This study examines the relationships between top management demographics, rational decision making (RDM), munificence, and firm performance. We expect top management demographics to influence rational decision making, and rational decision making to influence firm performance. In addition, we hypothesize a moderating effect of environmental munificence on the rational decision making-firm performance relationship. To test these hypotheses, we conducted a survey that measured RDM. Top management demographic characteristics, environmental munificence, and firm performance were collected from archival sources. We examined the relationships between RDM and top management age, tenure, and education level, using regression analyses. The results of this study provide support for the assertion that top management demographic characteristics influence decision making, and for the role of environmental munificence as a moderator in the relationship between decision making and organizational performance.
PurposeThe purpose of this paper is to focus on top management demographic characteristics, business strategy, and firm performance in the major US airlines.Design/methodology/approachThe relationships between management characteristics and business strategy are examined as well as the business strategy – firm performance relationships before and after airline deregulation. This is a longitudinal study (1972‐1995) that includes data from publicly available sources. Pooled cross‐sectional time series regression analyses were used with fixed‐effects to test specific hypotheses. The management demographics include age, tenure, education, and functional background. Business strategy was measured as low cost, differentiation, and scope. The study includes three measures of firm performance.FindingsThere were significant management demographics‐business strategy relationships in the deregulatory period. There were also significant business strategy‐firm performance relationships with deregulation.Originality/valueThis is a longitudinal study of management, strategy, and performance of the airlines from regulation to deregulation. It has performance implications for the major air carriers that are of interest to academics and managers.
This study investigates the moderating roles of environmental munificence and dynamism in theThe relationship between rationality in strategic environment, namely, uncertainty or rate of change. However, there are two other critical decision processes and firm performance has been a subject of continuing controversy in the stra-aspects of a firm's operating environment, namely complexity and munificence which have received tegic management field. One school of thought favors the 'rational comprehensive' approach relatively little attention ' (1993: 358). This paper attempts to address this gap in (Ansoff, 1965). Another feels that an 'incremental political' approach offers better descriptive accu-past empirical research by investigating (a) the moderating role of environmental munificence, racy and normative validity (Quinn, 1980). In recent years, the emphasis has moved away from (b) the moderating role of environmental dynamism, and (c) the joint effect of munificence and a search for universal relationships that juxtapose these two ideal types to a focus on the context dynamism in the relationship between rationality in strategic decision processes and organizaspecificity of the rationality -performance relationship. Empirical research on the performance tional performance. implications of the comprehensiveness of decision processes has yielded conflicting results. In a recent review of this literature, Rajagopalan, THEORETICAL BACKGROUND Rasheed, and Datta point out that 'most previous Rationality-performance relationship studies have focused on one aspect of the Organizational environment is a major source of contingencies faced by a firm (Tosi and Slocum,
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