Top management team means-ends diversity and competitive dynamics

Abstract

We examine how top management team (TMT) members' disagreement about strategic means and ends – means-ends diversity (MED) – affects firms' propensity to take competitive action in the context of fungible versus non-fungible resources. Theorizing in part from TMT diversity literature, we contribute to competitive dynamics and upper echelons research by demonstrating how top team MED shapes competitive outcomes. Contrary to common assumptions, our results suggest that such diversity can inhibit rather than promote competitive propensity. Importantly, we argue that firm resource profiles are pivotal in moderating this relationship. To be specific, we find that multipurpose fungible resources like slack augment this suppression, whereas non-fungible strategic investments galvanize action and do the opposite. Moreover, we find that too weak and too great a propensity for competitive action diminishes firm performance. Theoretical contributions and research implications are discussed.