Linking TMT Characteristics and Strategy Execution with Firm Performance: A Review of Literature

Abstract

Firm performance indicators are shifting day by day, and how firms make their business decisions and execute them so as to survive in the current challenging business environments has become a matter of research interest to management scholars and practitioners alike. Focus has now shifted to the top leadership of organizations commonly referred to as top management teams (TMT); their characteristics and how they influence the firms they lead to performance levels that meet expectations of the diverse stakeholders of the firms. This study, which is founded on the Upper Echelon Theory, investigated the effect of TMT characteristics on firm performance. The paper discusses the results of the review of literature in relation to the linkages between TMT characteristics, Strategy Execution, Organizational Structure and Firm Performance. The study concluded by proposing that even though TMT characteristics may influence the performance of their firms, such an influence will be through the execution of the various strategies identified by the firm. It next proposed that the execution of strategies of the firm may influence the performance of the firm, but this relationship happens through the decisions and actions of the TMT. Lastly it proposed that even though TMT characteristics may influence the performance of their firms, such influence is dependent upon the prevailing organizational structure in the firm. Finally the study proposed that future research should test the model with TMT characteristics as the independent variable, Organization Structure as the moderating variable, Strategy Execution as the mediating variable and Firm Performance as the dependent variable.