The Characteristics of Top Management and Firm Performance a Critical Review of Literature

Abstract

Over the years there has been a debate as to whether the top management playa major role in the performance of the organization. Proponents argue that human factors such as their characteristics in deed contribute to the performance of the organization while there are those who attribute organizational performance to the immediate environment that interacts with the organization in the course of its existence. Organizations outcomes, such as strategies and performance are expected to reflect the characteristics of these leaders. This argument was propagated by Hambrick and mason (1984) in their upper echelons perspective. This paper therefore intends to investigate the relationship between the characteristics of the top management and performance of the firm. The characteristics here includes; age, job tenure, educational level social economic background. The upper echelons theory mainly states that the decisions made by top management are as a result of the interpretations of the conditions facing the decision maker at that time. These interpretations are determined by the values and the manager perception, beliefs or the cognitive base. The main objective of this study is to establish the extent of influence of the top management characteristics on the performance of an organization. The top management are the key drivers of any organization and makes strategic decisions that affect the performance of the entity. In this context their importance cannot be underscored. The study also reviews empirical literature related to the top management characteristics and the performance of the firm. The top management demographic and cognitive characteristics have been attributed to the decisions of the top management and hence corporate performance.