Nghiên cứu thực nghiệm về đặc điểm của quản trị cấp cao và tinh thần doanh nhân đối với năng lực và hiệu quả của doanh nghiệp

Nội dung text: Nghiên cứu thực nghiệm về đặc điểm của quản trị cấp cao và tinh thần doanh nhân đối với năng lực và hiệu quả của doanh nghiệp

1. AN EMPIRICAL STUDY OF TOP MANAGEMENT CHARACTERISTICS AND ENTREPRENEURSHIP ON FIRMS COMPETENCE AND PERFORMANCE NGHIÊN CỨU THỰC NGHIỆM VỀ ĐẶC ĐIỂM CỦA QUẢN TRỊ CẤP CAO VÀ TINH THẦN DOANH NHÂN ĐỐI VỚI NĂNG LỰC VÀ HIỆU QUẢ CỦA DOANH NGHIỆP Hsin-Kuang Chi, Ph.D - Nanhua University, Taiwan Yan-Ting Lai - Nanhua University, Taiwan Ching-Feng Chang - National Chengkung University, Taiwan Abstract Ever since Hambrick and Mason proposed upper echelon theory in 1984, top management team (TMT) issues have been received tremendous attentions from academician and practitioners. Especially in the dynamic, fast-moving, and global world, the importance of TMT has become inevitably important nowadays. TMT is the soul of organization in that they make strategic decisions which effect firm’s future. Furthermore, splendid performance stems from the firm’s learning ability, the attitude toward entrepreneurial activities, and the emphasis of core competence, all of these issues which are affected by TMT characteristics. Hence, this study attempts to integrate relevant literature to develop a comprehensive research model, as well as to investigate the interrelationships among TMT characteristics, absorptive capacity, core competence, entrepreneurial orientation, managerial performance. Through a series of questionnaire survey, the results of this study indicate that TMT functional background diversity and educational background level have significantinfluences on a firm’s absorptive capacity, entrepreneurial orientation andcore competence have significant impacts on its core competence. Furthermore, afirm’s absorptive capacity and entrepreneurial orientation. Finally, the results alsosuggested that firms characterized by higher entrepreneurial orientation, absorptivecapacity and core competence are more likely to gain excellent managerial performance. Key words: Top Management Team, Core Competence, Entrepreneurial Orientation, Quality, Absorptive Capacity, Management Performance. Tóm tắt Kể từ khi Hambrick và Mason đề ra thuyết cao cấp (upper echelon theory) vào năm 1984, vấn đề về nhóm quản trị cấp cao (TMT) đã được nhiều nhà nghiên cứu và các nhà quản trị thực tế quan tâm chú ý. Nhất là trong một thế giới năng động, đang vận hành nhanh chóng và toàn cầu hóa hiện nay, ý nghĩa của TMT đã trở nên quan trọng hơn bao giờ hết. TMT là linh hồn của tổ chức do họ đưa ra những quyết định chiến lược, có tác động tới tương lai của doanh nghiệp. Hơn nữa, hiệu quả cao bắt nguồn từ khả năng học hỏi của doanh nhiệp, thái độ đối với các hoạt động của doanh nhân và sự tập trung vào năng lực cốt lõi. Tất cả những yếu tố này đều có ảnh hưởng tới đặc điểm của TMT. Do đó, nghiên cứu này nhằm mục đích tổng hợp những lý thuyết liên quan để phát triển mô hình 201
2. nghiên cứu toàn diện cũng như tìm hiểu mối quan hệ giữa đặc điểm của TMT, khả năng tiếp thu, năng lực cốt lõi, định hướng doanh nhân và hiệu quả quản trị. Thông qua khảo sát từ bảng câu hỏi, kết quả nghiên cứu cho thấy nền tảng chức năng đa dạng và trình độ học vấn của TMT có tác động đáng kể tới khả năng tiếp thu của doanh nghiệp. Ngoài ra, định hướng doanh nhân và khả năng tiếp thu có tác động lớn tới năng lực cốt lõi của doanh nghiệp. Cuối cùng, kết quả nghiên cứu cũng đề xuất những công ty có định hướng doanh nhân, khả năng tiếp thu và năng lực cốt lõi cao hơn thường có nhiều khả năng đạt được hiệu quả quản trị tốt hơn. Từ khóa: Nhóm quản trị cấp cao, Năng lực cốt lõi, Định hướng doanh nhân, Chất lượng, Khả năng tiếp thu, Hiệu quả quản trị. 1. Introduction In the dynamic environment, Top Management Team (TMT) plays a pivotal role to lead the firm to the success to the present and to the future. Ever sinceHambrick and Mason (1984) proposed the upper echelon theory did we realize that the importance of TMT decision-making would strongly influence the organizational outcomes. From then on, issues of how TMT affect business decision making and strategic planning has been highly recognized. Past researches have showed that TMT have an important impact on shaping the organizational culture. Organizational culture follows the corporate belief, core value and further affects organization decision-makings; however, each firm forms different culture types for having different top management team traits, vision and facing external environment. Thus, TMT, roles of them are various, but the majorrole is to be the decision-maker (Hamrbick& Mason, 1984) and creates the vision, the belief of the firm. TMT are also sensitive to environmental scanning for which they decide the interior strategy, effective strategic planning, control to face the uncertainty and the change under the dynamic, fast moving environment. Therefore, TMT need to foresight, lead the organization to learn at anytime, to enhance the organization core competence in order to compete with rivals and maximize the management performance. Since Hambrick and Mason (1984) propose upper echelons theory that the upperechelons of an organization plays more decisive roles in the business operations processand management performance, most of previous studies of TMT are basically focusedhow TMT demographic characteristics or individuals’ personalities, cognitive preferenceand risk-taking or risk-avoidance effect performance (e.g., Hambrick& Mason, 1984;Bantel& Jackson, 1989; Murry, 1989; Iaquinto&Fredickson, 1997; Pegels, Song &Yang, 2003). Thus, the research of process from TMT toward performance is still vagueand there are little researches examine the interrelationship among demographic characteristics,entrepreneurial orientation, absorptive capacity and core competence as an integratedframework. Age heterogeneity as well as tenure heterogeneity are likely to differ in their attitudes,values and perspective for their different social, political and economic environmentand event but differences in values and attitudes could result in conflict so that 202
