Decoding the paradox: the impact of TMT cognition heterogeneity on the speed of strategic change

Although scholars have substantially explored the impact of top management team (TMT) on strategic change, how TMT composition influences the speed of strategic change is still under investigation. We move beyond TMT heterogeneity in demographic attributes and investigate the impact of TMT cognition heterogeneity on the speed of strategic change, considering the moderating role of TMT conflict.

Data was collected through a questionnaire survey. We randomly selected our sample firms from six different regions in eastern, central and western China. The final sample size is 132 Chinese firms. Due to the categorical nature of our data, the OSR (Optimal Scaling Regression) model was adopted to examine proposed hypotheses.

Our findings suggest that during the process of making strategic change, because positive influences are dominant when heterogeneity level is low while negative influences become dominant when heterogeneity level turns to high, TMT cognition heterogeneity drives up the speed of strategic change but at a decreasing rate. Moreover, the two types of TMT conflict moderate the impact of TMT cognition heterogeneity on the strategic change speed in opposite ways; that is, task conflict strengthens the relationship while relational conflict weakens it.

First, our examination decodes the seemingly parodoxical impact of TMT cognition heterogeneity and thus enriches the research on the impact of TMT composition on strategic change. Second, we distinguish task conflict from relationship conflict and findings suggest that TMT task conflict promotes the impact of TMT cognition heterogeneity while TMT relationship conflict always hurts. Third, investigating the interaction effects of team processes (i.e., cognition diversity and team conflict) on strategic change, the complexity of information processing in decision making is articulated.