Because of the amount of interest in top management teams (TMT), there is a huge volume of research on the subject (Carpenter et al, 2004). The Upper Echelon perspective of Hambrick and Mason (1984) gave TMT research a ‘fresh lead’ (Pettigrew, 1992: 164) and it was viewed as ‘a central catalyst’ (Carpenter et al, 2004: 750) for TMT research. This resulted in a shift in the organisational leadership literature, moving from a focus on the individual leader to that of the top management team, and from giving the environment the power over the decision making and output to the characters of the leaders as well (Menz, 2012; Higgs, 2009; Pitcher and Smith, 2001; Thomas and Ramaswamy, 1996; Pettigrew, 1992). Pettigrew (1992) described the managerial elites research as a one of the most important, yet difficult, research frontiers.
Despite the vast amount of research generated in the area of top management teams and Upper Echelon Theory literature, there are still gaps and questions that will benefit from further research (Menz, 2012), as discussed in chapter one.
Due to its vast amount, the literature on TMT branched into from different disciplines as will be seen below. This part of the literature review starts with
the definitions of TMT, in order to narrow it down and to focus the scope of the research on the research question of the current research. The definitions will clarify who are considered to be TMT members, what acts define a TMT, which will link to the outcomes of those acts, translated into organisational outcome.
The definition of TMT has varied throughout the literature, according to the research purpose and discipline in which the research was conducted. Menz (2012) defined TMT members as senior executives in the TMT responsible for one or more functional areas in their organisations. Carpenter and Fredrickson (2001: 538) defined top management teams as the top two management tiers, concluding from the dominant collusion or TMT literature that it includes up to six members, typically: ‘CEO, chairman, chief operating officer (COO), chief financial officer (CFO), and the next highest management tier of a firm’. Boeker (1997) defined the top management team as the CEO and those who directly report to the CEO.
Carpenter, Geletkanycz and Sanders (2004: 753), reviewing the literature on TMT theory in the last thirty years, concluded that ‘the top team construct and team membership are often identified using the measurement heuristic of senior hierarchical level, as indicated by title or position, since individuals at higher levels are expected to have greater influence on decisions that are strategic in nature’. Other scholars, such as Pettigrew (1992: 163), looking at the research conducted on managerial elites, summarised them to be those who are occupying roles with authority or strategic positions, such as
‘Chairman, President, Chief Executive Officer, Managing Director, or inside or outside Director’ but he also included executive teams in operation, such as Board of Directors, Executive Committees or Top Management Teams’. But after a reflection on previous TMT research, Pettigrew (1992: 178) suggested that ‘rather than assuming titles and positions as indicators of involvement, the first task of the process scholars is to identify which players are involved and why’. Pettigrew (1992) attributed the lack of agreement about a definition for TMTs by drawing attention to Keck (1991) argument that members in the organisation without a title could have a role in the TMT, whereas others with titles might be ‘marginalised’ as TMT members.
Following that line of logic, Carpenter et al (2004) suggested CEOs as key informants to identify team members who are likely to be part of strategic decisions. Amason and Sapienza (1997) defined TMT as those identified by the CEO to be involved in strategic decisions. Eisenhardt (1989), in her research into strategic decision making in high velocity environments, used the CEOs of eight computer companies as key informants to identify both the strategic decisions and those who were involved with the CEOs in taking those decisions, as opposed to looking at titles, when deciding who is a TMT
member. Iaquinto and Fredrickson (1997) asked the CEO to identify who would be involved in a team after describing different strategic decisions.
Pitcher and Smith (2001) concluded in their research discussion that, despite the various means adopted by other scholars to define a team, TMT
researchers would be closer to a more accurate definition if they asked the CEOs, either via surveys or interviews, to define the TMT. By doing so power relations in teams would be revealed, as inclusion of some members and exclusion of others shows who has the power over the decisions. Knight, Pearce, Smith, Olian, Sims, Smith, and Flood (1999) used CEO interviews as an access point to firms by which the research goals were explained and, if access was grante, CEOs identified TMT members and sent each member a memo requesting participation, which Knight et al (1999) described as a method of increasing the likelihood of participation. Therefore, asking CEOs to identify TMT members would bring a more accurate definition of who is in a TMT (Pitcher and Smith, 2001; Pettigrew, 1992), it would help identify power relationships (Pitcher and Smith, 2001) and would play a role in helping researchers in gaining data access (Knight et al, 1999).
Whether looking at the theoretical or the empirical TMT definitions, both describe the functions top management team members occupy in the
organisation and their activities involving ‘strategic leadership and decisions’ (Menz, 2012: 47).
In conclusion, the TMT empirical definition is very different from the
conceptual definition of TMT (Carpenter et al, 2004) but, despite the different functional roles top management team members have in an organisation, they ‘comprise strategic decision making and leadership as a TMT member’ (Menz,
2012: 48). The job of the top management team members is becoming more complex and demanding with strategic leadership as a specific key role for a successful top management team member (Applegate et al, 1992; Benjamin Dickinson, and Rockart 1985; and Menz, 2012). The following section will discuss strategic leadership and strategic decision making with regard to their importance and strong association to TMTs and how that affects organisational performance (see Figure 2).
Figure 2: Literature Review Map.