Utilizing the firm's resources: How TMT heterogeneity and resulting faultlines affect TMT tasks

Authors

  • Hermann Achidi Ndofor,

    1. Department of Management, Mays Business School, Texas A&M University, College Station, Texas, U.S.A.
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  • David G. Sirmon,

    1. Department of Management & Organizations, Foster School of Business, University of Washington, Seattle, Washington, U.S.A.
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  • Xiaoming He

    Corresponding author
    1. Department of Management, School of Economics and Management, Beijing Jiaotong University, Beijing, China
    • Correspondence to: Xiaoming He, Department of Management, School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China. E-mail: xmhe@bjtu.edu.cn

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Abstract

While theory and evidence show that firms' competitive actions mediate the resource-performance relationship, details of top managements' roles in shaping resource utilization choices have been underemphasized. We address this oversight by integrating top management team heterogeneity and any resulting faultline strength with the resource-action-performance model to investigate how TMT composition differentially affects the model's two linkages. Specifically, we argue that TMT heterogeneity positively affects the resource-action linkage, yet negatively affects the action-performance linkage. Moreover, when heterogeneity begets strong faultlines, all such positive effect is lost. Supportive evidence from the in-vitro medical diagnostic substance manufacturing industry allows us to discuss how our findings contribute to upper echelons theory, as well as the emerging stream on resource utilization. Copyright © 2014 John Wiley & Sons, Ltd.

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