's (TMT) international orientation influences perceptions of environmental uncertainty and how these perceptions impact international strategic decisions, in particular regarding ownership stakes taken in foreign acquisitions. We highlighted the need for the concept of TMT international orientation to encompass executives’ formative‐years’ international experiences along with their international career experiences and nationalities. Empirical tests based on a sample of 2122 international acquisitions completed by 561 UK firms over the period 1999–2008 showed that TMT international orientation positively moderated the negative impact of cultural differences and host country risk on acquisition ownership stakes. The results underscored the importance of considering decision‐makers’ attributes due to their experiences at a young age, beyond their demographic characteristics or professional experience, in the context of international strategic choices. We also discussed some implications of one of the possible consequences of executives’ formative international experience, namely biculturalism, for international business.     

Confidentiality Constraints Within Mergers and Acquisitions: Gaining Insights Through a ‘Bubble’ Metaphor*

Mergers and acquisitions are extremely sensitive, both within and outside the organizations involved. Confidentiality agreements are therefore essential for allowing teams the ‘space’ to develop potential scenarios for future integration. Despite the importance of confidentiality in practice, the subject has received little coverage in the management literature. By adopting a case‐study approach, this research explores aspects of confidentiality in a four‐year post‐acquisition integration programme in a FTSE100 pharmaceutical company. The paper identifies a range of personal impacts on the signatories, as well as various dimensions of information transfer despite the agreement being in place. Through the use of a metaphor, the research suggests that a confidentiality agreement has many similarities with the properties and characteristics of a bubble. This bubble trope is used to enhance conceptual understanding of confidentiality constraints in an organizational‐change context. The paper concludes by suggesting some ‘key learnings’ in relation to using confidentiality agreements in strategic change programmes such as a merger or acquisition.     

Testing the Time‐Variancy of Explanatory Factors of Strategic Change1

The article proposes an empirical framework able to: (1) assess the relative validity of both adaptive and inertial views of strategic change and (2) verify the potential time‐ or context‐dependency by testing the structural stability of the empirical model, in Spanish banks, 1983–1997. Results offer inconclusive findings regarding (1) but strong evidence to answer (2). The assumption of structural stability is rejected and the effect of many explanatory factors considered in the empirical model varies over time as some factors show different effects and/or significance levels depending on the period considered. These findings suggest that explanatory models of strategic change should be viewed as ‘time‐’ or ‘context‐dependent’. The article provides a conceptual model in which alternative explanations operate in a sequential way. The results highlight, first, that inconclusive past findings about adaptive versus inertial views should be reviewed under this new evidence, and future empirical research must assure that its methods and interpretations are robust to potential structural breakdowns; and second, the limitations raised by the static approach offered by the available theories/models when approaching the dynamic and complex nature of strategic change. Theoretical developments and implications for managerial practice are suggested.     

Examining the Antecedents and Consequences of CIO Strategic Decision‐Making Authority: An Empirical Study*

Despite the strategic importance of information technology (IT) to contemporary firms, chief information officers (CIO) often still have varying degrees of strategic decision‐making authority. In this study, we apply the theory of managerial discretion to define CIO strategic decision‐making authority and argue that the CIO's level of strategic decision‐making authority directly influences IT's contribution to organization performance. We also draw on the power and politics perspective in the strategic decision‐making literature to identify the direct antecedents to the CIO's strategic decision‐making authority. A theoretical model is presented and empirically tested using survey data collected from a cross‐industry sample of 174 matched pairs of CIOs and top business executives through structural equation modeling. The results suggest that organizational climate, organizational support for IT, the CIO's structural power, the CIO's level of strategic effectiveness, and a strong partnership between the CIO and top management team directly influence the CIO's level of strategic decision‐making authority within the organization. The results also suggest that the CIO's strategic decision‐making authority in the organization directly influences the contribution of IT to firm performance and that effective CIOs have a greater influence on IT's contribution when provided with strategic decision‐making authority.     

CEO Incentives and Customer‐Supplier Relations

This study explores how suppliers adjust their relation‐specific investments (RSI) in response to the different risk‐taking incentives provided by the customer firm to its CEO, during normal and transition periods. We investigate this relation using 17,553 customer–supplier transactions over the 1993–2013 period. We find strong evidence consistent with the risk‐taking argument. Specifically, we find that an increase in the risk‐taking incentives of customer CEOs leads to a decline in suppliers’ RSI in normal periods, but an increase in RSI during transition periods. We employ the FAS‐123R mandate to show that an exogenous reduction in customer CEO's incentive pay increases suppliers’ RSI. We reaffirm the effect with the passage of the Sarbanes–Oxley Act as a secondary quasi‐natural experiment. Finally, we examine several scenarios that either amplify or attenuate the observed relation, based on factors such as financial constraints, distress, growth opportunities, industry competition, and other firm characteristics. Our study contributes to the literature that examines the interplay between corporate policy and product market relationships.     

