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Title: Mediating Role of Strategic Choice Between Top Management Team Diversity and Firm Performance: Upper Echelons Theory Revisited

Authors: Bradley J. Olson; Satyanarayana Parayitam; Nicholas W. Twigg

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: Several studies attempt to relate top management team (TMT) demographic diversity to firm performance, and the findings are varied. This study examines the mediating role of strategic choice in affecting firm performance. The sample consists of 66 firms from the telecommunication industry that engaged in mergers and acquisitions. Strategic choices used are firm innovation and acquisition activity. Results indicate that (i) age diversity is negatively related to strategic choice, (ii) functional heterogeneity is positively related to strategic choice, and (iii) strategic choice mediates the relationship between functional heterogeneity and firm performance. Results thus provide support for the upper echelons theory.

Keywords: Top management team diversity; strategic choice; firm performance; functional heterogeneity.

DOI: 10.1504/JBM.2006.141143

Journal of Business and Management, 2006 Vol.12 No.2, pp.111 - 126

Published online: 05 Sep 2024 *