Top management team diversity, individualism–collectivism, and MNE performance
Department
Statistics and Analytical Sciences
Document Type
Article
Publication Date
8-1-2019
Abstract
Existing theories of diversity typically focus on a limited range of usually American research settings and on a relatively narrow range of types of diversity. Here, we examine a less commonly used measure of diversity, top management team (TMT) functional diversity, for a sample of non-US multinational enterprises (MNEs) from a cross-cultural perspective. We theorize and empirically test the notion that the individualism–collectivism dimension of national culture moderates the relationship between TMT diversity (measured by functional heterogeneity) and firm performance such that greater functional diversity among TMTs in collectivistic national cultures improves firm performance, while greater functional diversity among TMTs in individualistic national cultures weakens MNE performance. Our empirical results based on a sample of MNEs from 25 countries support our hypotheses. The relationship between TMT functional heterogeneity and firm performance is strongly negative in highly individualistic national cultures but positive in collectivistic national cultures. Managerial implications, limitations, and future research directions are discussed.
Journal Title
International Journal of Cross Cultural Management
Journal ISSN
1470-5958,1741-2838
Volume
19
Issue
3
First Page
273
Last Page
290
Digital Object Identifier (DOI)
10.1177/1470595819870819