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—        –                   The Big Countries VS Small Countries             Germany, France, The Netherlands and Belgi...
˜  Firms today are facing an increasingly competitive and    changeable environment due to economic instability,    globa...
˜    Upper echelon theory (Hambrick and Mason, 1984)      o  Suggested that the company outcomes can be attributed to the...
˜    Tony Simons (1995)      o  found TMT compositional diversity must be supported by a debate        process to have po...
In our paper we investigated the NationalDiversity in Top Management Team affectsCompany Performance on big countries in E...
—   –
˜  Germany Economy˜  Germanys economy is the    worlds third-biggest and one    of its most advanced. At the    economic...
˜  France Economy˜  In the late 1990s, the    economy of Frances grew    faster than the European    average, allowing t...
• Van Veen and   • Maclean et all (2006)                 • Van Veen and    Marsman        Marsman (2008)     (2008)       ...
˜    The Netherlands˜    The economic climate worsened      in the first quarter of 2008 in all      countries of the We...
˜  Belgium˜    domestic demand is      suppor ted by monetar y      conditions and, partly      reflecting the improving...
The main research question can be formulated as                   follows:  Can differences in company performance ofMNCs ...
Heiltjes et al                       (2003)• 1990                                • 2008• 4,4%             • 1999          ...
• investigated the effect of board composition on company Barnhart et al. 1994     performance.Tushman and Rosenkopf    • ...
˜    The whole dataset is provided by van Veen (2007) and          derived from his study on nationality diversity.
˜    Nationality      Measured by nationality in board were provide by the database      from Advanced International Mana...
44%   28%     21%   13%        • Overall        25%
• The result indicate the national diversity of the small countries (Netherlands and Belgium) in Europe more higher percen...
Table one shown a significant (0,266)    relationship between national    diversity of TMT and companyperformance (ROA), t...
˜    The first hypothesis predict a positive relationship between      the nationality diversity of TMT members and compa...
The coefficient of the                          In percentage of foreigners andcompany performance,                       ...
Table five shows there is a not significant result (.19) in percentage offoreigners, company size (-.136) and also relatio...
THERE IS A POSITIVE RELATIONSHIP BETWEEN THE NATIONALITY DIVERSITY OF TMTMEMBERS AND      COMPANY PERFORMANCE, IT IS NOT D...
Relationship between National Diversity of Top Management Team on Company Performance
Relationship between National Diversity of Top Management Team on Company Performance
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Relationship between National Diversity of Top Management Team on Company Performance

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Firms today are facing an increasingly competitive and changeable environment due to economic instability, globalization, and complex technologies. To perform well among growing competition, greater efficiency is required

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Relationship between National Diversity of Top Management Team on Company Performance