3. itwould hinder the cohesiveness (Pfeffer, 1983). On the other hand, TMT diversity, thedissimilar solutions accelerates effective group discussion preventing “group thinking”and leads to high quality decision (Bantel and Jackson, 1989; Bose, 2015). Waller (1995) proposesthat there is an association between functional background and organization effectiveness.Tihany et al. (2000) argue that high educated members in TMT will search more eagerlyfor information thus can generate better strategies. From the above, TMT will have influence on absorptive capacity, entrepreneurialorientation, and core competence. Kisfalvi and Pitcher (2003) state that such as age,educational background, tenure and demographic variables of upper echelon examine therelationships between strategic variables such as innovation, diversification and so on,but find that demographic proxies for team diversity do not have consistency. A firm with better learning abilities tends to more actively gain knowledge andwhich the knowledge usually may be the important resource to support a firm’s outcomes.Covin and Slevin (1989) states management performance will relate to tendency of a firm towardentrepreneurial process such as the methods, practices and decision- making styles thatmanagers can act entrepreneurially. Core competence is uniqueness to a firm, and canprovide better suggestion to key decision and thus create better outcomes (Petts, 1997; Yang, 2015).Chanvarausth and Ravichandran (2003) notes a firm processing better learning abilitywould create better profit. Hence, we can know that learning ability, the attitude towardentrepreneurial activities, and the competences would determine the firm’s performance. As a result, we would like to re-examine the relationships between TMT demographicamong our research constructs, absorptive capacity, entrepreneurial orientation,core competence, and management performance. The research objectivesof this study are as follows: (1) To develop a comprehensive research framework to integrate the interrelationshipsbetween top management team characteristics, absorptive capacity, entrepreneurialorientation and management performance. (2) To identify the influence of top management team demographic heterogeneityand top management team culture on absorptive capacity, entrepreneurial orientation andcore competence. (3) To investigate the interrelationships between absorptive capacity, entrepreneurialorientation, core competence and management performance. 2. Literature Review 2.1. Top Management Team Organizational Culture Organizational culture has been discussed within the academic field for a long time since Pettigrew proposed this idea in Administrative Science Quarterly in 1979. Hereafter, extensive researches have been developed on the topic. Daft (2004) defines culture as "The set of values, guiding beliefs, understanding, and ways of thinking that is shared by 203
4. members of an organization and is taught to new members." Hofstede et al. (1990) state organizational culture acquires a status that similar to structure, strategy and control. Hodgetts and Luthans (2000) consider corporate culture as the standard, language, core value and philosophy of organizational behavior. Robbins (1990) and Martinez et al. (2015) refers organizational culture as a system of shared meaning. In every organizational culture there are patterns of beliefs, symbols, rituals, myths, and practices that have evolved over time which in turn, create common understandings among members as what the organization is and how its members should behave. Aaker (2005) and Hogan &Coote (2013) suggest an organizational culture involves three elements: (1) a set of shared values or dominant beliefs that define organizational priorities (2) a set of norms of behavior (3) symbols and symbolic activities used to develop and nurture those shared values and norms. There is no exact consensus about organizational culture’s definition, according to Hofstede et al. (1990), but they can be attributed to some characteristics: (1) holistic (2) historically determined, (3) related to anthropological concepts, (4) socially constructed, (5) soft and (6) difficult to change. Due to the fact that organizational culture will follow the corporate belief, core value and further affect organization decision-makings, each firm will form different culture types with different top management team traits, vision and face external environment there are many different types of organizational culture. As the fact that organizational culture is profoundly affected by TMT members’ behaviors, tendency, belief and value so this study examines MT organizational culture by adopting organizational culture. The research uses two continua, based upon Trompenaars and Woolliams (1997), one distinguishes between equity and hierarchy and the other examines orientation to the person and the task and which form four types of organizational cultures. The following will have brief introduction to the four types of cultures. Incubator. This culture is like a leaderless team. This person-orientated culture is characterized by a low degree of both centralization and formalization. In this culture, individualization is one of the most important features. The organization exists only to serve the needs of its member. Responsibilities and tasks within this type of organization are assigned primarily according to the member’s own preferences and needs. Structure is loose and flexible and control takes place through persuasion and mutual concern for the needs and values of other members. The main characteristics are concluded as follow: (1) person oriented, (2) power of the individual, (3) self-realization, (4) commitment to oneself, and (5) professional recognition. Guided Missile. This culture strong emphasizes on equality in the workplace and orientation to the task. The task-oriented culture has a low degree of centralization and high degree of formalization. Achievement and effectiveness are weighed above the demands of authority, procedures or people. The management of the organization is predominantly seen as a continuous process of solving problems successfully. The manger is a team leader, whose hands command absolute authority. This culture is designed for a rapid reaction to extreme changes. The main characteristics are as follow: (1) task 204
5. orientation, (2) power of knowledge/expertise, (3) commitment to tasks, (4) management by objectives, and (5) pay for performance. Family. This culture is characterized by a high degree of centralization and a lowdegree of formalization. It generally reflects a highly personalized organization and ispredominantly power oriented. Employee in this culture seems to interact around thecentralized power of father or mother. The power of the organization is based on anautocratic leader who directs the organization. The climate inside the organization ishighly manipulative and full of intrigues. The main characteristics are as follow: (1)power orientation, (2) personal relationships, (3) entrepreneurial, (4) affinity/trust, and (5)power of person. The Eiffel Tower. This role-oriented culture is characterized by a high degree offormalization together with a high degree of centralization. Control is executed throughsystems of rules, legalistic procedures, assigned rights and responsibilities. Bureaucracyand the high degree of formalization make this organization inflexible. Respect for authorityis based on the respect for functional position and status. Employees are veryprecise and meticulous. Order and predictability are highly valued in the process ofmanaging the organization and duty is an important concept that one feels within himselfrather than an obligation one feels towards a concrete individual. In this culture, organizationis slow to adapt to change. The main characteristics are as follow: (1) roleorientation, (2) power of position/role, (3) job description/evaluation, (4) rules and procedures,and (5) order and predictability. 