CEO Power and Top Management Team Tenure Diversity: Implications for Firm Performance

Tomohiko Tanikawa, Yuhee Jung

Research output: Contribution to journalArticle

Abstract

Using agency theory, we explore how the CEO (as principal) and the top management team (TMT) members (as agents) interactively influence the performance of a firm. By adding performance feedback theory into agency relations, we investigate whether the interactive effect of CEO–TMT relations on firm performance differs when past firm performance is either poor or strong. Using a sample of 115 Japanese firms, our results show that the interactive effect of CEO power and TMT tenure diversity on firm performance is positive in a situation of poor past firm performance. However, in a situation of strong past firm performance, the opposite result is found. These findings imply that CEO power might play a significant role in enhancing the effectiveness of TMT diversity on firm performance when past firm performance is poor.

Original languageEnglish
Pages (from-to)256-272
Number of pages17
JournalJournal of Leadership and Organizational Studies
Volume26
Issue number2
DOIs
Publication statusPublished - 2019 May 1

Keywords

  • CEO power
  • past firm performance
  • tenure diversity
  • top management team

ASJC Scopus subject areas

  • Business and International Management
  • Sociology and Political Science
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management Science and Operations Research

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