Top management team diversity and organizational performance: an empirical investigation of strategic leadership influence

Abstract

Competition has pushed contemporary organizations to diversify their workforce, with significant attention being paid to exploring how the diversity of leaders influence organizational outcomes. Despite growth in TMT (Top Management Team) diversity research in the last four decades, results have been inconsistent and unclear. An emerging field of research hints of a link between strategic leadership and TMT diversity and how this association influences performance. The study explored the moderating effect of strategic leadership on the relationship between TMT diversity and organization performance on Public Benefit Organizations (PBOs) in Kenya. A sample of 138 PBOs was developed and data collected and analyzed on various aspects of TMT diversity, strategic leadership and organizational performance. The study found that both transformational and transactional leadership behaviors moderates the relationship between TMT diversity and PBO performance. The research has theoretical implications on upper echelons and strategic leadership theories as well as policy inferences in assisting policy makers leverage on the diversity of TMTs in enhancing performance. The study recommends adoption of the strategic leadership practices in PBOs so as to enhance the outcomes of TMT diversity. Relatedly, further studies should be undertaken in other regions and sectors while at the same time testing the research model in varying environmental settings.