Top management team diversity and adaptive firm performance: the moderating roles of overlapping team tenure and severity of threat

Abstract

PurposeAlthough strategic scholars have made great effects to exploring the moderating roles of team interaction in explaining the effect of top management team (TMT) diversity, they have adopted seemingly conflicting theoretical perspectives to explain how it works. Drawing on ideas from the threat rigidity theory, the authors integrated these perspectives by proposing a contingency model in which the relationships between TMT diversity and adaptive firm performance depend on the matching between the internal context (i.e. overlapping team tenure) and external context (i.e. severity of threat).Design/methodology/approachThis study sampled 579 Chinese A-share listed companies that have been severely affected by the COVID-19 pandemic, and multilevel linear regression analysis was used to test the hypothesis.FindingsResults provided support for this hypothesis. Specifically, the interaction between TMT age/tenure diversity and overlapping team tenure is significant only when the severity of threat is high, while the interaction between TMT functional diversity and overlapping team tenure is significant only when the severity of threat is low.Originality/valueThe results of this study provide a comprehensive perspective to predict the performance impact of team diversity and contribute to diversity research and practice.