Diversity in the Executive Suite

273 Pages·2014·1.46 MB·English

Diversity in the Executive Suite: A Longitudinal Examination of the Antecedents
and Consequences of Top Management Team Heterogeneity

by

Jason Douglas DeBode

A dissertation submitted to the Graduate Faculty of
Auburn University
in partial fulfillment of the
requirements for the Degree of
Doctor of Philosophy

Auburn, Alabama
August 2, 2014

Keywords: Top Management Teams, Chief Executive Officer, Managerial Power,
Managerial Discretion, Strategic Leadership, Longitudinal

Copyright 2014 by Jason Douglas DeBode

Approved by

Garry L. Adams, Co-chair, Associate Professor of Strategic Management
Kevin W. Mossholder, Co-chair, Professor of Management
L. Allison Jones-Farmer, Associate Professor of Statistics and Business Analytics
LaKami T. Baker, Assistant Professor of Management
Abstract

This dissertation takes an evolutionary approach toward Top Management Team
(TMT) heterogeneity by examining its antecedents (i.e., CEO characteristics) and
outcomes (i.e., firm performance, TMT turnover) as well as several boundary conditions
of these relationships (i.e., TMT discretion, TMT power distribution). Four primary
research questions are explored in detail, including 1) In what ways are a CEO’s
characteristics related to TMT heterogeneity?; 2) What is the nature of the relationship
between TMT heterogeneity, firm performance, and TMT turnover?; 3) What are the
temporal dynamics of these relationships?; and 4) How do TMT power and discretion
influence the relationships between TMT heterogeneity, firm performance, and turnover?
The primary goal of this study was to better understand how TMT heterogeneity
manifests in organizations and the influence it has on different outcomes of interest to
firms. Emanating from the strategic leadership literature, the Upper Echelons perspective
served as the primary theoretical framework in this study. Additional theories from the
strategic management and social psychology literatures were incorporated to gain a
greater understanding of the modeled relationships as well as how they unfold over time.
Using latent growth modeling and multiple regression analyses, this study
examined the above phenomena among a sample of firms on the Fortune 1000 list from
2002 through 2012. The results highlight the complicated associations between executive
diversity, firm performance, and executive turnover over time. Specifically, most
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diversity types had a short-lived influence on performance, though TMT Race Diversity
emerged as having a persistent and nonlinear relation. Additionally, certain diversity
types were associated with gains in financial performance, though only when combined
with certain levels of specific moderators. Ultimately, this study finds support for the
influence of CEOs on TMT diversity, the Upper Echelons perspective, and, perhaps most
importantly, the benefits of opening the ‘black box’ in organizational demography
research.
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Acknowledgements

An African proverb holds that it takes a village to raise a child, and so it is with
doctoral students. There are many people who have contributed to my development as a
scholar and progression through my doctoral program, many of whom I would like to
thank here. First is my dissertation committee. Dr. Garry Adams has challenged and
supported me since I first showed him what would become my dissertation model. His
encouragement, reassurance, and humor have helped in ways difficult for me to express
and for that I am forever grateful. On a different note, the various ways he contributes to
our doctoral program have helped with my teaching, research, service, and navigating the
job search process; this help has been invaluable.
Dr. Kevin Mossholder has served as a guiding influence in my comprehensive
papers and dissertation. His help honing my research skills and constant reminders to
focus on the theory and practical implications of my research have greatly contributed to
my development as a researcher and for that I am thankful. Dr. Allison Jones-Farmer has
entertained and enabled my interest in statistical methods since my earliest days in her
classes. Her support throughout the doctoral program – both professionally and
personally – has helped make my doctoral education proceed far more smoothly than it
otherwise would have. Dr. LaKami Baker and Dr. Andy McLelland have been more
recent additions to my research cohort, but your helpful insights along with the generous
gifts of your time and effort on my dissertation are most appreciated.
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Beyond my committee members, my thanks and appreciation go out to the entire
faculty of the Management Department at Auburn University. Several faculty members
have been especially influential in my progression through the doctoral program. Dr.
Alan Walker, Dr. Achilles Armenakis, and Dr. Junior Feild have worked with me since
my beginning days in the program and I am grateful for your guidance. Ms. Nancy Ray-
Monroe and Ms. Barbara Hawkins have been helpful with the endless administrative
details associated with the doctoral program, research, and teaching; your help is
appreciated more than I can say.
Additional thanks go out to the mentors who guided me through earlier stages of
my academic career. Dr. Bob Blodgett, Dr. Nora Reilly, and Dr. Sean Robson were all
integral to my success in and progression through my bachelors and masters programs.
Without their help I would likely have ended up on a very different career path, and I am
grateful for your guidance and friendship over the past several years. My colleagues in
the doctoral program, both those who went before me and those who come after, have
played an important role in my development as an academician. Whether focused on
research, teaching, or more personal matters, our conversations helped me to develop and
gain an appreciation for other domains and perspectives and I value each relationship
made during my time in the doctoral program.
On a more personal note, my endless gratitude goes out to my parents, Doug and
Sandy DeBode and my in-laws Kevin and Tammy Neubauer for their love, support, and
encouragement. My thanks also go to my brothers, Chris and Brad, and to my brother-
and sisters-in-law Seth, Taylor, and Shelby for the many ways they have supported my
family during our time in Auburn.
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Lastly my eternal love and thanks go to my wife, Tasha. You have helped me
endure the most difficult days and celebrate the best. Without your patience, support,
encouragement, and love this experience would not have been possible. The sacrifices
you made to help turn my ambitions into reality have not gone unnoticed. You are my
rock and I look forward to what the future has in store for us.