2.2. Interrelationships between Top Management Team Demography, AbsorptiveCapacity, Core Competence, and Entrepreneurial Orientation Kor (2003) mentions managerial experiences enable to achieve entrepreneurialgrowth. Managerial experiences come from the tenure, age, personal characteristics. Simons et al. (1999) find that a demographic diversity of TMT would provide a pool ofskills, information, and contain creative decision making. TMT diversity, the reconciliationto dissimilar solutions accelerates effective group discussion preventing “groupthinking” and leads to high quality decision (Bantel and Jackson, 1989). Furthermore, Carpenter (2002) andHomberg & Bui propose (2013) TMT diversity would provide TMT with grater breadth of informationsources, and skill sets than other teams that are more homogenous. Accordingthe research above, TMT heterogeneity provides better information to compete in thechosen market niches. Tenure. Age and organizational tenure are tow of the most important varibles inempirically research, yet it is very different to separate these two effects due to the explanationsdiffering may different in whether or not organizational learning, core competenceand process of entrepreneurship. More tenured manager may have more psychological commitment to the organizationstatus and to organization value (Schmidt & Posner, 1983; Zoogah, Vorab, Richardc, &Pengc, 2011) and change or innovatecould be resisted. According to Keck (1997), tenure is positively related to stability efficiency,but may affect on the stance to 205
6. innovation. Thus, tenure would relate to theability to absorb knowledge, to act entrepreneurially and the elements of the core competences. Age. Bantel and Jackson (1989) express that age heterogeneity may facilitategroup creativity and may lead to more tolerance for uncertainty or risk-taking. Hambrick and Mason (1984) note TMT members of a similar age would possess similar valueorientation. Younger managers are better learning, reasoning and memorizing and aremore willing to accept new challenges. Thus, the divergence of tenure and age of TMTdemography would have differences among absorptive capacity, core competence andentrepreneurial orientation. Functional Background. Wiserman and Bantel (1992) mention the professionaleducation of TMT members helps uplift the flexibility of decision-making and communicationability. Holland (1976) finds out major in school would be greatly related tothe personalities, and attitudes and cognitive styles. Teams composed of dissimilartypes of curricula benefit from the diversity of perspective and create better solution.Also Anderson (2003) states the idea that TMT members whose background are inproduction, process engineering and accounting focus on automation, plant and backwardintegration, whereas those, whose background are marketing and sales, a product researchare tend to emphasize on new opportunities research. Meanwhile, Goll et al. (2001)propose TMT with higher level of business degree are expected to generate a wider rangeof creative solutions. Waller (1995) proposes that there is an association between functionalbackground and organization effectiveness. From above, the more minglement ofTMT composition, it could creative more widely opinions to decision-making, managementprocess and the position of the firms. Specifically, functional education get highdiversity benefit the absorptive capacity, core competence and entrepreneurially orientation. Educational Background. Bantel and Jackson (1989) state that higher levels ofeducation should facilitate to a team to generate and implement creative solutions tocomplex problem and this could explain why people who are more educated have morereceptive attitudes toward innovation and are willing to accept new challenge and learningnew things. According to Hamrick and Mason (1984), Bantel and Jackson (1989),and Hitt and Tyler (1991), the amount of formal education that TMT have is positivelyassociated with innovation and strategic chance. Tihany et al. (2000) find out the highereducated members in TMT, the higher diversification their firm would be. So thesefindings reveal that high educated TMT will search more eagerly for information thus cangenerate better strategies. H1-1: TMT demography in terms of tenure and age divergence will result in differencesamong absorptive capacity, core competence, and entrepreneurial orientation. H1-2: TMT demography in terms of functional background diversity and educationalbackground has positive relationship to absorptive capacity. H1-3: TMT demography in terms of functional background diversity and educationalbackground has positive relationship to core competence. 206
7. H1-4: TMT demography in terms of functional background diversity and educationalbackground has positive relationship to entrepreneurial orientation. 2.3. Interrelationships between Top Management Team Culture, AbsorptiveCapacity, Core Competence, and Entrepreneurial Orientation Organizational culture is the key element of that organization functions. Previousstudies suggest that the standard, language, core value and philosophy of organizationalbehavior are profoundly influenced by TMT characteristics. Hence, different organizationalcultures lead to different decision modes and stances to learning, to newbusiness, to risk, and to core competences. Daft (2001) argues that the organizationalculture plays a dominant role in creating organizational learning. Especially, firms witha participant culture should create an atmosphere for sharing, and for learning. As a result,we infer that TMT culture shou7ld influence a firm’s, absorptive capacity, corecompetences and entrepreneurial orientation. H1-5: Different TMT organizational cultures are likely to have differences among absorptivecapacity, core competence and entrepreneurial orientation. 2.4. Interrelationships between Absorptive Capacity, Entrepreneurial Orientationand Core Competence Zahra and George (2002) propose that absorptive capacity pertains to knowledgecreation and utilization that enhances a firm’s ability to gain and sustain a competitiveadvantage. Prahalad and Hamel (1990) mention core competences as the collectivelearning which is determinant to coordinate diverse production skill and how to integratemultiple streams of technologies.Absorptive Capacity also could lead to sustain a competitive advantage in combinationwith a firm’s other complementary assets and resource. Matusik and Hill (1999)state that firms with more flexibility will provide better opportunities and which will helpto firms sustain superior performance through customer responsiveness. Firm withhigher absorptive capacity are likely to have a competitive advantage over firms with lowabsorptive capacity in quickly transferring external resources (Chanvarasuth&Ravichandran,2003). From above, firms with better learning ability would create bettersustainable core competence. Hence, we hypothesis as follow: H2-1: Firms exhibiting better absorptive capacity are likely to enhance core competence. In addition, entrepreneurial orientation is the strategy-making processes and stylesof firms that engage in entrepreneurial activities. In order to involve in this new activities,firms needs to acquire and absorb new knowledge. Nevertheless, absorptive capacityis defined as a firm’s ability “to evaluate new, external knowledge, assimilate it, andapply it to commercial ends” (Cohen &Levinthal, 1990). Firms with higher entrepreneurialorientation are apt to learn vigorously. For example, they may take more expenditureon R&D in the field that they are competing or they would learn from others. Besides, an effective entrepreneurial orientation would be an example of good strategicmanagement (Lmpkin&Dess, 1996). Since entrepreneurial orientation is the reflectionof organizational processes and decision-making of a firm, it is the important 207
