Themed issue: Top management matters

In recent years, there has been a lively debate in the management field on whether and how top managers and Chief Executive Officers (CEOs) matter to the company’s performance (e.g. Fitza, 2014; Quigley and Hambrick, 2015). The collection of accepted papers in this issue of Strategic Organization seems to suggest that Top Management Teams (TMTs) influence not only specific corporate strategy decisions but also their firm’s performance. By examining a number of boundary conditions from different theoretical vantage points, these articles clearly position themselves in the “TMT matters” camp, with heterogeneous effects on firm performance. We can cluster the articles into three ‘baskets’: the effect of TMT (1) on the relation between performance feedback and a firm’s behavior; (2) on strategic oversight, the accuracy of strategic decisions, and acquisition target selection; and (3) on the link between CEO characteristics and firm performance. From Basket 1, two articles build on the Behavioral Theory of the Firm (BTOF) to suggest that TMT team characteristics and managerial perceptions of performance feedback influence a firm’s behavior. Saraf et al. (2022) examine how the inconsistency between objective performance feedback and managerial perceptions affects a firm’s propensity for innovation. They find that inconsistency has a negative effect on innovation propensity. Instead of looking into perceptions, Kolev and McNamara (2022) examine the structural attributes of TMTs as an important moderating factor in the relationship between performance feedback and a firm’s behavior. They show that when performances are below aspirations, TMTs with greater tenure diversity, smaller size, and smaller pay disparity among members tend to engage in more strategic risk-taking. Next, we have three articles that examine the effect of TMTs on various strategic decisions. Using data on CEOs and TMTs from Chinese firms, Li and Sullivan (2022) examine the relationship between managerial hubris and strategic foresight and argue that managerial hubris negatively impacts strategic foresight due to biases in attending, encoding, and processing information. By building a multi-agent model, Miller and Lin (2022) investigate how TMT characteristics influence the accuracy of diagnoses of strategic issues within the team. Among other interesting results, they show that attending to other managers’ inferences proves detrimental to the accuracy of strategic issue diagnoses while attending to the environment improves it. Thus, these two articles together seem to suggest that while strategic foresight improves strategic analysis, managerial hubris and TMT characteristics could hamper these relations. The third article examines how acquirers value targets’ technological relatedness (i.e. similarity and complementarity) in acquisition target selection. Kavusan et al. (2022) suggest and find that demographic fault lines within the TMT affect the team’s information processing capabilities of target relatedness, namely its complementarity component. Finally, we have three articles on the importance of CEO characteristics. Two articles look at CEO overconfidence. Zhung and Shi (2022) propose that overpaid CEOs (with a high compensation package relative to the market) become more overconfident, with implications for firm strategy. 1118220 SOQ0010.1177/14761270221118220Strategic OrganizationEditorial research-article2022