Influence of Top Management Team Diversity on the Performance of Public Benefit Organizations in Kenya

Abstract

Faced with varying complexities in their operating environments, modern organizations are forced to seek various management strategies that allow them to gain competitiveness and enhance their performance. Top Management Team (TMT) diversity is one such strategy. Increased competition has pressed organizations to employ capable and diverse leaders able to develop high-quality strategies, promote development and increase profits and impact. Research on TMT diversity has focused on different forms of diversity including differences in gender, age, nationality, education, organization tenure, and functional or technical background. Despite wide interest from scholars, the concept of TMT diversity influence on performance has been found to be ambiguous in most instances. The Public Benefit Organizations (PBOs) sector despite being one of the most important within economies has received very little attention among researchers regarding the influence of TMT diversity on performance. This study sought to find out the influence of TMT diversity on performance of Public Benefit Organizations (PBOs) within the purview of strategic change, strategic leadership and the macro environment. The study relied on the upper echelons, resource based view, strategic leadership and open systems theories to offer the foundations of the assessment. Review of previous literature revealed the existence of research gaps that this study sought to help fill. The study applied a cross sectional research design within a positivistic framework on a population of all the PBOs in Kenya from which a sample of 138 respondents was acquired. Quantitative data collected from 101 PBOs was analysed using descriptive and inferential statistics. The study found that TMT diversity has a low (10.4%) but statistically significant influence on PBO performance. The study further found that strategic leadership and macro environment have a moderating effect on the relationship between TMT diversity and PBO performance. However, strategic change was found to lack intervening influence on the relationship between TMT Diversity and PBO performance. The study also found a positive joint influence of TMT diversity, strategic leadership, and macro environment on PBO performance. The study therefore concludes that TMT diversity has an influence on PBO performance, and has a greater effect in organizations with high strategic leadership orientation that is able to align with the macro environment. The study recommends all stakeholders in the sector to enhance TMT diversity in their organizations while ensuring adoption of strategic leadership behaviours and constant alignment to the macro environment. Further studies targeting the four variables in varying settings to assess their outcomes and relationship towards their inclusion in the theories and policies ought to be undertaken. The research contributes to the upper echelons theory by addition of strategic leadership and macro environment as moderating variables in the TMT diversity and organization performance relationship. Finally, the study contributes to the PBO management policies and practices raising the need to consider TMT diversity in making hiring decisions, leadership development policies and strategies for interacting with external environment as ways of enhancing organizational performance.