8. factor offirms’ competitive advantages (Lmpkin&Dess, 1996). Core competences strengthencompetitive advantages throughout being competitively unique and entrepreneurial orientationrepresents the process aspect of entrepreneurship. Hence, as a result, we couldinfer that firms with higher entrepreneurial orientation would create better learning ability.Second, firms with entrepreneurial orientation would enhance competitive advantages tostrength core competences. H2-2: Firms exhibiting higher entrepreneurial orientation are likely to have better absorptivecapacity. H2-3: Firms with entrepreneurial orientation are likely to have a significant influence oncore competence. 2.5. Interrelationships between Absorptive Capacity, Core Competence,Entrepreneurial Orientation and Management Performance In the fast-moving and competitive environment, the more competitive advantagesa firm gains, the more value a firm creates. Prior researches have suggested an entrepreneurialorientation is a key for organizational success (Lumpkin &Dess, 1996).Covin and Slevin (1989) finds that new entry with stronger entrepreneurial orientation lead to high performance. Covin and Slevin (1989) states management performance will relate tomindset of a firm toward entrepreneurial process such as the methods, practices and decision-making styles that mangers can act entrepreneurially. In other words, entrepreneurialorientation plays an important role in organizational success and hence, producesbetter performance to the firms. Based upon the discussion above, we would expect that a firm with entrepreneurial orientation will exhibit higher performance. Hence, the hypothesis in this study isbelow: H3-1: Firms with entrepreneurial orientation are likely to have a significant influence onmanagement performance. Furthermore, scholars propose that organizational learning enhances firms’ innovationand helps to adopt exterior change (Mullen & Lyles, 1993) in that learning abilityof organization member’s aid to recognize, apply, and assimilate the value of new, externalinformation (Cohen &Levinthal, 1990). Chanvarausth and Ravichandran (2003)note that a firm processing with absorptive capacity comparing to other alliances participantswill create better profit. Zott (2001) suggest that the timing of capability deploymentwill sustain performance difference across firms. As a result, according to thediscussion above, we believe that firms with better absorptive capacity will create betterbusiness outcomes. H3-2: Firms exhibiting higher absorptive capacity will create better management performance. Moreover, core competence is the uniqueness to one’s firm. Petts (1997) statescore competence as an engine of growth since core competence can provide firms bettersuggestion to key decisions. Every firm according to their own need and the industryenvironment would need different core competences. Hence, firms acquire and punctuatein renewing knowledge and skill to compete in changing market will bring more 208
9. opportunitiesand sustain competitive advantages than others and further, to create the betterperformance. Markides (1994) note that core competences have play acritical role to play in the process of corporate performance. Raff (2000) states firmsthat are flexible in using their resource bases to capitalize upon emerging strategic opportunities.Matusik and Hill (1999) also argue firms with more flexibility would provide better opportunities and further increase the firm’s outcomes. These opportunitieshelp firms sustain superior performance because of first mover advantages (Ferrier, Smith& Grimm, 1999), customer responsiveness (Matusik& Hill, 1999). With respect to theinferred above, we can state that the core competence would highly relate to a firm’sbusinesses performance. H3-3: Firms exhibiting higher core competence are likely to create better managementperformance. 3. Research Design and Methodology 3.1. The Conceptual Model and Construct Measurement In this research, we aim to investigate the interrelationships between Top management team characteristics, absorptive capacity, entrepreneurial orientation, core competences and management performance. For the purpose of this study, we developed the following conceptual model, as shown in Figure 1. Figure 1 The Research Model of this Research For the purposes of this study, the following five major constructs are operationalized in this study: (1) Top management team Characteristics, (2) Absorptive Capacity, (3) Entrepreneurial Orientation, (4) Core Competence, and (5) Management Performance. 209
10. 3.2. Questionnaire Design A 53-item survey questionnaire and one figure were developed to obtain the responses from Top management team members about their opinions on various research variables. The questionnaire of this study is consisted of five constructs: “top management team characteristics (5 items, one figure),” “absorptive capacity (9 items),” “entrepreneurial orientation (12 items),” “core competence (18 items),” and “management performance (9 items)". A preliminary version of this questionnaire was designed by the author and discussed with the thesis advisor. The questionnaire was pre-tested through a pilot study by the EMBA students of National Cheng Kung University. Questionnaire items were revised based upon the results of the pilot study before being put into the final form. The detailed contents of the questionnaire, including the statement of the questionnaire items and the ranging or the scale were shown in Appendix. 3.3. Sampling Plan A sampling plan was developed to ensure that certain types of respondents were included in this study. This study selects the top management team members in high-tech and manufacturer industries in Taiwan as our sample. The sample frame is mainly obtained from The Top 1000 firms in Taiwan (2005) by Tian Xia magazine. 4. Result and Discussion 4.1. Descriptive Analysis Preliminary analyses were conducted in this section to provide information about the characteristics of respondents and the results of relevant research variables.The data were gathered over a month period beginning in middle April of 2005, and ending in early May of 2004, including one pilot test and one final survey. For the final survey, a total of 500 survey questionnaires were mailed to the sample firms. Out of 500 sample firms, a total of 114 questionnaires were usable, producing a response of between 22.8% percent. The response rate for manufacturing firms is 27.33% and that for hi-tech manufacturing firms is 16.00%. Table 1 show the basic attributes of the respondents, including eight major items in this study: (1) industry, (2) history, (3) capital, (4) number of employees, (5) education, It is shown that more than 71% of sample firms belong to manufacturer sector. More than 52% of the sample firms operate less than 20 years. More than 77% of the sample firms, their capital are less than 1 billion NT dollars. More than 76% of the sample firms, their total numbers of employees are less than 500 persons. 210
