Strategy and Competion: Identify stylized facts on how top management team characteristics affect a firm’s strategic decisions, such as investment, R&D investment, technology adoption, and mergers and acquisitions.

Module / Subject / School:

Strategy and Competion

Requirements: 

Assignment Question:

A growing body of research has examined the role of top executives in driving strategic decisions and firm performance. In economics, researchers have sought to identify the effect of individual executives (CEOs) and their managerial styles by examining changes in firm performance after exogenous events such as the sudden death of a CEO or the movement of CEOs across firms. In strategic management literature, the Upper Echelons theory views a firm’s performance as a reflection of its top management team’s characteristics:

“A firm’s behaviour and performance are to a large extent a function of its top management team, which makes most of the firm’s important strategic and organizational decisions.” (Hambrick and Mason, 1984)

The Upper Echelons theory has inspired a rich and diverse body of literature that examines how the characteristics, educational background, functional background, and heterogeneity of a firm’s top management shape the firm’s performance. More recently, the availability of large survey data and the ability to analyse unstructured data (texts) have given new impetus to this literature, leading to new insights.

Your final assignment draws on this literature. Specifically, your task is to review the

literature on the Upper Echelons theory to:

1. Identify stylized facts on how top management team characteristics affect a

firm’s strategic decisions, such as investment, R&D investment, technology adoption, and mergers and acquisitions.

2. Develop a framework on how the configuration of a firm’s top management team affects the firm’s strategic decisions and performance.

3. Use the framework to explain the strategic decisions of a firm of your choice.

4. Explain how the firm may reconfigure its top management team to improve its performance. A set of references with links to the academic articles will be provided on Blackboard.

Important: You must draw on relevant concepts and theories covered in the course and literature to provide a systematic analysis. Failure to use theory and concepts can lead to a low mark. It is important to inform your analysis by referring to relevant (secondary) data. The use of peer-reviewed academic journals is essential.

What we score:

80%

Our Writer’s Comment 

This assignment is designed to assess students’ understanding of business practices.

To secure an A+ grade, adhere to these guidelines and make sure your work aligns with the grading criteria:

1. Review the Literature on Upper Echelons Theory

The first part of your assignment asks you to review the literature on Upper Echelons theory. Here’s what you need to do to stand out:

• Start by defining the theory clearly, referencing Hambrick and Mason’s (1984) foundational work. Explain how the characteristics of top management teams (TMT) influence firm performance and strategic decisions.
• Dive deeper into recent studies that have built on this theory. You want to highlight key insights such as how CEOs’ backgrounds, education, and functional experience affect decision-making in areas like R&D investment, technology adoption, and M&As.
• Use peer-reviewed academic articles to support your claims. Don’t just summarize; show how the research connects to specific types of strategic decisions. For example, discuss how a CEO with a finance backgroundmay prioritize mergers and acquisitions over innovation, or how diverse management teams lead to better R&D outcomes.

Focus on structuring this section logically, moving from general principles to specific examples. This will help build a strong foundation for the rest of your assignment.

2. Develop a Framework

The framework is your opportunity to show how the configuration of the TMT impacts strategic decisions. Here’s how to approach it:

• Break down key characteristics like educational background, functional experience, leadership style, and team diversity.
• Link each characteristic to specific strategic outcomes. For example, a CEO with a technical background may drive more innovation-based strategies, while a more risk-averse team might delay R&D investments.
• Use diagrams or tables to visually represent the framework. This not only makes your analysis more professional but also helps clarify complex relationships.

Make sure to integrate theoretical concepts from your course material here, showing how different TMT configurations lead to varying firm performances.

3. Apply the Framework to a Firm of Your Choice

In this section, choose a real firm and apply your framework to explain their strategic decisions. To make your analysis more compelling:

• Select a firm with a notable leadership team—it could be a firm known for innovation (like Apple) or for large mergers and acquisitions (like General Electric).
• Use real-world data to back up your claims. For instance, explain how a firm’s CEO background influenced a major acquisition or technology adoption.
• Be specific. Rather than generalizing about the firm’s performance, connect specific decisions—like investment in new technologies or expansion into new markets—to the characteristics of the top management team.

Secondary data such as annual reports, press releases, or interviews with executives can add depth to your analysis. Make sure your analysis is grounded in the theoretical framework you built in the previous section.

4. Reconfigure the Top Management Team for Improved Performance

This part allows you to be creative but strategic. Here’s how to tackle it:

• Identify current gaps in the firm’s TMT configuration. For example, does the firm lack diversity in its leadership team? Does the CEO have limited experience in global markets, impacting international expansion?
• Recommend specific changes—perhaps suggesting the addition of executives with international experience, or a stronger focus on diversity to promote innovation.
• Support your suggestions with evidence. Use research that shows how these changes can positively impact the firm’s performance, especially in areas like strategic decision-making, risk management, or corporate culture.

Link your recommendations back to the firm’s strategic goals, showing how the reconfiguration will help them achieve those goals more effectively.

General Tips to Boost Your Score:

• Use more peer-reviewed sources: The more you draw on academic literature to back up your points, the stronger your analysis will be. Make sure to cite them properly.
• Critical analysis: Don’t just describe—analyze deeply. For example, when discussing a CEO’s background, explain not just how it influences decisions, but why it matters in the context of the firm’s strategy.
• Real-world examples: Ground your framework and recommendations in real-world evidence. Use data from case studies or company reports to support your points.
• Clear structure: Make sure each part of your assignment flows logically into the next. Use clear headings and subheadings to guide the reader.

By tightening your analysis, adding depth with academic references, and making your recommendations more specific and actionable, you’ll be on your way to improving your score next time!

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