How ideological diversity within top management teams influences strategic dynamism

Abstract

Although many studies have examined the impact of the demographic diversity of top management teams (TMTs) on strategic outcomes, little theoretical or empirical work has investigated the influence of TMTs’ ideological diversity on strategic decisions. Because ideologies held by top executives influence not only their goals but also their decision-making processes, we develop the construct of TMT ideological diversity to explain how it increases strategic dynamism. In addition, we suggest that the positive effect of TMT ideological diversity on strategic dynamism is weaker when the CEO is more conservative, when the TMT is more diverse in demographic characteristics, and when management has more discretion. Using political donation records of U.S. top executives to capture their liberal versus conservative values, we find considerable support for our predictions.