11. Table 1 Characteristics of the Respondents (n=114) Table 2 shows the characteristics of TMT, the mean number of TMT is approach 10 persons where female members are around 2-3 persons and males still are the majorities, about 7-8 persons. The average between TMT members are around 43-44 years old and the average eldest age is around 54 years old and the average youngest member age is around 36 years old. To the functional background, the very majorities of TMT members are specialized in business which is 43 % and science major is only about 7 %. Most of the TMT members in their firm tenured averagely 13-14 years, the average long est is 19 years and the shortest is 7 years. Furthermore, the educational background of TMT is in order from 26.52 %, 49.32%, 19.94% and 4.21% that we can tell most of the TMT members have university degrees but only few percent of them get doctor degree. Table 2 Characteristics of TMT 211
12. 4.2. Comparisons of Research Constructs under Different Level of TMT Characteristics and Different Types of TMT Organizational Culture One of the purposes of this study is to verify the differences of the research constructs under disparities of TMT characteristics and TMT organizational Culture. T-test would be used to examine the high difference group and low difference group of Top management team member’s tenure and age. ANOVA would be used to examine the differences of research constructs under different types of TMT organizational culture. The following shows the results: Here, the tenure is measured by means of the longest tenure of TMT member in their firm minus the shortest tenure of TMT member and age is measured as well. We adopt K-means method (nonhierarchical cluster analysis) to divide TMT tenure into two groups and so does TMT member’s age. Table 3 shows the result that there is no significant difference in the research constructs. Finkelstein and Hambrick (1990) find out the longer tenure the firm is, the higher risk –avoidance orientation TMT would be. Senior TMT members tend to be more imitative but young TMT members tend to be more innovation on decision-making process (Vroom &Pahl, 1971). Wierseman and Bantel (1992) point out the tenure heterogeneity may lower the informality and interaction (O’Rielly et al., 1993) between TMT members. However, in the study there is no significant difference between low divergence and high divergence tenure group. So it is not appropriative to adopt tenure as a grouping variable in the research constructs. Table 3 T-Test of high and low difference group of TMT member’s tenure We use K-mean method (nonhierarchical cluster analysis) to divide TMT tenure into two groups. The two groups, one is that age divergence tends to be high and the other tends to be low; thus, we name the two groups as the high age divergence and the low age divergence. Table 4 shows the result. High age divergence of TMT has significant difference in risk-taking (t=1.738, p=0.085) and autonomy (t=1.796, p=0.075), and competitive aggressiveness (t=2.041, p=0.044), which belong to the dimension of 212
13. entrepreneurial orientation. Hence, the high age divergence of TMT group has a tendency to take bold actions in new entry such as venturing a new business or unknown market than the low divergence of TMT age group. The high age divergence of TMT also tends to let an individual or team aim at bringing forth a business concept or vision and carrying it to complete the mission independently than the low age divergence of TMT does. Furthermore, according to the result, we can tell the high age divergence of TMT in response to threat tends to higher than the low divergence of TMT age group. As a result, hypothesis1-1 is partial supported. Table 4 T-Test of high and low divergence groups of TMT member’s age We adopt two-stage cluster analysis involving hierarchy cluster analysis and K- means method (nonhierarchical cluster analysis) to divide TMT organizational culture into four groups. The result of the cluster analysis is shown in Table 5. According to Table 5, it shows that group one has significant higher scores than those of group two, those of group three, and then those of group four. Therefore, we name group one as high Incubator group (n=32), group two as high Guided Missile group (n=24), group three as high Eiffel Tower group (n=30) and group four as high family (n=38). The p-values of all four cultures are extremely significant. Table 5 Cluster Analysis of TMT organizational culture 213
14. The MANOVA test results are shown in Table 6. High Incubator culture tends to be more risk-taking (F=2.274, P=0.084) and more antonymous (F=3.658, P=0.015) in entrepreneurial orientation dimension than the other three cultures. This means that when TMT organizational culture is characterized by high Incubator, firm shows more risk- taking under uncertainty and more antonymous that firm would tend to delegate to individuals to achieve the mission. Besides, high Eiffel Tower culture tends to be more competitive aggressiveness (P=2.502, F=0.063) in entrepreneurial orientation dimension than the other three. This implies that when TMT organizational culture is characterized by high Eiffel Tower, firm shows more competitive aggressiveness to outperform its rival and perform a combative posture and a forceful response to rivals’ actions. Moreover, high Incubator culture tends to more emphasize on efficiency (F=2.325, P=0.079) in core competence dimension than the other three. This means when TMT organizational culture tends to be high Incubator, firm emphasizes greatly on efficiency. Hence, hypothesis 1-5 is partial supported. In sum, only entrepreneurial orientation would show the difference in the constructs of organizational, age and tuenure. The low sample response rate may be the arch-criminal. Low sample response rate would cause the unbalance of culture evaluation to our research constructs. Table 6 Comparisons among Respondents with Different Levels of TMT Organizational Culture 4.3. Structural Equation Model (SEM) The purpose of this study is to find out the relationships among TMT management team demography, and absorptive capacity, core competence, entrepreneurial orientation and management performance and to investigate the fitness of the research framework. For such an objective, structure equation model is employed to test the interrelationships of all the variables in the entire model. The proposed structural equation model is shown in Figure 2. Before evaluating the structural or measurement models, the overall fit of the model to ensure that the model should be evaluated. In this study, five indices were used to 214
