The Impact of TMT Functional Heterogeneity on Corporate Performance and the Mediating role of Compensation Gap on New Energy in China

Authors

  • Li Chong
  • Asokan Vasudevan
  • Toong Hai Sam
  • Kumarashvari Subramaniam
  • Walton Wider
  • Prashanth Beleya
  • Xue Rui Teng

Abstract

Purpose- The study aims to further improve and enrich the research scope of top management team heterogeneity by revealing the TMT heterogeneity affecting corporate performance and seeking evidence of the pay gap as a mediating variable.  Design/methodology/approach- The Upper Echelons Theory states that heterogeneity of TMT determines the cognition and values of TMT members, which in turn affects business decisions and corporate performance. The quantitative research paradigm of empirical analysis was conducted using structural equation modelling from 30 new energy companies in China. Findings- Empirical results showed a significant influence of all dimensions of TMT heterogeneity on corporate performance. EL, AGE, CE, OB and GB signification influence CP. Empirical evidence has not supported that TE signification influence CP. Research results supported that CG mediates the relationship between EL, AGE, CE, OB, GB and CP. However, this research result did not support that CG mediates the relationship between TE and CP. Practical implications- The relationship between the top management team and company performance is evaluated based on the Upper echelons theory in China and has some creative value and realistic demand. This study will further improve and enrich the research scope of top management team heterogeneity by revealing the TMT heterogeneity affecting corporate performance and seeking evidence of the pay gap as a mediating variable.

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Published

2023-01-12