Top management team demographic-faultline strength and strategic change: What role does environmental dynamism play?

Research summary: Drawing on the demographic fault-line perspective and the concept of attribute-specific faultlines, we investigate the effect of top management team(TMT) relationship-based (gender, age, educational level) and task-based (functional background, tenure) faultline strength on strategic change. In a panel study(2003–2015), we find that TMT relationship-based fault-line strength (especially educational-level) negatively influences strategic change whereas TMT task-based faultline strength positively affects strategic change. Environmental dynamism reduces the negative effect of TMTgender and educational-level faultline strengths on strategic change while in fact revealing a notable positive effect between TMT age-faultline strength and strategic change. Additionally, environmental dynamism strengthens the positive effects of task-related TMT faultline strength on strategic change. We offer theoretical and practical implications to both the demographic faultlines and upper echelons research domains. Managerial summary: Top management teams (TMTs)in firms can fracture into subgroups based on demographic characteristics (e.g., age, gender, and education level) as well as based on task-based characteristics(e.g., functional background, and tenure). We call the former relationship-based faultlines and the latter task-based faultlines. We predict and find that stronger relationship-based faultlines hinders between subgroup cohesion, reducing TMTs' ability to initiate strategic change. We also predict and find that stronger task-based faultlines facilitate inter-subgroup knowledge-sharing, improvingTMTs' ability to initiate strategic change. We find that environmental dynamism reduces the negative effect of most relationship-based faultlines (except age where this effect is positive) on strategic change while strengthening the positive effect of task-based faultline strengths on strategic change.