THE INFLUENCE OF TOP MANAGEMENT TEAM HETEROGENEITY ON FIRMS COMPETITIVE MOVES

This paper explores the executive origins of firms' competitive moves by focusing on top management team characteristics, specifically on te am heterogeneity, rather than on the more often studied environmental and organizational determinants of such behaviors, Arguing that compet itive actions and responses represent different decision situations, w e develop propositions about how heterogeneity may enhance some compet itive behaviors but impair others. With a large sample of actions and responses of 32 U.S. airlines over eight years, we find results that l argely conform to our propositions. The top management teams that were diverse, in terms of functional backgrounds, education, and company t enure, exhibited a relatively great propensity for action, and both th eir actions and responses were of substantial magnitude. Heterogeneous teams, by contrast, were slower in their actions and responses and le ss likely than homogeneous teams to respond to competitors' initiative s. Thus, although team heterogeneity is a double-edged sword, its over all net effect on airline performance, in terms of changes in market s hare and profits, was positive.