Power relationships among top managers: Does top management team power distribution matter for organizational performance?

• Published in: Journal of business research 2006-05, Vol.59 (5), p.622-629
• Main Authors: Smith, Anne, Houghton, Susan M., Hood, Jacqueline N., Ryman, Joel A.
• Format: Article
• Language: English
• Subjects: Business studies; Chief executive officers; Correlation analysis; Executives; Hospital management; Hospitals; Interpersonal relations; Job performance; Management science; Managers; Power; Senior management; Studies; Survey data; Teams; Top management team; U.S.A
• ISSN: 0148-2963; 1873-7978
• DOI: 10.1016/j.jbusres.2005.10.012

We investigated patterns of power within top management teams (TMTs) by addressing three research questions: What is the shape of TMT power distribution? Is TMT power distribution associated with firm performance? If so, are there distinguishing TMT characteristics between high and low performers? We evaluate these questions using survey data from top managers in 51 hospitals who identified power relationships among their team members. We find that while the CEO is almost always the most powerful TMT member, no teams in our sample have simply a dominant CEO surrounded by powerless team members. We find that the power inequality within a team is positively associated with firm performance. A TMT is more likely to be associated with strong performance when an executive pair garnered most of the power, and when that pair incorporated different world views, as indicated by differences in functional background and industry experience.