Research Espresso | Dec 2022 Issue 18

Research

The Yin & Yang of Top Management Teams

Research INSIGHT

The Yin & Yang of Top Management

Post, C., Muzio, D., Sarala, R., Wei, L., & Faems, D. (2021). Theorizing Diversity in Management Studies: New Perspectives and Future Directions. Journal of Management Studies, 58(8), 2003-2023.

RESEARCH INSIGHT

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 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 relationbuilding 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.

Prof. Liqun Wei Professor Department of Management

Business scholars named World’s Top 2% Scientists

Three scholars from the HKBU School of Business have recently been listed among the world’s top 2% of the most-cited scientists in respective disciplines. They are among the 44 researchers from HKBU recognised on the list this year, indicating HKBU’s growing research strength and impact.

The list of the database of top-cited scientists is published by Stanford University. Prof. Christy Cheung, Professor of the Department of Finance and Decision Sciences, and Prof. Xu Huang, Associate Dean (Research & Impact) and Chair Professor of the Department of Management, are listed in Information & Communication Technologies and Economics & Business fields, respectively, for two consecutive years. Dr. Ludwig Man Kit Chang, Assistant Professor of the Department of Finance and Decision Sciences also made the list in Information & Communication Technologies field.

The ranking is based on the “Updated science-wide author databases of standardized citation indicators”, compiled and announced annually by a group of researchers at Stanford University, USA. Scientists are classified into 22 scientific fields and 176 sub-fields. The rankings are calculated based on standardized information of citations, h-index, co-authorship-adjusted hm-index, citations to papers in different authorship positions, and a composite indicator.

Prof. Christy Cheung Professor Department of Finance and Decision Sciences

Prof. Xu Huang Chair Professor Department of Managementt Associate Dean (Research & Impact) School of Business

Dr. Ludwig Chang Assistant Professor Department of Finance and Decision Sciences

Finance scholar provides new perspectives on bribery

HKBU School of Business organised the research webinar on 29 November 2022, featuring Prof. Aris Stouraitis, Professor from the Department of Finance and Decision Sciences, to deep dive into the world of bribery and its impacts and benefits. The audience enjoyed an afternoon of conducive discussions with the scholars, who provided a different yardstick for measuring the validity of some of the popular conjectures about bribery based on the innovative perspective of academic research.

Understanding the basic nature of corruption cases being illegal and undisclosed, Prof. Stouraitis and his team of researchers realised the lack of practical evidence that can be gleaned from previous academic studies as the measuring approaches could be subjective. The team hence used data on actual companies that have been involved in bribery activity worldwide to answer two questions: what benefits do firms get from paying bribes, and what determines these benefits. The samples included domestic and cross-border bribery cases detected from 1975 to 2015, involving 131 publicly listed firms listed in 24 stock markets worldwide reportedly having bribed government officials in 60 countries.

Prof. Stouraitis shared that, according to the study, the marginal benefit of every US dollar increase in the size of the bribe would lead to US$6-9 increase in the value of the firm. Over half of the bribes were actually paid after the contracts were awarded, which contradict to the ‘pay to play’ perception, whereby firms pay bribes to enter the bidding process, and subsequently contracts are awarded to the best bidder. The study also found that only a very small fraction of CEOs whose companies paid bribes under their tenure were fired when they bribery was revealed. In many cases, the CEO during the revelation of the bribery was different from the CEO who paid the bribe.

However, the result suggested that bribing firms are not more efficient compared to a matched control group of firms without bribery incidents. The stricter the regulatory burdens at the country level will also lead to the lower benefits from bribes. Politicians with greater hold-up power do not grant less benefits to firms, and Competition for the same contract by many firms does not lead to smaller benefits.

Research EXCELLENCE

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10 Research Espresso / Dec 2022

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The Research Espresso, a bimonthly e-publication covering everything you need to know about the latest research developments at the HKBU School of Business, focuses on four key areas: Research Insights (the main research topic of the month), Research Excellence (recognition of faculty members’ research achievements), News (research-related updates), and Seminars (sharing research skills and knowledge).

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