Different values, different ways: How ideological diversity within top management teams influences strategic distinctiveness

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 their ideological diversity on strategic decisions. Because ideologies held by top executives influence their decision-making processes, we propose TMT ideological diversity as a key construct to explain how it increases strategic distinctiveness. In addition, we argue that the positive effect of TMT ideological diversity on strategic distinctiveness is weaker for more regulated industries but stronger for more dynamic environments and longer TMT tenures. Using political donation records of U.S. top executives to capture their liberal versus conservative values, we find considerable support for our predictions.