Top Management Teams Diversity on Firm Performance in the COVID-19 Pandemic: Evidence from Indonesia

Arya Kwikamto, Deasy Ariyanti Rahayuningsih, Astrid Rudyanto, Regi Muzio Ponziani

Abstract


Objective This research aims to analyze the effect of top management teams diversity on firm performance during COVID-19 pandemic. Top management teams diversity consists of cultural diversity, gender diversity and other diversities (tenure, network, scale, age).Design/Methodology This paper used mixed-method for data collection and data analysis. For quantitative method, this paper used 92 consumer cyclicals and consumer non-cyclicals companies listed in Indonesia Stock Exchange from 2020-2022, resulting in 275 observations that met the criteria. Random effect multiple regression is used to test the hypotheses. For qualitative method, this paper interviewed 5 human resources managers from consumer cyclicals and consumer non-cyclicals companies from various characteristics.Results The results show that top management teams scale and age positively influence the firm performance in consumer cyclical and consumer non-cyclical companies in Indonesia. Top management teams network has positive influence on firm performance in consumer cyclical companies, but negative influence on firm performance in consumer non-cyclical companies in Indonesia. On the other hand, cultural diversity, gender diversity, and top management teams tenure do not influence the firm performance in consumer cyclical and consumer non-cyclical companies in Indonesia.Research limitations/implications It can be implied that companies should tailor their leadership development and recruitment strategies to foster the most impactful forms of diversity to conquer the crisis.Novelty/Originality This research analyzes the effect of top management teams diversity in an emerging country during pandemic which fills the research gap.

Keywords


Firm Performance, Cultural Diversity; Gender Diversity; Emerging country; COVID-19

Full Text:

PDF

References


Adusei, E., Demah, E., & Boso, R. K. (2023). Top management commitment in greening supply chain operations: Post-COVID-19 perspectives from an emerging economy. Journal of Global Operations and Strategic Sourcing, 16(4), 773–797. https://doi.org/10.1108/JGOSS-03-2022-0021

Agustia, D., Harymawan, I., & Permatasari, Y. (2022). Board Diversity, Sustainability Report Disclosure and Firm Value. Global Business Review, 23(6), 1520–1543. https://doi.org/10.1177/09721509221124125

Ahmadi, A., Nakaa, N., & Bouri, A. (2018). Chief Executive Officer attributes, board structures, gender diversity and firm performance among French CAC 40 listed firms. Research in International Business and Finance, 44(December 2016), 218–226. https://doi.org/10.1016/j.ribaf.2017.07.083

Akgün, A. İ., & Türkoğlu, S. P. (2024). Intellectual capital and performance of listed firms during the global financial crisis: The effects of legal origin. International Journal of Organizational Analysis, 32(4), 759–785. https://doi.org/10.1108/IJOA-01-2023-3587

Aladwey, L., Elgharbawy, A., & Ganna, M. A. (2022). Attributes of corporate boards and assurance of corporate social responsibility reporting: Evidence from the UK. Corporate Governance: The International Journal of Business in Society, 22(4), 748–780. https://doi.org/10.1108/CG-02-2021-0066

Altass, S. (2022). Board diligence, independence, size, and firm performance: Evidence from Saudi Arabia. Accounting, 8(3), 269–276. https://doi.org/10.5267/j.ac.2022.1.001

Badu, L. A., & Appiah, K. O. (2017). The Impact of Corporate Board Size on Firm Performance: Evidence from Ghana and Nigeria. Research in Business and Management, 4(2), 1. https://doi.org/10.5296/rbm.v4i2.11721

Blanco-Alcántara, D., Díez-Esteban, J. M., & Romero-Merino, M. E. (2019). Board networks as a source of intellectual capital for companies: Empirical evidence from a panel of Spanish firms. Management Decision, 57(10), 2653–2671. https://doi.org/10.1108/MD-12-2017-1238

Boey, Y. S., & Wooi, H. C. (2021). CEO Age and Managerial Risk Taking: Do National Cultures Matter? International Journal of Economics and Management, 15(2), 283–296.

