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Keywords

functional background heterogeneity of TMT, digital transformation, the demographics of TMT, innovation capability

Abstract

Digital transformation is the key for enterprises to achieve breakthrough development, and the heterogeneity of top management team (TMT) has an important impact on the success of digital transformation. Starting from the high-level echelon theory, taking the panel data of Shanghai and Shenzhen A-share listed companies during 2010—2021 as research samples, the Herfinadal coefficient was used to measure the heterogeneity of TMT function-al background, and the impact of TMT functional background heterogeneity on enterprises' digital transformation was investigated. Empirical findings: There is an inverse U-shaped relationship between TMT functional background heterogeneity and digital transformation, and a series of robustness tests, such as propensity score matching,two-period lag of explained variables, sample replacement, change of measurement model, addition of control variables that may be omitted, and non-shrinking tail treatment, show that TMT functional background heterogeneity still has a significant inverse U-shaped effect on digital transformation. This is because the heterogeneity of TMT functional background plays a certain role in the integration of internal and external resources, the operation of member relations and organizational decision-making. Furthermore, we pay attention to the difference of this effect in different types of enterprises, and find that the inverted U-shaped relationship between state-owned enterprises and small and medium-sized enterprises is more significant, because state-owned enterprises have a certain path dependence and relatively weak technology accumulation ability, while small and medium-sized enterprises have a certain resource disadvantage. Secondly, the interaction term of TMT demographic characteristics and TMT functional background heterogeneity was introduced to further explore the boundary conditions of the mechanism of action. The results showed that the average age of TMT had no significant effect on the relationship between the two,possibly because the dynamic nature of the power structure or social capital involved in the age of senior executives may affect the results of the study. The proportion of women positively moderates the inverse U-shaped relationship between TMT functional background heterogeneity and enterprise digital transformation, respectively, because female executives have the ability to cultivate interpersonal relationships and long-term vision. Education level negatively moderates the inverse U-shaped relationship between TMT functional background heterogeneity and enterprise digital transformation, because TMT with higher education level has relatively less work experience and makes too detailed decision analysis. In addition, based on the dynamic capability perspective and using the number of patented inventions to measure the innovation capability of enterprises, we find that innovation capability plays an intermediary role between the heterogeneity of TMT functional background and digital transformation. Specifically, the heterogeneity of TMT functional background has an inverted U-shaped effect on the innovation capability of enterprises, while the innovation capability of enterprises positively affects the digital transformation of enterprises. Further research shows that the related influence of TMT functional background heterogeneity is independent of whether TMT has the influence of R&D background and CEO functional background diversity, and promotes the improvement of enterprise economic efficiency through the influence of digital transformation. The research of this paper provides empirical evidence for Chinese listed enterprises to rationally allocate senior management team personnel,actively carry out innovation activities, and realize digital transformation.

DOI

10.16315/j.stm.2023.06.005

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