From Attention to Action: The Influence of Cognitive and Ideological Diversity in Top Management Teams on Business Model Innovation

Abstract

As top management teams (TMTs) become progressively more diverse, an important question arises: how does greater TMT diversity affect a company's ability to innovate its business model? To examine this, we draw on the upper-echelons literature and on research on business models as activity systems to theorize that cognitive and ideological diversity in TMTs will affect teams' attention to business model innovation (BMI) and companies' BMI intensity. Analysis of longitudinal data from firms in the US printing and publishing industry provides support for the theory that, over time, TMT cognitive and ideological diversity have a positive influence on BMI. Whereas cognitive diversity expands TMT's BMI attention-scope, both cognitive and ideological diversity increase BMI intensity. However, too much ideological diversity has a negative effect. We furthermore find that TMT longevity moderates the effects of TMT diversity positively, suggesting that the benefit of diversity grows as team members work together longer as a team. We discuss the study's contributions to the literature on diversity, BMI, and the upper echelons.

Research on Digital Business Model Innovation Based on Emotion Regulation Lens

“…Business model innovation is defined as “designed, novel, non-trivial changes to the key elements of a firm’s business model and/or the architecture linking these elements” ( Foss and Saebi, 2018 , p. 201). In recent years, with technological change and global competition, many firms have reshaped the industry pattern and created growth myths through BMI, becoming an essential driving force of innovation-driven development ( Johnson, 2010 ; McGrath, 2010 ; Afuah, 2014 ; Hartmann and Vanpoucke, 2017 ; Narayan et al, 2021 ). Given its economic importance, BMI has gained increasing attention from academics and practitioners ( Foss and Saebi, 2017 ; Snihur and Zott, 2020 ; Bhatti et al, 2021 ; Zhang et al, 2021 ).…”

Theorizing Diversity in Management Studies: New Perspectives and Future Directions

“…They find that TMT cognitive diversity increases the attention-scope of TMT's business model innovation, while both TMT cognitive diversity and TMT ideological diversity contribute to the intensity of business model innovation. The results of Narayan et al (2020) possibility of nonlinear effects of diversity. The challenge for theorizing on and around diversity is to understand the differences in the impact mechanisms depending on the type of diversity and how these mechanisms can or cannot be generalized to apply to another type of diversity.…”

“…These emerging diversity dimensions may require new methodological approaches to adequately quantify them. In this special issue, Narayan, Sidhu, and Volberda (2020), for instance, rely on publicly available data on individuals' donations to Republican and Democratic causes to operationalize the level of ideological diversity in U.S.-based TMTs.…”

“…These challenges are pushing companies to engage in significant transformation trajectories where they must implement more agile organizational structures, engage in complex partnerships with external partners to build resilient ecosystems, and experiment with alternative business models. The contribution of Narayan and Sidhu (2020) to this special issue indicates that workforce diversity can be an important asset to address these necessary organizational challenges. Based on a longitudinal analysis of firms in the U.S. printing and publishing industry, Narayan et al (2020) provide evidence that cognitive and ideological diversity have a primarily positive influence on business model innovation.…”

“…The contribution of Narayan and Sidhu (2020) to this special issue indicates that workforce diversity can be an important asset to address these necessary organizational challenges. Based on a longitudinal analysis of firms in the U.S. printing and publishing industry, Narayan et al (2020) provide evidence that cognitive and ideological diversity have a primarily positive influence on business model innovation. At the same time, this special issue strongly suggests that the extent to which organizations can benefit from diversity to accelerate corporate transformation is likely to depend on how diversity and the associated identities are managed.…”