How CEO Values and TMT Diversity Jointly Influence the Corporate Strategy Making Process

Understanding managerial behavior and its underlying motivations is of key interest in times where the role of business in society is generally viewed critically. While CEO influence on strategy making processes is almost undisputed, little attention has explicitly been paid to how CEO values and the characteristics of the top management team (TMT) interact in shaping corporate strategy making. This is surprising if one follows the assumption that top managers who work closely together will by necessity influence each other's actions. Hence, we would expect the CEO-TMT interface to be vital in understanding how leadership influences strategy making. To address this, we propose a model in which the personal values of the CEO have a direct effect on the characteristics of corporate strategy making processes yet where this association is moderated by TMT diversity. We test the model with data from Austria and Germany obtained through a large-scale survey conducted in spring 2015 and a follow-up survey conducted in fall 2015 and find general support for our model. CEO values geared towards self-transcendence (as opposed to selfinterest) seem to be associated with more formal strategy making processes, while values geared towards openness to change (as opposed to conservation) are found to be associated with more flexible and less externally open ones. TMT diversity moderates all of these relationships. Our results add to upper echelon theory as well as to strategy process research and highlight promising avenues for future research