Abstract
Purpose
This study attempts to move beyond the “congruence assumption” surrounding top management team (TMT) demography by exploring the intervening processes that link TMT diversity and organizational performance.
Design/methodology/approach
Using Fiol's concept of unified diversity and employing an information processing perspective of strategic decision‐making, this article proposes a model that incorporates both moderating and mediating influences; and then tests the hypotheses using data from specific strategic decisions faced by 85 top‐level decision‐making teams within the health care industry.
Findings
Evidence was found to support the expectation that goal consensus moderates the relationship between informational diversity and decision quality within the management teams. In addition, team member collaboration was found to partially mediate this effect.Research limitations/implications– The retrospective nature of the data collection captured the essence of the decision‐making process over time, but future research using longitudinal designs that include different types of industries is needed to confirm the validity of the findings.
Practical implications
The practical implications of this study point towards a need for managers to set in motion both divergent and convergent thinking during the strategic decision‐making process. The findings indicate that if managers want to reap the benefits of teams with members from different functional and educational backgrounds, they must instigate some aspect of shared framing among team members, such as consensus on broad organizational goals.
Originality/value
This research identified relevant contingency and mediating variables that help to explain the equivocal results of previous studies attempting to link top management team demography to organizational performance.