Science Research Management

Science Research Management ›› 2021, Vol. 42 ›› Issue (8): 141-149.

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The double-edged sword effects of top management team faultline on enterprise substantive innovation: A study from the business diversification perspective

Sun Yuefan1, Zhang Qi1, Zhang Yongji2   

  1. 1. School of Business, Beijing Technology and Business University, Beijing 100048, China; 
    2. School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China
  • Received:2021-02-18 Revised:2021-05-27 Online:2021-08-20 Published:2021-08-13

Abstract:    Based on the perspective of business diversification, this paper uses the micro data of non-financial A-share listed companies in Shanghai and Shenzhen from 2009 to 2018 to examines the characteristics of the top management team faultline, which causes the difference of subgroups, and systematically tests the influence mechanism of the double-edged sword effects of top management team faultline on the substantive innovation of enterprises.
    The research shows that: (1) Under the specialized business model, the top management team faultline has a significant positive impact on the substantive innovation of enterprises; (2) Under the related business diversification model, the top management team faultline has a significant positive impact on the substantive innovation of enterprises; (3) Under the unrelated business diversification model, the top management team faultline has a significant negative impact on the substantive innovation of enterprises; (4) Further research shows that when the related business is more diversified, the stronger the positive impact of the top management team faultline on the substantive innovation of enterprises, when the unrelated business is more diversified, the stronger the negative impact of the top management team faultline on the substantive innovation of enterprises; Moreover, under different business diversification modes, the impact of the top management team faultline on the strategic innovation of enterprises is different from the impact of the top management team faultline on the substantive innovation of enterprises. This paper enriches the research on the influencing factors of enterprise substantive innovation, and has important reference value for the appointment decision of enterprise managers and the reasonable setting of team structure.
    This paper may contribute in the following aspects: Firstly, there is not much research on the substantive innovation of enterprises in the existing research, it is rarer to see the research on the substantive innovation of enterprises by the top management team faultline. This paper enriches the research on the factors affecting the substantive innovation of enterprises from the perspective of the top management team faultline, provides a new direction for the follow-up research on the substantive innovation of enterprises, and enriches the literature in this field. Secondly, this paper explores the double-edged sword effect of the top management team faultline on the substantive innovation of enterprises from the perspective of business diversification, and effectively expands the deep driving factors of the double-edged sword of the top management team faultline. Thirdly, it provides a more detailed reference for building the diversity of the top management team and improving the structure of the top management team. In other words, the enterprise needs to reasonably arrange the top management team personnel structure and match the diversified characteristics of the business, instead of blindly pursuing the diversity of team members.
   Based on concrete empirical data, this paper provides strategic support for enterprises to construct and improve the governance structure of the top management team, and provides important countermeasures and suggestions for enterprises to develop and utilize human resources. For example, enterprises should arrange the structure of the top management team based on the characteristics of business structure, not blindly pursue the diversity of team members, and set a reasonable level of team structure to match the characteristics of the enterprise′s business operation. When nominating top management team members, enterprises should not only consider the individual abilities of the top management team members, but also pay full attention to the team faultline caused by the differences in educational level, professional background, social capital and other characteristics of team members. At the same time, when the individual abilities of candidate members of the top management team meet the requirements of the enterprise, attention should also be paid to the overall cognitive diversity of the top management team after the appointment of candidate members of the top management team, so as to make full use of the cognitive diversity and difference caused by the intensity of the top management faultline. In addition, this paper is conducive to a comprehensive understanding of the factors affecting the construction of enterprises′ substantive innovation capacity, and has important guiding significance for enterprises to select appropriate related and unrelated business diversification and to enhance their substantive innovation capacity.

Key words: top management team faultline, enterprise substantive innovation, specialized business, related business diversification, unrelated business diversification