Performance effects of top management team gender diversity during the merger and acquisition process

Abstract

Purpose – The purpose of this paper is to uncover the performance effects of top management team (TMT) gender diversity in the merger and acquisition (M&A) process. To do so, an integration of the upper echelons perspective and the M&A process literature is offered to consider the “double-edge sword” of gender diversity on both pre- and post-integration performance. Additionally, the boundary effects of acquirer experience on the TMT gender diversity-performance relationship is examined. Design/methodology/approach – The hypotheses are tested in a sample of 310 acquisitions by Fortune 1,000 companies. Multiple regression analysis is utilized to test the effects on the two different performance variables. Findings – The findings reveal that TMT gender diversity is beneficial to pre-integration performance, but hinders post-integration performance. Additionally, the findings provide evidence that acquirer experience can overcome the negative effects of gender diversity in post-integration performance. Originality/value – This study contributes to a better understanding of the double-edge sword of TMT gender diversity by providing evidence that performance implications depend on the performance variable of interest. Specifically in the M&A context, gender diversity has differing effects on pre- and post-integration performance.

When strategic consensus matters: dynamic managerial capabilities and firm internationalization as seen by TMT

“…Extensive body of research examined how differences among individual executives' observable demographic characteristics, such as age, gender, tenure, education and functional experience influence firm performance (Acar, 2016;Francioni et al, 2015;Hambrick and Mason, 1984;Mathieu et al, 2008;Mousa et al, 2016;Tihanyi et al, 2000;Tsui and O'reilly, 1989;Yang and Wang, 2014). This upper echelon perspective (Hambrick and Mason, 1984) suggests that differences between demographic characteristics imply greater When strategic consensus matters knowledge and cognitive resource bases and wider information processing skills (Hambrick et al, 1996;Parola et al, 2015). Therefore, the differences are initially expected to promote innovativeness and increase decision quality (Hambrick and Mason, 1984) and have the potential to generate varying capabilities.…”

“…Therefore, the differences are initially expected to promote innovativeness and increase decision quality (Hambrick and Mason, 1984) and have the potential to generate varying capabilities. However, differences in demographic characteristics may also hamper communication, development of strategic consensus and decision-making, thereby hindering the implementation of strategies and leading to negative outcomes (Hambrick and Mason, 1984;Knight et al, 1999;Parola et al, 2015). Likewise, the cognitive managerial capabilities may lead to executives paying attention to different issues, which may at least partly lead to differenteven conflictingperceptions on strategies and operative moves (Melone, 1994).…”

How Does Top Management Team Diversity Matter in Abruptly Dynamic Environments?

“…Executives with distinctive educational training may interpret real-time information in a disparate manner. In abruptly dynamic environments, although TMT educational diversity may enhance a TMT's capacity to collect and process real-time information, time pressures are likely to impede effective discussion of relevant information (Parola et al, 2015;Prasad & Junni, 2017). Consequently, the negative effect of TMT educational diversity is likely to outweigh the positive effect of this type of diversity on a firm's resilient performance in abruptly dynamic environments.…”

“…Among this research, the influence of TMT diversity on firm performance has attracted considerable attention. Empirical scrutiny has led to the conclusion that TMT diversity is a double-edged sword (Homberg & Bui, 2013;Jarzabkowski & Searle, 2004;Parola, Ellis, & Golden, 2015;Prasad & Junni, 2017). TMT diversity leads to the use of broad sources of information, which helps executives perceive more opportunities or develop alternative solutions than would otherwise be the case (Hough & White, 2003;Yoon, Kim, & Song, 2016).…”

Does Diversity Matter for Religious Firms Too? Board Gender Diversity and Corporate Choices of Shar¯ı‘ah Compliant Firms

“…One of the basic premises of the theory is that corporate choices are dependent on personal values of decision makers. Though gender was not identified as an important characteristic in initial upper echelon framework, a recent consensus has been developed among researchers that gender is an important variable which influences values and decision-making processes of top managers (Parola, Ellis, & Golden, 2015). Upper echelon perspective has also been found to be consistent in explaining board gender diversity (Byron & Post, 2016;Post & Byron, 2015).…”