15. test the fit of the model. The first one was the chi-square test, the essential for the nested model comparison. The chi-square value of 78.363 with 77 degrees of freedom isn’t statistically significant at the 0.435 significance level. Thus, the research has consistency with the design model (as shown in Figure 2) and the actual model. However, we must also note that the chi-square test becomes more sensitive as the number of indicators rise. With this in mind, other measures were also examined. Figure 2 Structural Equation Model of this Study The rest of the fit indices adopted in this study were the root mean square residual (RMR), the goodness of fit index (GFI), and the adjusted goodness of fit index (AGFI). The smaller the RMR is, the better the fit of the model. A value of 0.05 is suggested as a close fit (Arbuckle &Wothke, 1999). GFI and AGFI will not be influenced by the sample size explicitly and they were adopted to test how much better the model fits thanno model at all. A very good fit of research model would require GFI and AGFI to be higher than 0.9 (Arbuckle &Wothke, 1999). The quality of the apriority alternative models should rely on the fit indices. However, it does not necessarily mean that one model is superior or the corrected causal model. Another important criterion for the quality of the model is the plausibility criterion (Joreskog&Sorbom, 1994). It means that the path coefficients in the model adhere to the general theoretical conception and to the hypotheses. Therefore, a model that fits the data well, but with many unsupported hypothesized paths, cannot be defined as correct. Hence, the fit indices and the theoretical predictions should be taken into consideration. According to the criterion above, the best model is tested in this study. displays the fit indices of the model. It shows significant GFI is 0.918, AGFI is 0.872 with quite high chi-square number (78.363), the GFI and AGFI indices indicate moderate fit of this model.As the overall goodness of fit is promising, it is encouraged to further identify the magnitudes and significance of the path structural coefficients of the model.A further evaluation of the model indicates that Entrepreneurial Orientation has a significant 215
16. influence on Absorptive Capacity (β=0.595) which is consistent with hypothesis2-2. Furthermore, Entrepreneurial Orientation and absorptive Capacity both have a significant impact on Core Competence (β=0.333, β=0.609) which are consistent with hypotheses 2-1 and 2-3. Finally, Entrepreneurial Orientation and Core Competence both have a significant influence on Management Performance (β=0.358 ,β=0.367) which are consistent with hypotheses 3-1, 3-3. These results seem to indicate that the interrelationships among Top management team Demography, Absorptive Capacity, Entrepreneurial Orientation, Core Competence and Management Performance are significant specifically. Absorptive Capacity is significantly influenced by Entrepreneurial Orientation. Entrepreneurial Orientation is significantly influenced by TMT Demography. Besides, Core Competence is significantly influenced by Absorptive Capacity and Entrepreneurial Orientation. Finally, Management performance is significantly influenced by Core Competence and Entrepreneurial Orientation. The result shows that Entrepreneurial Orientation is affected by TMT functional background diversity and Educational background Level. What types of Entrepreneurial Orientation is significant affected by firms’ TMT educational and functional background divergence. Besides, organizational absorption is related to entrepreneurial orientation. What to absorb or how to absorb the knowledge depends on the different types of entrepreneurial orientation in the firms. With an acceptable goodness of fit of the model, it seems to suggest that, to enhance management performance, firms should keep core competence especially on Innovation, Efficiency, and quality and keep bright attitude toward entrepreneurial orientation especially on autonomy, risk-taking, and competitive aggressiveness while facing new challenge. 5. Conclusions and Suggestions 5.1. Research Conclusions The major objectives of this study are to identify the interrelationships among absorptive capacity, core competence, entrepreneurial orientation and management performance. The first conclusion is that there are significant relationships among TMT characteristics, absorptive capacity, entrepreneurial orientation and core competence. The results indicate that TMT age divergence has significantly differences in entrepreneurial orientation. Besides, the results also show that TMT functional background divergence and educational background level would highly significant influence on entrepreneurial orientation. Furthermore, the results also provide TMT functional background divergence and educational background level are highly positive association with core competence. Finally, TMT educational background level has also highly significant impact on absorptive capacity. In sum, those two demographic traits would show significances on entrepreneurial orientation, absorptive capacity and core competence. 216
17. The above conclusion may have the following managerial implications. First, as the literature review in chapter 2, people in different cohort groups have different organizational experiences (O’Relly, 1983) and thus are likely to be heterogeneous with respect to attitudes and values (O’Relly&Peffer, 1984). The results in the study have shown that the distribution of TMT composition would profoundly affect the organizational absorptive capacity, core competence and entrepreneurial orientation. TMT members play a critical role in organization manipulation. They create organization’s belief, vision, and handle the directions of strategic planning. Hence, their decisions are highly related to the next step of their organization, and strongly induce organizational learning absorption in a way. Likewise, the decisions are highly associated with the forceful attitude toward the new entry whether or not a new market or a new business. Second, TMT functional background and educational background should be gained more emphasis since the more diversity of TMT functional background inspires the better creativities. This is also in line with Bantel (1989) that TMT members composed of dissimilar types of curricula benefit to bring to the problem-solving task and groups will be more effectivewhen TMT individuals have variety of skills, knowledge, ability and perspectives (Wanous&Youtz, 1986). By the same token, higher levels of education of TMT members are associated with a team’s ability to generate and implement creative solutions to complex problem and to innovate, and to learn (Bantel, 1989). The second conclusion is TMT organizational culture would have differences in entrepreneurial orientation in terms of risk-taking, autonomy under high Incubator culture. In addition, high Eiffel Tower culture would have significant differences in competitive aggressiveness.The above conclusion may have the following managerial implications. First, the result of the study indicates that when TMT organizational culture is characterized by high Incubator, their attitudes toward entrepreneurial orientation are likely to be more risk-taking and autonomy. These are compliance with the previous research of Trompenaars and Woolliams (2003) that incubator-type organizational typically is entrepreneurial and flexible control. Second, when a TMT organization culture is characterized by high Eiffel Tower, their attitudes toward entrepreneurial orientation are likely to be more competitive aggressiveness. The firm would seek for the face-to-face competition in order to achieve the goal. Trompenaars and Wolliams (2003) note that Eiffel Tower is highly task orientation. In such traits, when individuals face to a new task, they only seek how to complete the task and accumulate skills. Third, Hodgetts and Luthans (2000) note that corporate culture is the standard, language core value and philosophy of organizational behavior. TMT members’ manner would have great influence on shaping organizational culture. The association between TMT’s manner and organizational culture decides the attitudes toward learning absorption, the tendency to entrepreneurial orientation and what core competence of the firm would be. When TMT form the organizational culture, they need to create a learning organizational atmosphere so that throughout sharing, the organization can act the belief top-down thoroughly and further lead organization to be more competitive. 217
