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The Reciprocal effects of top management cognitive diversity and firm performance: opening the black box

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Demography research rarely examines the black box within which the cognitive diversity of the top management team is assumed to affect firm performance. Using data from 35 simulated firms run by a total of 159 managers attending executive education programs, the current research tested several hypotheses concerned with: a) the relationship between demographic and cognitive team diversity; and b) reciprocal influence processes between teams cognitive diversity and firm performance. Results showed that members of high-performing teams tended to preserve multiple interpretations early in the team's life cycle, but moved toward greater clarity near the end of the life cylce. These high-performing teams, therefore, exhibited both early interpretative ambiguity and late heedful interrelating. Further, teams that improved firm performance early in the game tended to show increased diversity concerning perceptions of team decision making and structure over the course of the simulation. Thus, cognitive diversity in teams both affected and was affected by changes in firm performance. Finally, there was a marginally significan tendency for teams heterogenous in terms of nationality and functional backgroung to show increases in market share over the course of the simulation. Surprinsingly, there was no evidence of any effect of demographic diversity on measures of cognitive diversity.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp1998/98-91.pdf

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Copyright INSEAD. All rights reserved