Functional diversity of top management teams and firm performance in SMEs: a social network perspective

Lulu Zhou (), Haiyan Huang (), Xiaolin Chen () and Feng Tian ()
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Lulu Zhou: Southeast University
Haiyan Huang: Nanjing Audit University
Xiaolin Chen: Nanjing University of Finance & Economics
Feng Tian: University of Newcastle

Review of Managerial Science, 2023, vol. 17, issue 1, No 10, 259-286

Abstract: Abstract This paper adopts a social network perspective and divides the functional diversity of top management teams (TMTs) into intrapersonal functional diversity (IFD) and dominant functional diversity (DFD) to identify the impacts of these two types of functional diversity on firm performance in Chinese SMEs. It further explores the moderating effects of the internal network density and external bridging ties of TMTs. Based on questionnaires collected from 762 newly founded SMEs in China, the results show that IFD and DFD have positive effects on firm performance, that the network density within a TMT plays a positive moderating role in the relationship between TMT functional diversity and firm performance, and that the interaction between internal network density and external bridging ties plays a positive moderating role in the relationship between IFD and firm performance. Thus, it is recommended that new SMEs build TMTs with diverse functions. Moreover, TMTs should pay attention to the structural role of internal trust networks and the external role of bridging ties and give full play to their interactive functions.

Keywords: TMT functional diversity; Social networks; Firm performance (search for similar items in EconPapers)
JEL-codes: C83 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11846-022-00524-w

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