Upper echelons theory
DESCRIPTION
A theory that considers organizational outcomes to be partially predicted by top managements’ background characteristics.
A theory that considers organizational outcomes to be partially predicted by top managements’ background characteristics.
KEY INSIGHTS
Based on research by Hambrick and Mason (1984) and subsequent researchers, upper echelons theory posits that, as upper level managers are selectively perceptive and boundedly rational, a behavioral element derived from managements’ idiosyncratic characteristics should be evident in the outcomes of the organization. In this context, the theory provides a rationale for examining the nature and extent of the relationship between various managerial backgrounds and organizational outcomes. While the strength of research findings for the theory may ultimately be dependent on the specific management background characteristics examined (e.g. career experience, gender) as well as specific organizational outcomes examined (e.g. profitability, diversification posture), there is general support for the view that certain organizational outcomes can be at least partially predicted by certain top management characteristics.
Based on research by Hambrick and Mason (1984) and subsequent researchers, upper echelons theory posits that, as upper level managers are selectively perceptive and boundedly rational, a behavioral element derived from managements’ idiosyncratic characteristics should be evident in the outcomes of the organization. In this context, the theory provides a rationale for examining the nature and extent of the relationship between various managerial backgrounds and organizational outcomes. While the strength of research findings for the theory may ultimately be dependent on the specific management background characteristics examined (e.g. career experience, gender) as well as specific organizational outcomes examined (e.g. profitability, diversification posture), there is general support for the view that certain organizational outcomes can be at least partially predicted by certain top management characteristics.
KEYWORDS Top management, background characteristics, organizational performance
IMPLICATIONS
Marketing strategists should recognize the possibility that organizational outcomes may be influenced to a significant degree by the background characteristics of the organization’s top management. To the extent that marketing strategy development is also influenced by top management backgrounds, marketing strategy outcomes may be affected as well. While it is difficult to generalize how and to what extent there may be such influences, knowledge of upper echelons theory-based research may provide marketers with insights that may influence top management selection and/or more effective marketing management and strategy development and implementation.
Marketing strategists should recognize the possibility that organizational outcomes may be influenced to a significant degree by the background characteristics of the organization’s top management. To the extent that marketing strategy development is also influenced by top management backgrounds, marketing strategy outcomes may be affected as well. While it is difficult to generalize how and to what extent there may be such influences, knowledge of upper echelons theory-based research may provide marketers with insights that may influence top management selection and/or more effective marketing management and strategy development and implementation.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Herrmann, Pol, and Datta, Deepak K. (2005). ‘Relationships between Top Management Team Characteristics and International Diversification: An Empirical Investigation,’ British Journal of Management, 16(1), March, 69.
Herrmann, Pol, and Datta, Deepak K. (2005). ‘Relationships between Top Management Team Characteristics and International Diversification: An Empirical Investigation,’ British Journal of Management, 16(1), March, 69.
Michel, J., and Hambrick, D. C. (1992). ‘Diversification Posture and Top Management Team Characteristics,’ Academy of Management Journal, 35, 9–37.
Wiersema, M. F., and Bantel, K. A. (1992). ‘Top Management Team Demography and Corporate Strategic Change,’ Academy of Management Journal, 35, 91–121.
Marketing Management
Waldman, D. A., Ramirez, G. G., House, R. J., and Puranam, P. (2001). ‘Does Leadership Matter? CEO Leadership Attributes and Profitability under Conditions of Perceived Environmental Uncertainty,’ Academy of Management Journal, 44(1), 134–143.
Waldman, D. A., Ramirez, G. G., House, R. J., and Puranam, P. (2001). ‘Does Leadership Matter? CEO Leadership Attributes and Profitability under Conditions of Perceived Environmental Uncertainty,’ Academy of Management Journal, 44(1), 134–143.
Burke, L. A., and Steensma, H. K. (1998). ‘Toward a Model for Relating Executive Career Experiences and Firm Performance,’ Journal of Managerial Issues, 10(1), 86–102.
BIBLIOGRAPHY
Hambrick, Donald C., and Mason, Phyllis A. (1984). ‘Upper Echelons: The Organization as a Reflection of Its Top Managers,’ Academy of Management Review, 9(2), April, 193–206.
Hambrick, Donald C., and Mason, Phyllis A. (1984). ‘Upper Echelons: The Organization as a Reflection of Its Top Managers,’ Academy of Management Review, 9(2), April, 193–206.
Hambrick, D. C. (2005). ‘Upper Echelons Theory: Origins, Twists and Turns, and Lessons Learned,’ in K. G. Smith and M. A. Hitt (eds.), Great Minds in Management: The Process of Theory Development. Oxford: Oxford University Press, 109–127.