Cultural Intelligence and Offshore Outsourcing Success: A Framework of Firm‐Level Intercultural Capability*

This article discusses the importance of firm‐level cultural intelligence in the context of international business ventures such as offshoring. We identify the recent movement toward global delivery models in offshoring ventures as the strategic imperative for offshoring partners to acquire and develop firm‐level cultural intelligence. Drawing on Earley and Ang's (2003) conceptualization of cultural intelligence and the resource based view of the firm, we develop a conceptual framework of firm‐level cultural intelligence. The framework comprises three dimensions of intercultural capabilities of the firm: managerial, competitive, and structural. We propose items to measure these three dimensions and discuss theoretical and managerial implications.     

Discourses about Righting the Business ← → Society Relationship

This article engages the question—what is the right business‐society relationship? We consider three perspectives that seek to address the relationship: corporate social responsibility (CSR), social entrepreneurship (SE), and conscious capitalism (CC). We take a macroapproach considering how commentary about these approaches establishes a direction for corporate practice and its relationship to key stakeholder groups. We argue that these perspectives are ‘D'iscourses that provide arguments for and articulations about the direction of corporate practice and the business‐society relationship. To organize our review of each perspective, and focus our critique, for each we highlight (a) drivers and influencers, (b) core assumptions and defining features, and (c) approaches and exemplars. Although distinct, all emphasize effective business practices as key to meeting social needs. CSR suggests legitimizing business practice; SE relocates business practices; and CC seeks to reimagine/rehabilitate business for social good. Ultimately, we conclude that these Discourses lack a clear communicative focus in terms of decision making within these organizations. We attend to this and other implications, and offer avenues for further research.     

The New CEO and the Post‐succession Process: An Integration of Past Research and Future Directions

The early tenure of a new Chief Executive Officer (CEO), also referred to as ‘the CEO post‐succession process’, is a critical phase in the history of an organization, because it is associated with a high rate of organizational failure and CEO dismissal. Research on this important process has grown rapidly over the last decade, focusing particularly on the question of how the match between the CEO, the organization and the environment is created in the post‐succession process. Yet, the respective literature is highly fragmented, which suggests that there is a need for a systematic review and evaluation of existing works. Adopting the conceptual vocabulary of the practice perspective, the authors review this literature in terms of what it reveals about (1) the practices adopted by new CEOs and other actors involved in the post‐succession process, (2) the properties of the key practitioners involved, and (3) the practical context of the post‐succession process. This review suggests that new CEOs are primarily involved in practices aimed at integrating the new CEO into the organization, and practices aimed at realigning the organization with its environment. The important insights that the existing literature affords are identified, and the gaps in this body of research are highlighted. On this basis, a concrete research agenda is developed in terms of topics, methodologies and theories.     

A Real Options Reasoning Approach to Corporate Social Responsibility (CSR): Integrating Real Option Sensemaking and CSR Orientation

In this article we explore the conceptual relationship between corporate social responsibility (CSR) orientation and real option reasoning. We argue that the firm's attitude, communication, and behavior toward CSR will act as significant determinants to the firm's sensemaking approach to real options; that is, if and how it (the firm) acknowledges, receives, and manages strategic real options. Integrating the previous work of Basu and Palazzo with Barnett, we propose a new model that extends the influence of CSR orientation/character to general strategic decision making while simultaneously developing the attention‐based view to real options.     

A Resource‐Based View of Strategic IT Alignment: How Knowledge Sharing Creates Competitive Advantage

A critical decision problem for top management, and the focus of this study, is whether the CEO (chief executive officer) and CIO (chief information officer) should commit their time to formal planning with the expectation of producing an information technology (IT)‐based competitive advantage. Using the perspective of the resource‐based view, a model is presented that examines how strategic IT alignment can produce enhanced organizational strategies that yield competitive advantage. One hundred sixty‐one CIOs provided data using a postal survey. Results supported seven of the eight hypotheses. They showed that information intensity is an important antecedent to strategic IT alignment, that strategic IT alignment is best explained by multiple constructs which operationalize both process and content measures, and that alignment between the IT plan and the business plan is significantly related to the use of IT for competitive advantage. Study results raise questions about the effect of CEO participation, which appears to be the weak link in the process, and also about the perception of the CIO on the importance of CEO involvement. The paper contributes to our understanding of how knowledge sharing in the alignment process contributes to the creation of superior organizational strategies, provides a framework of the alignment‐performance relationship, and furnishes several new constructs.