Top Management Team Advice Seeking and Exploratory Innovation: The Moderating Role of TMT Heterogeneity

Abstract

Research on strategic decision making has considered advice-seeking behaviour as an important top management team attribute that influences organizational outcomes. Yet, our understanding about how top management teams utilize advice to modify current strategies and pursue exploratory innovation is still unclear. To uncover the importance of advice seeking, we delineate between external and internal advice seeking and investigate their impact on exploratory innovation. We also argue that top management team heterogeneity moderates the impact of advice seeking on exploratory innovation. Findings indicated that both external and internal advice seeking are important determinants of a firm's exploratory innovation. In addition, we observed that top management team heterogeneity facilitates firms to act upon internal advice by combining different perspectives and developing new products and services. Interestingly, heterogeneous top management teams appeared to be less effective to leverage external advice and pursue exploratory innovation. Copyright (c) 2010 The Authors. Journal of Management Studies (c) 2010 Blackwell Publishing Ltd and Society for the Advancement of Management Studies.

Debiasing illusion of control in individual judgment: the role of internal and external advice seeking

“…Research from the top management team field suggests that, particularly, the advice seeking behavior of senior executives, which is often regarded as their dominant way of information acquisition in decision situations, plays a major role in this context (Alexiev et al 2010;Heyden et al 2013). It suggests that information acquisition via the individual advice seeking behavior can improve performance and the overall strategy process (McDonald and Westphal 2003).…”

“…Both forms of advice seeking behavior have been shown to have some positive effects on decision making processes in organizations (McDonald et al 2008;Yaniv 2004). Specifically, they have been linked to greater exploratory innovation (Alexiev et al 2010) and performance in organizations (McDonald and Westphal 2003).…”

“…However, internal and external advice seeking also have been found to possess distinct effects on strategic decision making behavior (Alexiev et al 2010). Internal advice can foster innovation and cooperation in the top management team by enhancing trust among the involved participants (Alexiev et al 2010;Sniezek and Van Swol 2001).…”

“…Kahneman and Lovallo (1993) for example suggest that a broader and more balanced advice seeking based on comparisons and reference classes can reduce biased judgment. At the same time, research from the top management team field has shown empirically that both internal and external advice seeking are associated with greater exploratory innovation (Alexiev et al 2010) and performance in organizations (McDonald and Westphal 2003).…”

“…Research from the top management team field suggests that particularly the advice seeking behavior of senior executives-as their dominant way of information acquisition-might influence the level of biases in strategic decision making processes (Alexiev et al 2010;Heyden et al 2013). In strategic decision-making situations, advice-seeking behavior is defined as the extent to which executives rely on advice and information from internal and/or external sources as a basis for decision making (Heyden et al 2013).…”