Upper Echelons Theory and Market Orientation: TMT Characteristics as Antecedents to a Market Orientation

Abstract

Several antecedents have been suggested in the development of a market orientation of an organization. Kohli and Jaworski (1990) discuss the senior management factors preceding a market orientation. Upper echelons theory posits that strategic choices and performance levels can be partially predicted by managerial background characteristics (Hambrick and Mason 1984). This theory purports that observable managerial characteristics are reliable indicators of unobservable cognitions, values and perceptions in that they have influence on the process of strategic choice and the outcomes resulting from those choices (Carpenter et al 2004). The values of the top management team can affect perception of a situation, which can then affect a strategic choice (Hambrick and Mason 1984). This paper suggests that some of the behaviors and characteristics of the upper echelon can be factors in the decision of how an organization is oriented, specifically a market orientation. This paper proposes that four areas can be reflected in the behaviors of the top management team in the determination of a market orientation of a firm - age, functional background, top management team tenure, and team heterogeneity.