Influence of Top Management Team Characteristics on Firm Performance in High Growth Environment: Examining Mediation Mechanisms Using Content Analysis of Annual Reports

Abstract

Top Management teams (TMT) play an important role in determining the strategic actions of a firm and in turn shaping the organizational outcome and performance. Hambrick and Mason’s Upper Echelon perspective provides a theoretical framework to understand the top management teams and its influence on organizational outcomes. In this paper, we study how various TMT characteristics influence Firm Growth in high growth environment. We intend to explicitly test the mechanisms through which TMT demographic characteristics like TMT age, tenure, education, functional background and heterogeneity affect firm performance. Through content analysis of annual reports, we create variables to represent risk taking, innovativeness, internal and external focus, and inclination to change. These are then used as mediators to the TMT characteristics - Firm Growth relationship. We intend to test these hypotheses on a sample of large Indian firms (S&P BSE 500), for the period 2007 to 2012.