Psychological team diversity and strategy implementation

The overwhelming majority of team or group composition studies are restricted to analyzing the link between team demographics and the content of specific strategic choices. We argue that in order to make progress in this domain it is now time to broaden the approach by focusing on psychological team composition and issues of effective implementation. In addition, we propose a more sophisticated theoretical and methodological approach to the use of specific team composition measures. We conducted an experimental study in order to explore the potential of addressing these major limitations of past research. Specifically, we hypothesize on and analyze the relationship between the psychological composition of management teams (in terms of their members'' control perceptions) and two aspects of effective strategy implementation: meticulous planning and the configuration of consistent action patterns. We find that homogeneous ''internal'' teams adapt their strategy-making behavior to the requirements of the environment, whereas homogeneous ''external'' teams do not. As expected, mixed (i.e., heterogeneous) teams experienced most problems in effectively implementing their strategies. The findings provide support for the potential value of analyzing both psychological composition of decision making teams and strategy implementation issues. Furthermore, it underscores the importance of properly matching theoretical expectations and measurement methodology in multi-level research.management and organization theory ;

A game theory of organizational ecology : a model of managerial inertia and market selection

This paper merges two theoretical perspectives in a mathematical game model: industrial organization on the one hand, which basically is the economic theory of market competition and firm strategies, and organizational ecology on the other, which is a major sociological tradition that studies the evolution of organizational populations. The merger is instrumental in analyzing a key question in organization studies: what is the role of flexibility, inertia and efficiency in facilitating firm performance in a selection environment, in terms of both profitability and survival? Particularly, we argue that game theory can offer a mathematical model of organizational ecology. Such a game-theoretic model reveals that an inert firm may push a flexible rival from the market, even if the inert market leader faces a cost disadvantage. Moreover, this may happen in a munificent environment. That is, cut-throat rivalry can be the result of strategic competition only - being facilitated by organizational inertia. This paper operationalizes relative inertia by modeling managerial resistance against downsizing. The model clearly supports the key claim of organizational ecology that relative inertia facilitates rather than impedes survival chances.industrial organization ;

Locus of control and study program choice: evidence of personality sorting in educational choice

In this study we investigate whether the process of Attraction Selection and Attrition as described by Schneider (1984) is already operative prior to labor market entry, i.e., in the educational phase of careers. We focused on selection with regard to the locus of control personality trait because of its firm conceptual and empirical relevance in both content and process of choice. Specific hypotheses were proposed as to the sorting of different personality types in study programs leading to different prospective professional careers. The study was carried out in a sample of 164 Austrian students. We found strong support for our hypotheses in that (1) personality predicted specific study choices and (2) personality predicted different levels of rationality in the choice process. In addition, the findings also suggest that tighter matches between personality and study programs could be observed for students making rational choices. The results indicate support for the validity of the ASA model in educational choice, provided the use of meaningful individual differences. Several promising avenues for future research are identified.management and organization theory ;

The Dynamics of Economic Performance and Organizational Diversity. An Empirical Study in Zwolle, the Netherlands, 1850-1914

Cities differ dramatically with respect to the extent in which their economic and other activities are diversified. Some cities are specialized, while other cities harbour a myriad of organizations, performing a huge variety of activities. An unanswered question is: Where does such organizational diversity within city communities originate from, and what are its consequences for economic performance and growth? We argue that the extent of organizational diversity goes hand in hand with the fractionalization of the city’s resource environment. Specifically, the more heterogeneous the pool of city inhabitants on salient characteristics such as age, gender and religious background, the more organizational diversity can be expected. This is because human population heterogeneity implies variety and preferences of needs, which spurs entrepreneurship and ultimately sustains organizational diversity. Furthermore, we claim that organizational diversity is beneficial for economic performance and growth, but only up to a certain maximum after which diversity might undermine performance. Cities with an optimal organizational composition have a level of organizational diversity that is high enough to shield it from external exogenous shocks, but not too high to prevent them from reaping externalities resulting from the performance of related activities. In other words, we suggest that cities have to balance technical efficiency and long-run adaptive capacity. In this paper, the above theory will be tested for the city of Zwolle in the Netherlands in the period 1850-1914.