  1. 1. — – The Big Countries VS Small Countries Germany, France, The Netherlands and Belgium By Joy Elly Tulung, Olivia N. Nelwan dan Victor P. K. LengkongInternational Conference on Business and Management Research (ICBMR) 3 - 4 Agustus 2010 Universitas Indonesia Depok
  2. 2. ˜  Firms today are facing an increasingly competitive and changeable environment due to economic instability, globalization, and complex technologies. To perform well among growing competition, greater efficiency is required.˜  Running an enterprise today requires more resources than one person can offer.˜  Being impossible to deal with all rapidly increasing amounts of data and the complexity of the global economy, top managers are forced to deal differently the management of a firm.
  3. 3. ˜  Upper echelon theory (Hambrick and Mason, 1984) o  Suggested that the company outcomes can be attributed to the TMT. Many researchers extended this theory.˜  (Haleblian & Finkelstein, 1993). o  The human capital of the executives who are attracted and retained in the TMT and behavioral factors are important determinants of how well particular TMTs may process information, which in turn allows them to make the strategic choices affecting firm performance
  4. 4. ˜  Tony Simons (1995) o  found TMT compositional diversity must be supported by a debate process to have positive performance impact.˜  (Early and Mosakowski, 2000). o  The research suggests that diversity can improve performance˜  (DiStefano and Maznevski, 2000). o  Particularly, diverse teams can be more productive than homogeneous teams
  5. 5. In our paper we investigated the NationalDiversity in Top Management Team affectsCompany Performance on big countries in Europe versus small countries in Europe.This because a limited academic researchto investigate a gap between big countries and small countries in Europe.
  6. 6. — –
  7. 7. ˜  Germany Economy˜  Germanys economy is the worlds third-biggest and one of its most advanced. At the economic heart of Europe, its performance has far-reaching effects outside Germany, par ticularly in other EU countries and in central and eastern Europe. In recent years performance has been sluggish, particularly in the ex- communist east.
  8. 8. ˜  France Economy˜  In the late 1990s, the economy of Frances grew faster than the European average, allowing the Socialist government to indulge in such goodies as the 35-hour work week. But the countrys cherished social model has in recent years proved a strong disincentive to growth and to job creation.
  9. 9. • Van Veen and • Maclean et all (2006) • Van Veen and Marsman Marsman (2008) (2008) 15% and21,4 %. 12,7%
  10. 10. ˜  The Netherlands˜  The economic climate worsened in the first quarter of 2008 in all countries of the Western Europe area. Including in Belgium and Netherland optimism has weakened, although the current economic situation is still assessed very positively in these countries. For several years the Dutch economy has been characterized by remarkably high growth of GDP and employment, and steeply declining unemployment rates
  11. 11. ˜  Belgium˜  domestic demand is suppor ted by monetar y conditions and, partly reflecting the improving labor market situation, historically high levels of consumer and business confidence. On the external side, the world economic situation has strengthened and Belgian competitiveness has improved, in part due to the depreciation of the euro
  12. 12. The main research question can be formulated as follows: Can differences in company performance ofMNCs in Germany, France, The Netherlands andBelgium be explained by the nationality diversity of the top management team members?
  13. 13. Heiltjes et al (2003)• 1990 • 2008• 4,4% • 1999 • 46,6% Heiltjes et al • 11% Van Veen and (2003) Marsman (2008)
  14. 14. • investigated the effect of board composition on company Barnhart et al. 1994 performance.Tushman and Rosenkopf • argued about the Top Management Team Composition, and they argued TMT Composition have a positive effects on change in 1996 performance. • comes close to research on nationality diversity. This author Elron 1997. studied the effect of cultural heterogeneity of TMT performance on MNC and subsidiary performanceHambrick and Cannela • adjustment in the composition of the executive cadre can impart powerful effects of firm strategy and performance 2004 Caliguiri, Lazarova & • focused on exploring a relationship between national diversity of TMT in the USA and four indicators of a firm’s Zehetbauer 2004 internationalization. • included nationality of TMTs in his research concerning the Birkner, 2005 change and dynamics in German firms.
  15. 15. ˜  The whole dataset is provided by van Veen (2007) and derived from his study on nationality diversity.
  16. 16. ˜  Nationality Measured by nationality in board were provide by the database from Advanced International Management course, assuming the headquarters are located in the home country˜  Countries The data for this measure were provided by provided by van Veen (2007) and derived from his study on nationality diversity˜  Company performance Collect the data was calculated by means of two ratios, which can be calculated from the annual financial statements—net return on assets (RoA).˜  Company size Measured by the amount of employees, the data provided by provided by van Veen (2007) and derived from his study on nationality diversity.
  17. 17. 44% 28% 21% 13% • Overall 25%
  18. 18. • The result indicate the national diversity of the small countries (Netherlands and Belgium) in Europe more higher percentage than the big countries (Germany and France) in Europe.
  19. 19. Table one shown a significant (0,266) relationship between national diversity of TMT and companyperformance (ROA), therefore the first hypothesis is accepted
  20. 20. ˜  The first hypothesis predict a positive relationship between the nationality diversity of TMT members and company performance. This relation was test on having a significant correlation.
  21. 21. The coefficient of the In percentage of foreigners andcompany performance, almost significant (-.172) the there is a significant relationship between company result (.256) size and performance.
  22. 22. Table five shows there is a not significant result (.19) in percentage offoreigners, company size (-.136) and also relationship between big countries and small countries (-.128)
  23. 23. THERE IS A POSITIVE RELATIONSHIP BETWEEN THE NATIONALITY DIVERSITY OF TMTMEMBERS AND COMPANY PERFORMANCE, IT IS NOT DEPEND ON THE LARGESTPERCENTAGE OF FOREIGNERS IN TOP MANAGEMENT TEAM HAS A MORE GOODPERFORMANCE THAN A LOWEST PERCENTAGETHE SIZE OF THE COMPANIES, THE BIG COUNTRIES HAS A MORE EMPLOYEE THANA SMALL COUNTRIES, THIS IS BECAUSE THE BIG COUNTRIES SURELY HAS A MOREINHABITANTS THAN A SMALL COUNTRIESTHE DIFFERENCES OF THE BIG COUNTRIES AND THE SMALL COUNTRIES IN THERESULT OF THE PERFORMANCE IS NOT SIGNIFICANT, SO THE PERFORMANCE OFTHE COMPANIES IN THE BIG COUNTRIES NOT MORE GOOD THAN THE COMPANIESIN THE SMALL COUNTRIES.

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