Success Catalyst or Hidden Impediment? The Moderating Role of Governance Power of Top Management Teams in the Strategic Process

Cheng-Yu Lee, Hsueh-Liang Wu, Chia-Jung Lee and Huei-Wen Pao

Advances in Management and Applied Economics, 2015, vol. 5, issue 5, 3

Abstract: Although the literature on strategy formulation or implementation has been accumulating, whether to keep strategy stable so as to maximize firm performance has not yet been conclusively determined, particularly when the strategy-making process is intertwined with different levels of top management team’s (TMT) governance power. This study is an attempt to revisit the performance implication of strategic persistence from the contingency perspective, which argues that such a relationship is sensitive to TMT power status. TMT power is characterized as ownership power structural power. Our evidence, in a sample of Taiwanese firms, lends support to the positive moderating effects of these two dimensions of governance power on the elusive relationship between strategic persistence and firm performance, while the deviation from the two dimensions weakens firm performance. This study demonstrates the critical role of top managers in the strategic process, and cautions against drawing universalistic normative implications for governance arrangement of TMT.

Date: 2015
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