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The effects of TMT faultline configuration on a firm’s short-term performance and innovation activities

Published online by Cambridge University Press:  03 August 2015

Xiao-Yun Xie ,
Wei-Liang Wang  and
Zhen-Jiang Qi
Xiao-Yun Xie
Affiliation:
School of Management, Zhejiang University, Hangzhou, Zhejiang, China
Wei-Liang Wang
Affiliation:
School of Management, Zhejiang University, Hangzhou, Zhejiang, China
Zhen-Jiang Qi*
Affiliation:
School of Management, Zhejiang University, Hangzhou, Zhejiang, China
*
Corresponding author: zjqi@zju.edu.cn
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Abstract

Faultline configurations in top management teams are of vital importance in predicting firm outcomes. Grounded in faultline theory, we hypothesise the positive effects of faultlines through the dual routes of coordination and information processing under conditions of various subgroup configuration types. Second-hand data from publicly traded Chinese information technology firms are used to test our hypotheses. The results demonstrate that TMT faultline strength is positively related to a firm’s short-term performance only when both the number and the balance of subgroups are high and is positively related to a firm’s innovation activities only when the number of subgroups is high and the balance of subgroups is low. This study contributes to faultline theory by enriching the connotation of faultlines with the configurational perspective and advancing the debate on the effects of team faultlines as we reveal the benefits of TMT faultlines.

Keywords

top management teamfaultlinesconfigurationsubgroup
Type
Research Article
Information
Journal of Management & Organization , Volume 21 , Issue 5 , September 2015 , pp. 558 - 572
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2015 

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