Top Management Teams and Alliance Portfolio Variety

Venue

Room 11, Department of Sociology and Social Research – via Verdi 26, Trento

Speaker

Dr. Paolo Aversa – Cass Business School, City University London

Abstract 

We investigate the top management team (TMT) variety as antecedent of a firm’s alliance portfolio (AP) variety. Despite the majority of studies agree that variety in TMT composition engenders an open posture of the firm towards alliances and other strategic decisions, scholars still lack a thorough understanding of the relation between TMT variety and AP variety, particularly under different contingencies. We theorize that the relationship between TMT variety and AP variety is contingent upon internal (i.e., core vs. non-core component codevelopment) as well as external (i.e., technological turbulence) factors. We examine empirical evidence from a longitudinal two-level model of vertical alliance decisions in the Formula 1 industry (1992-2010). We find significant results only when contingencies are taken into consideration, which suggests the importance of including more fine-grained data to open the black box of upper echelons theory. 

Our results counter-intuitively find that TMT variety does not always lead to more variety of AP. If fact, under standard circumstances the relationship between TMT variety and AP variety is positive for core components and non significant for non-core ones—indicating that TMT usually are not involved in these types of secondary decisions. However, when technological turbulence in the environment increases, the relation for core-components becomes stronger while for non-core it becomes negative and significant, as TMTs reduce complexity in alliance for non-core components in order to focus resources on the core ones. We explore implications for theory and practice regarding how TMT variety can underpin diverging decisions in AP variety.