Changes In The Top Management Team: Performance Implications Of Altering Team Composition

This study focuses on the performance implications of changes in the top management team using an eleven-year period longitudinal research design with a sample of 45 of the largest corporations in the Netherlands. The central argument of this paper builds on the idea that exits and entries of top management team members have a significant impact on subsequent firm performance due to the resulting changes in the composition of the team. Two aspects of team composition – organizational tenure and age - are examined in more detail. Specifically it is argued that changes in the top team which lead to higher degrees of dissimilarity between members of the team on the two aspects examined, will have a negative effect on performance. Results indicate that exits and entries indeed have performance implications in the years following the change. These performance effects can, however, not be attributed to increasing age or tenure dissimilarity.