The Impact of Top Management Team Diversity on Firm Performance: A Study of Large Companies in Malaysia

Abstract

The current economic climate has changed the landscape of business dramatically in the perspective of global environment. Hence, in order to respond for the global changes in term of economic, social, politic and technology, organization should enhance the right mix of top management teams (TMT) for current and future progression and growth of the organization. Diversity of top management team plays an important role to determine the performance of the organization. This conceptual paper is to examine the impact of top management team diversity traits on firm performance. The study will adopt quantitative research design with secondary data, for the average of five years. Secondary data mainly involves financial data that will be obtained financial databases such as DATASTREAM based on 200 nonfinancial large companies in Malaysia. The multiple regression analysis and cross-sectional study will be used to test the hypothesis. Issues surrounding top management team’s diversity, upper echelon theories and the mixed findings from previous research are offered as potential avenues for empirical research. Therefore, the line of inquiries needs a fundamental work and empirical analysis using above methodology. The preliminary results leading toward for a better understanding of the factor that explains how top management diversity translates into greater organizational achievements and argues the need to analyse the characteristics of top management teams and their composition more extensively, especially in the context of large companies. This is a cross-sectional study, variables, concepts, constructs and hypotheses will be carefully constructed and developed to meet the objectives of the study. Multivariate analyses will be adopted, and in this regard, panel data analyses using the E- VIEW/STATA statistical software will be used to suit the requirement of considering both crosssectional and time series data in the analyses.