From Attention to Action: The Influence of Cognitive and Ideological Diversity in Top Management Teams on Business Model Innovation

As top management teams (TMTs) become progressively more diverse, an important question arises: how does greater TMT diversity affect a company's ability to innovate its business model? To examine this, we draw on the upper-echelons literature and on research on business models as activity systems to theorize that cognitive and ideological diversity in TMTs will affect teams' attention to business model innovation (BMI) and companies' BMI intensity. Analysis of longitudinal data from firms in the US printing and publishing industry provides support for the theory that, over time, TMT cognitive and ideological diversity have a positive influence on BMI. Whereas cognitive diversity expands TMT's BMI attention-scope, both cognitive and ideological diversity increase BMI intensity. However, too much ideological diversity has a negative effect. We furthermore find that TMT longevity moderates the effects of TMT diversity positively, suggesting that the benefit of diversity grows as team members work together longer as a team. We discuss the study's contributions to the literature on diversity, BMI, and the upper echelons.

Automated summary

Cognitive and ideological diversity in TMTs positively affect business model innovation (BMI), but too much ideological diversity has a negative effect. TMT diversity enhances both the attention scope and intensity of BMI, while TMT longevity can amplify the benefits of diversity.