Top management team diversity: positive in the short run, but negative in the long run?

Abstract

Purpose This paper aims to investigate the moderating role of top management team (TMT) longevity on the TMT diversity‐firm performance relationship. Design/methodology/approach The paper presents results from a quantitative longitudinal study of 59 TMTs in German companies in different industries. Findings For age diversity, dominant educational background diversity, and diversity in dominant industry experience, the curvilinear moderating effect of TMT longevity on the TMT diversity–firm performance relationship is confirmed. However, for organizational tenure diversity, the form of the moderating effect is contrary to expectations (being u‐shaped). Research limitations/implication In line with previous studies, the results were sensitive to the performance measures in use. Furthermore, the results should not be generalized since they may be sensitive to the sector under study and the small sample size. Originality/value First, a curvilinear moderating effect of TMT longevity on the TMT diversity‐firm performance relationship is investigated for the first time. Second, although the selected diversity dimensions have been investigated in previous TMT studies, they are examined simultaneously for the first time. Third, this study analyzes TMTs of large and medium‐sized German corporations operating in a variety of sectors. Fourth, relating demographic data on TMTs collected in 2004 to performance data for the years 2004 to 2007, the present paper presents one of the few longitudinal studies in the context of TMT diversity.