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 language | English |
|---|---|
| Pages (from-to) | 256-272 |
| Number of pages | 17 |
| Journal | Journal of Leadership and Organizational Studies |
| Volume | 26 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2019 May 1 |
| Externally published | Yes |
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