The Yin & Yang of Top Management Teams

By Prof. Liqun Wei

From the beauty of pair figure skating to the world’s best movies, men and women can transcend barriers by working together as one. Is this also possible in business? As more organisations recognise the potential of gender diversity, the need to appoint more women in leadership roles becomes crucial for firms looking to strive in the global business arena. But what makes gender diversity work? Rejecting the notions that men and women bring different cognitive perspectives to Top Management Team (“TMT”)’s strategic decision-making or that success depends simply on hiring more women, a recent paper[1] seeks to demonstrate that it is by seamlessly harnessing the natural inclinations of both sexes that gender diversity delivers results.

Drawing on insights from social role theory about the way human beings interact socially – with women being more “communal” (i.e. socially sensitive and relation-building oriented) and men more “agentic” (i.e. assertive and voice-raising oriented) – the researchers explore how TMT gender diversity can promote “ambidextrous strategic orientation” (ASO). The simultaneous pursuit of exploration (such as developing new products) and exploitation (such as increasing sales of existing products) across a firm’s strategic activities, ASO is considered essential to sustainable firm performance, especially in the tech sector.

Analysing data and surveys from top managers working in high-tech SMEs across China – at 43%, the country has a very high female proportion in senior executive teams while SMEs’ relatively flat structures mean that TMTs play a more direct role in managing ASO – the researchers suggest TMT Psychological Safety as the key mechanism for transmitting the benefits of TMT gender diversity to ASO. Defined as the belief that their team is safe for each member to take risks such as addressing controversial issues openly, TMT Psychological Safety is built upon mutual trust and support between members and the freedom of each member to speak authentically.

Findings confirm that TMT members of the surveyed SMEs reflect the gender differences of social role theory while TMT gender diversity is indeed positively related to TMT Psychological Safety and, ultimately, ASO. Meanwhile, neither cognitive variety nor alternative diversity factors such as education proved relevant, while adding a firm’s slack resources as control (i.e. resources that are “unfettered, uncommitted and available for discretionary use”) further confirmed the positive effect of TMT gender diversity on ASO via TMT Psychological Safety.

Given the above, it’s clear that firms should stop assuming that TMT gender diversity works simply by leveraging some generic demographic factors since it’s clear that TMT Psychological Safety is the catalyst underpinning gender diversity’s effectiveness. Thus, instead of appointing more women, firms should nurture mixed teams of individuals able to leverage the attributes associated with their gender while consistently supporting members of the opposite sex. By centering the complementarity between the natural inclinations of men and women (such as men’s ability to help women avoid excessive consensus seeking), firm will be able to benefit from gender diversity via fostering TMT Psychological Safety. One caveat? It may take time for teams to gel and for surface-level stereotypes to be replaced by team interactions informed by members’ deep-level proclivities.

Just as the Yin and Yang of Chinese philosophy would suggest, opposite yet interconnected forces do indeed have the power – from the big screen to the board room – to spark creativity, trigger innovation and drive results!

Reference:

¹  "Tang S., Nadkarni S., Wei L. & Zhang S. “Balancing the Yin and Yang: TMT Gender Diversity, Psychological Safety, and Firm Ambidextrous Strategic Orientation in Chinese High-Tech SMEs” Academy of Management Journal , AMJ-2019-0378.R2