Top management team experience and firm performance: A comparison of the resource-based view and upper echelon theories

This dissertation posed several questions about the relationship between the different experiences of top management team members and firm performance: When and why does the experience of top management teams matter? What are the performance outcomes of different types of team experiences? And, How do changes to the top team affect performance? Using a sample of 283 firms with interdependent top teams and 1,965 executives, the study used the resource-based view and upper echelon theories to examine three different types of experience—firm, team and functional.; In answering these questions, the study concluded that all three types of experiences matter, but the effects of firm and team experience were contingent upon the environment. In more stable environments, the resource-based view theory that more and varied experience creates causal ambiguity and path dependency that is difficult to imitate prevailed. This result was confirmed by the succession hypotheses in stable firms which demonstrated a decrease in firm performance when there were decreases in firm or team experience. In firms operating under more industry volatility, the relationship was found to be curvilinear: more experience helps the firm to a point, after which social psychological constraints prevent the top team from operating efficiently, causing a decline in organizational outcomes.; The functional background of the executives did not affect firm performance as hypothesized. Building on Michel and Hambrick's (1992) work, the dissertation suggested that the relationship between the number of administrative positions on the top and performance would be curvilinear. This was not borne out. Examining the contributions made by the individual backgrounds, the inclusion of managers with Administration or Human Resources backgrounds were found to significantly negatively related to performance, while Engineering had a significant positive effect. Additionally, those firms that hired the CEO directly into the firm experienced a drop in performance.