How CEOs And TMTs Build Adaptive Capacity In Small Entrepreneurial Firms

Abstract

Research suggests that a CEO may have more influence in the context of small entrepreneurial firms, but it is still unclear how a company's chief executive facilitates strategic decision-making. Little is known about the ways in which these individuals build strategic capabilities, such as the capacity to adapt to changing environments. This study addresses these issues and develops a model indicating that transformational leadership facilitates behavioural integration and comprehensiveness in the decision process among members of the top management team (TMT), which in turn enhances organizational capacity to adapt to environmental changes. Survey results shed light on the complex way in which CEOs facilitate processes within the TMT and enhance small entrepreneurial firms' capacity to adapt, thereby increasing their viability. This study contributes to the literatures on Upper Echelon Theory, strategic decision-making, and dynamic capabilities by shedding light on the ways in which transformational leaders influence behavioural and decision-making processes.

Quo Vadis, Dynamic Capabilities? A Content-Analytic Review of the Current State of Knowledge and Recommendations for Future Research

“…Individual skills and cognitions have come to the foreground (Helfat & Peteraf, 2015), the inquiry of which now constitutes an important component of the dynamic capabilities perspective. Complementing the organizational and individual level, researchers have pointed to the importance of dynamic capabilities of key groups, such as top management and other executive teams (Friedman, Carmeli, & Tishler, 2016;Martin, 2011), and have even made the case that dynamic capabilities can operate beyond firm boundaries, such as at the level of the production network (Dyer & Nobeoka, 2000) or the nation state (Teece, 2014). Taken together, these different foci adopted by various researchers make clear that the dynamic capabilities perspective has come to represent a comprehensive multi-level paradigm.…”

Management by objective enhances innovation behavior: An exploratory study in global management consulting

“…To assess the extent of common method variance, we tested a one-factor model, in which all the observed items load onto the same latent variable (Friedman, Carmeli, & Tishler, 2016). The results of the onefactor model yielded the following fit indices: a significant χ 2 of 424.82 with 104 degrees of freedom and CFI = 0.499; Tucker-Lewis Index = 0.422; RMSEA = 0.196.…”