Boone, C., Lokshin, B., Guenter, H., & Belderbos, R. (2019). Top management team nationality diversity, corporate entrepreneurship, and innovation in multinational firms. Strategic Management Journal, 40(2), 277–302. https://doi.org/10.1002/smj.2976

Cao, X., Im, J., & Syed, I. (2021). A Meta-Analysis of the Relationship Between Chief Executive Officer Tenure and Firm Financial Performance: The Moderating Effects of Chief Executive Officer Pay and Board Monitoring. In Group and Organization Management (Vol. 46, Issue 3). https://doi.org/10.1177/1059601121989575

Chapple, L., & Humphrey, J. (2014). Does board gender diversity have a financial impact? Evidence using stock portfolio performance. Journal of Business Ethics, 709–723.

Chen, X., Chen, X., Fang, M., Xia, W., & Hu, Y. (2023). The Impact of The Top Management Team Faultlines on Environment, Social and Governance Performance of Listed Companies. Technological and Economic Development of Economy, 29(6), 1776–1806. https://doi.org/10.3846/tede.2023.19547

Dodd, O., & Zheng, B. (2022). Does Board Cultural Diversity Contributed by Foreign Directors Improve Firm Performance? Evidence from Australia. Journal of Risk and Financial Management, 15(8), 332. https://doi.org/10.3390/jrfm15080332

Elmarzouky, M., Albitar, K., & Hussainey, K. (2021). Covid-19 and performance disclosure: Does governance matter? International Journal of Accounting & Information Management, 29(5), 776–792. https://doi.org/10.1108/IJAIM-04-2021-0086

Facente, S. N., De Zuzuarregui, M., Frank, D., Gomez-Aladino, S., Muñoz, A., Williamson, S., Wang, E., Hunter, L., Packel, L., Reingold, A., & Petersen, M. (2022). Risky business: A mixed methods study of decision-making regarding COVID-19 risk at a public university in the United States. Frontiers in Psychology, 13, 926664. https://doi.org/10.3389/fpsyg.2022.926664

Farwis, M., Siyam, M. M., Nazar, MCA., & Aroosiya, MACF. (2021). The Nexus Between Corporate Governance and Firm Performance During COVID-19 Pandemic in Sri Lanka. Journal of Economics, Finance and Accounting Studies, 3(1), 81–88. https://doi.org/10.32996/jefas.2021.3.1.8

Fernando, G. D., Jain, S. S., & Tripathy, A. (2020). This cloud has a silver lining: Gender diversity, managerial ability, and firm performance. Journal of Business Research, 117(August 2019), 484–496. https://doi.org/10.1016/j.jbusres.2020.05.042

Firk, S., Gehrke, Y., Hanelt, A., & Wolff, M. (2022). Top management team characteristics and digital innovation: Exploring digital knowledge and TMT interfaces. Long Range Planning, 55(3), 102166. https://doi.org/10.1016/j.lrp.2021.102166

Frijns, B., Dodd, O., & Cimerova, H. (2016). The impact of cultural diversity in corporate boards on firm performance. Journal of Corporate Finance, 41, 521–541. https://doi.org/10.1016/j.jcorpfin.2016.07.014

García-Meca, E., García-Sánchez, I. M., & Martínez-Ferrero, J. (2015). Board diversity and its effects on bank performance: An international analysis. Journal of Banking and Finance, 53, 202–214. https://doi.org/10.1016/j.jbankfin.2014.12.002

Ghauri, P., Hadjikhani, A., & Elg, U. (2012). The Three Pillars: Business, State and Society: MNCs in Emerging Markets. In A. Hadjikhani, U. Elg, & P. Ghauri (Eds.), International Business and Management (pp. 3–16). Emerald Group Publishing Limited. https://doi.org/10.1108/S1876-066X(2012)0000028008

Giannetti, M., & Zhao, M. (2019). Board Ancestral Diversity and Firm Performance Volatility. Journal of Financial and Quantitative Analysis, 54(4), 1683–1711. https://doi.org/10.1017/S0022109018001023

Hambrick, D. C., & Mason, P. A. (1984). Upper Echelons: The Organization as a Reflection of Its Top Managers. The Academy of Management Journal, 9(2), 193–206.

Handajani, L., Subroto, B., & Erwin, S. T. (2014). Does Board Diversity Matter on Corporate Social Disclosure? An Indonesian Evidence. Journal of Economics and Sustainable Development, 5(9), 8–17.

