Striving for superiority: A status perspective on the relationship between top management team demographic faultline strength and managerial risk-taking

Abstract

In this study, we seize the prevalent phenomenon that demographic attributes serve as representative indicators of social status, leading to status differences among team members due to demographic dissimilarities. Therefore, we reconsider how top management team (TMT) demographic faultline strength affects managerial risk-taking from a status perspective. We hypothesize that high TMT demographic faultline strength makes status boundaries among subgroups more distinct, increasing TMT members’ status perceptions, status conflict, and motivation to change their current status positions, which in turn stimulate them to take more risks to pursue or maintain high status. Findings from a sample of Chinese listed firms support our hypotheses, demonstrating that TMT demographic faultline strength positively affects managerial risk-taking, and the positive relationship is weakened by state ownership and strengthened by institutional development. Additionally, institutional development weakens the negative moderating effect of state ownership. Theoretical and practical implications are discussed for better managing demographic faultlines and managerial risk-taking.