Knowing who knows what: The effect of transactive memory on the relationship between diversity of expertise and performance in top management teams

This dissertation attempts to resolve a paradox: while some studies find that diversity of expertise in a top management team leads to better performance by fostering creativity, others find that it reduces performance by decreasing communication and increasing conflict among executives. Examining how members of atop management team interact may clarify this issue.; Diversity of expertise has contradictory effects on performance because it increases both task and relationship conflict. While task (or substantive) conflict improves performance, relationship (or interpersonal) conflict hurts performance. A diverse group seeking to improve performance should try to maximize task conflict and minimize relationship conflict. Unfortunately, task and relationship conflict typically go together.; The thesis examines the impact of transactive memory and trust on the influence of diversity on conflict and performance. A team has a transactive memory system when members of the team mutually recognize each others' areas of expertise, and hold one another responsible for remembering and retrieving information belonging to their areas of expertise. I propose that teams with transactive memory systems process information better than teams without such systems, and therefore show superior performance. In addition, information sharing among the members of a team positively moderates the effect of task conflict on performance.; I hypothesize that trust among the members of the team severs the link between task and relationship conflict. The team can then show superior performance.; This paper presents data from a field study of 111 top management teams in banks. The results show that top management team characteristics such as team tenure, complexity, and conflict resolution methods influence the amount of task and relationship conflict experienced by the team. Trust reduces the amount of relationship conflict experienced by the team.; Neither task nor relationship conflict significantly influences firm performance. Transactive memory positively influences performance in groups with mid- to high values of task conflict. Task conflict in organizations that share a lot appears to lower performance. This suggests that the ability of the team to use and manage the expertise of its members predicts the performance of the team.