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Table of Contents

Abstract ............................................................................................................................... ii
List of Tables ..................................................................................................................... xi
List of Figures .................................................................................................................. xiii
List of Abbreviations ........................................................................................................ xv
Chapter 1 ............................................................................................................................. 1
Section 1.1: Introduction ................................................................................................. 1
Section 1.2: Research Questions ................................................................................... 10
Section 1.3: Research Model, Theories, and Constructs ............................................... 12
Section 1.3.1: Research Models. ............................................................................... 12
Section 1.3.2: Model Relationships. .......................................................................... 13
Section 1.3.2.1: CEO Characteristics  TMT Heterogeneity. ................................. 13
Section 1.3.2.2: TMT Heterogeneity  Performance. .............................................. 13
Section 1.3.2.3: TMT Heterogeneity  TMT Turnover ........................................... 14
Section 1.3.2.4: The moderating roles of TMT Power Distribution and TMT
Discretion................................................................................................................... 14
Section 1.4: Dissertation Contributions ........................................................................ 14
Section 1.5: Dissertation Outline .................................................................................. 18
Chapter 2 ........................................................................................................................... 19
Section 2.1: Primary Theories ....................................................................................... 19
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Section 2.1.1: The Upper Echelons Perspective. ....................................................... 19
Section 2.1.2: Top Management Team Power. ......................................................... 37
Section 2.2: Dissertation Constructs ............................................................................. 56
Section 2.2.1: Chief Executive Officer Characteristics ............................................. 56
Section 2.2.2: Chief Executive Officer Power .......................................................... 63
Section 2.2.3: Top Management Team Discretion .................................................... 66
Section 2.2.4: Top Management Team Power Distribution ...................................... 68
Section 2.2.6: Top Management Team Turnover ...................................................... 72
Chapter 3 ........................................................................................................................... 76
Section 3.1: Dissertation Hypotheses ............................................................................ 76
Section 3.2: On the Use of Time – Theoretical Concerns ........................................... 104
Section 3.3: Dissertation Model with Hypotheses Labeled ........................................ 110
Chapter 4 ......................................................................................................................... 111
Section 4.1: On the Use of Time – Methodological Concerns .................................... 111
Section 4.2: Study Design and Research Strategy. ..................................................... 112
Section 4.3: Dissertation Variables and Measures ...................................................... 113
Section 4.3.1: CEO Characteristics ......................................................................... 113
Section 4.3.3: TMT Discretion ................................................................................ 114
Section 4.3.4: TMT Power Distribution .................................................................. 115
Section 4.3.5: Firm Performance ............................................................................. 119
Section 4.3.6: TMT Turnover .................................................................................. 119
Section 4.3.7: Control Variables.............................................................................. 120
Section 4.4: Dissertation Methodology and Statistical Analyses ................................ 121
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Section 4.5: Dissertation Model with Data Collection Years Labeled ....................... 127
Chapter 5 ......................................................................................................................... 128
Section 5.1: Descriptive Statistics ............................................................................... 128
Section 5.1.1: Variable Adjustments ....................................................................... 128
Section 5.2: Unconditional Growth Models ................................................................ 129
Section 5.3: Conditional Growth Models .................................................................... 135
Section 5.3.1: Model Results: ROA with 2003 Heterogeneity................................ 136
Section 5.3.2: Model Results: ROS with 2003 Heterogeneity ................................ 143
Section 5.3.3: Model Results: ROA with 2004 Heterogeneity................................ 145
Section 5.3.4: Model Results: ROS with 2004 Heterogeneity ................................ 165
Section 5.4: Multiple Regression Models ................................................................... 179
Section 5.4.1: Model Results: Turnover with 2003 Heterogeneity ......................... 179
Section 5.4.2: Model Results: Turnover with 2004 Heterogeneity ......................... 180
Section 5.4.3: Nonlinear Heterogeneity effects on Turnover .................................. 182
Section 5.5: Post Hoc Analyses ................................................................................... 187
Section 5.6: Summary of Results ................................................................................ 188
Section 5.6.1: Overview of Hypothesis Support ..................................................... 190
Chapter 6 ......................................................................................................................... 196
Section 6.1: Dissertation Limitations .......................................................................... 196
Section 6.2: Discussion of Dissertation Results and Future Research ........................ 199
Section 6.2.1: Discussion of Dissertation Results and Study Contributions ........... 199
Section 6.2.2: Future Research Agenda................................................................... 209
Section 6.3: Lessons Learned ...................................................................................... 211
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Section 6.4: Conclusion ............................................................................................... 213
References ....................................................................................................................... 215

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