18. The third conclusion is that there are significant relationships between absorptive capacity, entrepreneurial orientation, core competence and management performance. It indicates that there is a strong positive relationship between absorptive capacity and management performance. In addition, there is partial positive relationship between entrepreneurial orientation in terms of proactiveness, risk-taking, competitive aggressiveness, and autonomy and management performance. Competitive aggressiveness and autonomy of entrepreneurial orientation show the positive effect to management performance but the other factors of proactiveness and risk-taking don’t have significance relationships to management performance. Besides, there are also positive relationships between core competence in terms of efficiency and innovation though there don’t have significance between the other two factors, quality and customer responsiveness of core competence. There have several managerial implications from above results. First, absorptive capacity represents a firm not only to assimilate new external knowledge but also the ability to apply it to a commercial ends and thus create profits. Hence, in the finding of the study, we find that the better the absorptive capacity is the better the management performance is. This finding is also compliance with Tsai (2001) that an organizational unit’s absorptive capacity is positively related to its business performance. Besides, Cohen and Levinthal (1990) propose that a unit with high absorptive capacity is likely to successfully commercialize its new products and thus applies new knowledge to improve its business operations. Zahra and George (2002) also investigate there is a positive relationship between absorptive capacity and corporate outcomes. The increments to an organizational knowledge base would lift its business outputs. Furthermore, firms must highlight the importance of sharing whether or not firm-specific or firm-required knowledge within themselves. Second, when firms tend to be more competitive aggressiveness and autonomy they would gain better performance. This copes with prior researches that have suggested an EO is a key for organizational success (Lumpkin &Dess, 1996). Covin and Slevin (1989) also find a positive relationship between a strong entrepreneurial orientation and higher performance. However, the constructs of entrepreneurial orientation vary and prior research suggest that entrepreneurs simply don’t see the risks that other see, or alternatively, they see non-entrepreneurial behavior as for more risky so it may the main reason that risk-taking in the study doesn’t significant. Althhough researches show a firm would exhibit both competitive aggressiveness and proactiveness but Lumpkin &Dess (2003) suggest these two dimensions may vary independently of each other in a given context and relate to performance. This finding implies that when firms tend to be more active to competition and willing to delegate to individuals the firm perform better performance and an effective entrepreneurial orientation would be a good example to implement strategic management or planning. Third, core competence has direct influenced on management performance which is in line with Markides (1994) that core competences have a pivotal role to play in the process of corporate performance. In our research, efficiency and innovation seem to receive more concern by the sampling firms, but quality and customer responsiveness do not. The rationale behind the results likes in the industry of the sample firms. Most of our sampling 218
19. firms are hi-tech and traditional manufacture industries, which may treat efficiency and innovation as more important factors. In contrast, service industries incline to be more careful with customer interaction, responsiveness and the quality. Each firm has focused on different core competences according to the interior needs and exterior environment. When firms develop their own core competence it would not only lower the new cost but accelerate the long-term competitive advantages and create maxima value to the firm. The fourth conclusion can be drawn from this study is that there are significant relationships among entrepreneurial orientation, core competence and absorptive capacity. The result of the study indicates a positive relationship between entrepreneurial orientation and absorptive capacity. Besides, there is an interesting phenomena that competitive aggressiveness and autonomy shows a significant relationship on core competence, but competitive aggressiveness doesn’t’ show t significance on absorptive capacity. Instead, proactiveness and autonomy show a significant relationship on absorptive capacity but proactiveness doesn’t show a significant relationship on competitive aggressiveness. Several managerial implications can be inferred from this result. Entrepreneurial orientation has been used to refer to the firm’s strategy-making processes and styles in entrepreneurial activities (Lumpkin &Dess, 1996). First, firms engage in pursuing new activities, it requires more knowledge to prepare, to evaluate and to implement so that it can lower the risk and failure. Second, there is also a positive relationship between entrepreneurial orientation and core competence. This indicates that entrepreneurial orientation would increase core competence of its firm. The importance of entrepreneurial orientation is that entrepreneurship is the major accelerator of a firm’s growth. A firm should cultivate entrepreneurial orientation because the higher entrepreneurial orientation the better awareness of environmental change and this leads to enhance a firm’s core value and sustain their competitive advantages. Third, according to the result of the study, it is found that there is a positive relationship between absorptive capacity and core competence. This result shows that the better absorptive capacity creates the firmer core competence. This is also copes with Zahra& George (2002) that absorptive capacity enables the firms to reconfigure its resource base and achieve the competences. Core competence provides also the unique competitive advantage of a firm; hence, firms need to acquire and punctuate in renewing knowledge and skill to compete in changing markets so that it can bring more opportunities and sustain competitive advantages than others. Fourth, according to Lumpkin and Dess (2003), they categorize proactiveness as the response to opportunity and competitive aggressiveness as the response to threat. When TMT members face threats, they are apt to react through enhancing the core competence within the firm but when they face new opportunities, instead, they are likely to react through enhancing absorptive capacity. This shows that, when TMT encounter a new opportunity, they would absorb new knowledge such as resources, skills and information first. On the contrary, TMT enhance their own core competences such as efficiency, quality, innovation and customer responsiveness when they face the threats first. In summary, the conceptual models as developed by this study has served as a useful framework for academicians and practitioners to evaluate the interrelationships 219