TEAM COMPOSITION, LEADERSHIP AND INFORMATION-PROCESSING BEHAVIOR A simulation game study of the locus-of-control personality trait

In this study, we relate the individual locus-of-control personality trait of team members to the team’s information gathering and processing behavior. We adopt a team information-processing approach arguing that a team’s information-processing capacity is a function of its composition with respect to the members’ locus of control and the leadership structure of the group. We develop models that go beyond analyzing simple main effects of differences in team locus-of-control composition. We hypothesize that (a) the impact of the team locus-of-control mean depends on the within-group locus-of-control diversity, and (b) the effect of both the team locus-of-control mean and its standard deviation is contingent upon the leadership structure of the group. The hypotheses were tested on 44 teams participating in an elaborate international management simulation over six time periods. As predicted, we find that teams with a high average internal locus-of-control score collect more information and make more informed decisions when the within-team locus-of-control spread is low, and when the team operates without a leader. The opposite is the case for teams with a high average external locus-of-control score. In addition, locus-of-control diversity induces team information search only in the case when the team has no leader. We also show that team financial performance is comparably affected by our focal independent team variables. On a general level, our results offer strong support for recent pleas to study theoretically relevant individual traits, use proper aggregation models and include structural moderator variables in team composition research.Economics ;

THE GENESIS OF TOP MANAGEMENT TEAM DIVERSITY Selective Turnover among Top Management Teams in the Dutch Newspaper Publisher Industry (1970-1994)

This paper develops and tests a model explaining diversity within top executive management teams from the perspective of selective turnover. We draw on two theoretical perspectives to describe the pull toward team homogenization (low diversity) and the push toward team heterogenization (high diversity). Schneider’s attraction-selection-attrition (ASA) model is used to explain the team’s natural tendency to ‘hire likes and fire unlikes’ (so-called homosocial reproduction), provided it has the power to do so. Rational-economic theory, however, suggests firm-specific countervailing imperatives pulling a team toward heterogeneity in order to cope with the requirements of the environment. We propose that the cycle of homosocial reproduction only gets interrupted when the teams face a compelling need for diversity, particularly when organizational performance is poor, diversification is high and competition is tough, but that the reproduction cycle is maintained if the top executive management team is powerful vis-à-vis the board of directors. We test our hypotheses in a population of top executive teams of the Big Five Dutch publishers over a 25-year period. Interestingly, many of our expectations are not supported. Relating to entry, we find that poor performance and high diversification causes teams to select likes. Moreover, although more powerful teams do tend to select likes, this is even more so when competitive intensity increases. Concerning exit, we find that poor performance increases the overall likelihood of executive exit, and that dissimilar managers tend to leave first. We conclude that homosocial reproduction does occur, particularly when the organizations face conditions that at first glance require more team diversity. Apparently, top management teams tend to close ranks when environmental pressure and complexity increases. Explanations for these findings are discussed, which point the way to new research avenues.Economics ;

Industriële organisatie en chaostheorie : de analyse van turbulente markten

Het voorwerp van onderzoek van de wiskundige theorie van niet-lineaire dynamica - bekend geworden onder de naam chaostheorie - is het modelleren en begrijpen van turbulentie. De vaststelling dat het economische leven alsmaar dynamischer en onzekerder wordt, heeft vele economen doen grijpen naar chaostheoretische concepten en inzichten. Dit heeft eveneens een beperkt aantal modellen van marktwerking (industriële organisatie) opgeleverd. In deze bijdrage worden deze toepassingen binnen de industriële organisatie besproken en geëvalueerd. Alle toepassingen blijken neer te komen op het ad hoc introduceren van heuvelvormige reactiefuncties in een speltheoretisch model van Cournot-duopolieconcurrentie. Nadat de werking van een dergelijk model is geïllustreerd, wordt ingegaan op de plausibiliteit van het bestaan van heuvelvormige reactiefuncties in het bijzonder en "chaotische" markten in het algemeen.mathematical applications;

CEO greed, corporate social responsibility, and organizational resilience to systemic shocks

In this study, we explore how top executives affect the well-being of multiple stakeholders and long-run organizational outcomes. In the context of the 2008 global financial crisis (GFC), we examine how CEO greed impacts firms’ stance toward corporate social responsibility (CSR) prior to the onset of the GFC and how this, in turn, shapes firms’ fate during and after the GFC. We argue that CEO greed will be negatively associated with CSR, because in their unbridled pursuit of personal wealth, greedy CEOs are more likely to exhibit myopic behaviors and neglect investment in CSR. We also adopt a person-pay interactionist logic to theorize that the willingness of greedy executives to invest in CSR will be especially sensitive to different types of pay instruments. Next, we build on recent findings from research on CSR that suggest that stakeholder engagement is a defining feature of resilient organizations. We expect that, due to low CSR investment, firms led by greedy CEOs will experience greater losses in the short run and will take longer time to recover from the 2008 GFC. For a sample of 301 CEOs of public U.S. organizations, we analyzed the stock prices and found general support for our hypotheses