| dc.description.abstract | he debate as to whether Top Management Team diversity influences corporate performance has
continued to attract attention from scholars and practitioners. Among researchers fueling this surge,
many have argued that higher levels of diversity lead to executive creativity, more effective
executive decision-making, and more positive organizational outcomes. Other researchers, however,
have argued that higher levels of executive diversity result in less communication among executives,
less effective executive decision-making, and less positive organizational outcomes. Thus the
question of whether diversity is advantageous to organizations still remains open. Therefore, this
study sought to contribute to knowledge by assessing the relationship between Top Management
Team demographic diversity and corporate performance while taking cognizant of the probable role
of leadership style and firm innovation as moderating variables. The specific objectives were: to
establish the relationship between Top Management Team demographic diversity and corporate
performance; to establish the relationship between firm innovation and corporate performance; to
establish if the strength of the relationship between Top Management Team demographic diversity
and corporate performance is influenced by firm innovation; to establish the relationship between
Chief Executive Officer leadership style and corporate performance; to determine if the strength of
the relationship between Top Management Team demographic diversity and corporate performance
is influenced by the Chief Executive Officer leadership style and to establish the joint effect of Top
Management Team demographic diversity, leadership style and firm innovation on corporate
performance. The study population comprised of all the 43 commercial banks as listed by the Central
Bank of Kenya report. The relevant data was collected from 29 banks (representing 72.5%) response
rate out of the probable 40 banks since 3 banks had already been used to pilot the questionnaire
hence were not included in the final study. Organizational performance was measured using financial
and non financial indicators. The data analysis and interpretation were based on descriptive statistics,
correlation and multiple regression analysis. Hypothesis testing revealed statistically insignificant
results for the relationship between Top Management Team demographic diversity and
organizational performance, firm innovation and organizational performance and on the relationship
between Chief Executive Officers leadership style and organizational performance. In addition, both
firm innovation and leadership style were found to influence the relationship between Top
Management Team demographic diversity and organization performance and their joint effect was
established to be lower than the individual moderating effect. The study encountered some
limitations such as the fact that the study was done in the banking sector, it was difficult to
generalize results to other sectors and thus future researchers should include firms from other sectors
in the economy. In addition, data analysis was done using regression analysis technique with the
assumption that relationship between data variables was linear and it is probable that relations
between variables are not necessarily linear. Future researchers should consider using some other
tools for statistical analysis. This study has extended our understanding on the relationship between
Top Management Team demographic diversity and corporate performance by introducing the
moderating effect of leadership style and firm innovation. Similarly, the study has clearly depicted
that different types of diversities have different effects on corporate performance. While providing a
mile stone on pertinent Top Management Team diversity literature, this study has both theoretical
and practical implications. From the study, it is clear that diversity has both positive and negative
effects on organizations performance. Thus diversity should be managed to enhance organization’s
performance. The need to establish other factors influencing the relationship between Top
Management Team demographic diversity and corporate performance has been underscored.
Similarly, the study has supported the complex nature of relationships between Top Management
Team diversity and corporate performance and advocates for more research in this area. | en |