20. among absorptive capacity, entrepreneurial orientation, core competence and management performance. The hypotheses as inferred and test in the study do confirm the interrelationship among the above research constructs. 5.2. Research Suggestion for Future Research Although the result of this study is fruitful and these results may contribute to the existing literature for further validation, several suggestions could be made for academicians and business practitioners. First, this study adopted the cross-sectional research to empirically test the underlying relationships and hypotheses. The cross-sectional is superior in capturing statistically significant findings and exploring the difference between several groups.Second, this study adopted a survey methodology by mailing the questionnaire that is hi-tech or traditional manufacturing industries. Future research can take other industries into account. Third, the applications of the idea of entrepreneurial orientation inhere in core competence is a new concept. Although, there are a plenty of studies that have been empirically tested for absorptive capacity, there still have a lot to investigate. Further studies can include potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP) into the research framework to elaborate the phenomena.Fourth, empirical validation for the integrated framework is not well established. Even though most of the framework and the relationships between variables have been proved to be significant the comprehensive model using LISREL test seems to indicate that there are still plenty of rooms to revise and modify results of this analysis and further validation may be required. Fifth, the response rate of this study is low. Further efforts, should maintain the reasonable rate. More effort should also made to perform a representative sample and to confirm whether the response error and non-response errors results in non-significant test.Sixth, further research could extend the industries category to study that different industries could contribute different entrepreneurial orientation especially in proacitveness and competitive aggressiveness. REFERENCES Alderson, S. (1993). Reframing management competence: focusing on the top management team. Personnel Review, 22(6), 53-62. Bantel, K.A. & Jackson S.E. (1989). Top management and innovations in banking: does the demography of the top team make a difference? Strategic Management Journal Summer Special Issue, 10,107-124 Bose, U. (2015). Design and evaluation of a group support system supported process to resolve cognitive conflicts. Computers in Human Behavior,49, 303–312 Carpenter, M. A. & Sanders, WM. Gerard (2002), Top management team compensation: the missing link between CEO pay and firm performance. Strategic Management Journal, 23, 367-375. 220
21. Carpenter, M. A. (2002). The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance. Chanvarasuth, Pisit&Ravichandran, T. (2003). Absorptive capacity and strategic Alliances in the supply chain context. Institute of Electrical and Electronics Engineering, 340- 344. Cohen, W. M. &Levinthal, D.A. (1989). Innovation and learning: two faces of R&D. Economic Journal. 99, 569-596. Cohen, W. M. &Levinthal, D.A.(1990). Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35,128-152. Covin, J.G., &Slevin, D.P. (1989), Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10, 75-87. Daft, R. L. (2004) Organization theory and design (8th ed.). New York: South-Western. Goll, I., S., Rakesh, B. &Tucci, L. A. (2001). Top management team composition, corporate ideology, and firm performance. Management International Review, 41(2), 109-128. Hambrick, D.C. & Mason, P.A.(1984). Upper echelons: the organization as a reflection of its top managers. Academy of Management Review, 9(2), 193-206. Hitt, M.A. & Tyler, B.B. (1991). Strategic decision models: integrating different perspectives. Strategic Management Journal, 12(5), 327-351. Hodgett, Richard M. &Luthans, F. (2002). International management culture, strategy and behavior. Ohio: Irwin McGraw-Hill. Hogan, S. J. &Coote, L. V. (2013). Organizational culture, innovation, and performance: A test of Schein's model. Journal of Business Research. 67 (2014) 1609–1621 Homberg, F & Bui, H. T. M. (2013). Top Management Team Diversity: A Systematic Review. Group & Organization Management, 38(4), 455–479 Kisfalvi, V. & Pitcher, P. (2003), Doing what feels right: the influence of CEO character and emotions on top management team dynamics. Journal of Management Inquiry, 12(1), 42-66. Markides, C. C. (1994). Related diversification, core competences and corporate performance. Strategic Management Journal, 15, 149-165 Martinez, E. A. (2015). Organizational Culture and Performance. American Economic Review: Papers & Proceedings, 105(5), 331–335 Murry, A. I. (1989). Top management group heterogeneity and firm performance”, Strategic Management Journal Summer Special Issue, 10, 125-141 Pegels, C. C., Song, Y. I. & Yang, B. (2003). Management heterogeneity, competitive interaction groups, and firm performance. Strategic Management Journal, 21, 911- 923. Pettigrew, A. M. (1979). On studying organizational cultures. Administrative Science Quarterly, 24, 270-581. 221
22. Pfeffer, J. (1983). Organizational demography. In Research in organizational behavior, Staw B, Cummings LL (eds). Geenwich, CT, 299-357. Prahalad, C. & Hamel, G (1990). The core competence of the Corporation. Harvard Business Review, 68(3), 79-91. Robbins, S. P. (1990). Organization theory: structure, design and applications. New Jersey, Prentice Hall. Trompenaars, F. &Woolliams, P. (2003). A new framework for managing change across cultures.Journal ofChange Management, 3(4), 361-375. Wiersema, M. F. &Batel, K. A. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35(1), 91-121. Yang, C.C. (2015). The integrated model of core competency and core capabilities. Total Quality Management & Business Excellence,26(1/2), 173-189. Zoogah, D.B., Vorab, D., Richardc, O.&Pengc, M.W. (2011). Strategic alliance team diversity, coordination, and effectiveness. The International Journal of Human Resource Management, 22(3), 510–529. 222