Hu, S., & Zhang, Y. (2021). COVID-19 Pandemic and Firm Performance: Cross-country Evidence. International Review of Economics & Finance, 74, 365–372. https://doi.org/10.1016/j.iref.2021.03.016

Ibrahim, A. H., & Hanefah, M. M. (2016). Board diversity and corporate social responsibility in Jordan. Journal of Financial Reporting and Accounting, 14(2), 279–298. https://doi.org/10.1108/JFRA-06-2015-0065

Ionascu, M., Ionascu, I., Sacarin, M., & Minu, M. (2018). Women on Boards and Financial Performance: Evidence from a European Emerging Market. Sustainability, 10(5), Article 5. https://doi.org/10.3390/su10051644

Jukka, T. (2021). Top management team demography and firm operating performance: A path analysis. Journal of Strategy and Management, 14(1), 19–34. https://doi.org/10.1108/JSMA-12-2019-0224

Kalsie, A., & Shrivastav, S. M. (2016). Analysis of board size and firm performance: Evidence from NSE companies using panel data approach. Indian Journal of Corporate Governance, 9(2), 148–172. https://doi.org/10.1177/0974686216666456

Kara, A., Nanteza, A., Ozkan, A., & Yildiz, Y. (2022). Board gender diversity and responsible banking during the COVID-19 pandemic. Journal of Corporate Finance, 74, 102213. https://doi.org/10.1016/j.jcorpfin.2022.102213

Korir, F. J., & Tenai, J. K. (2020). Does Structural Power Matter? Board Attributes and Firm Performance: Moderated by CEO Duality. SEISENSE Journal of Management, 3(5), 54–64. https://doi.org/10.33215/sjom.v3i5.432

Kumar, S., & Zbib, L. (2022). Firm performance during the Covid-19 crisis: Does managerial ability matter? Finance Research Letters, 47, 102720. https://doi.org/10.1016/j.frl.2022.102720

Kurnianto, T. W., Malini, H., Wendy, W., Giriati, G., & Setiawan, H. (2024). Financial performance analysis before and after initial public offering in consumer cyclical and consumer non-cyclical sector companies on the indonesia stock exchange. Jurnal Ekonomi, 13(01), 228–245.

Lajnef, K., & Ellouz, S. (2024). Do Hofstede’s cultural dimensions moderate the CSR-firm performance relationship before and during the COVID-19 crisis? Global Knowledge, Memory and Communication. https://doi.org/10.1108/GKMC-10-2023-0382

Lestari, R. A. (2021). Gender Diversity, Board Composition, Intellectual Capital and Its Effect on Firm Performance Article Information. Management Analysis Journal, 10(1), 62–76.

Li, W. (2023). Impact of Directors’ Network on Corporate Social Responsibility Disclosure: Evidence from China. Journal of Business Ethics, 183(2), 551–583. https://doi.org/10.1007/s10551-022-05092-3

Liu, R., Li, C., & Huo, M. (2023). The impact of chief executive officer turnover on strategic change: A model of mediating effect and joint moderating effect. China Finance Review International, 13(4), 633–666. https://doi.org/10.1108/CFRI-03-2021-0055

Lo, F. Y., & Fu, P. H. (2016). The interaction of chief executive officer and top management team on organization performance. Journal of Business Research, 69(6), 2182–2186. https://doi.org/10.1016/j.jbusres.2015.12.027

Lo, F. Y., Wang, Y., & Zhan, W. (2020). Does TMT cultural diversity contribute to firm performance and do socialisation and tenure matter? A test of two competing perspectives. Personnel Review, 49(1), 324–348. https://doi.org/10.1108/PR-11-2018-0468

Ma, C., Ge, Y., & Wang, J. (2021). Top Management Team Intrapersonal Functional Diversity and Adaptive Firm Performance: The Moderating Roles of the CEO–TMT Power Gap and Severity of Threat. Frontiers in Psychology, 12, 772739. https://doi.org/10.3389/fpsyg.2021.772739

Mardiana, K. S., Attamimi, A. H., Saud, Y. V., & Sofianti, E. (2023). Determinants of Firm Value: Analysis on Non-Cyclical Consumer Companies. Asian Journal of Management Analytics, 3(1), 249–268.

Miroshnychenko, I., Vocalelli, G., De Massis, A., Grassi, S., & Ravazzolo, F. (2024). The COVID-19 pandemic and family business performance. Small Business Economics, 62(1), 213–241. https://doi.org/10.1007/s11187-023-00766-2

Muhammad Rashid Amedi, A., & Saeed Mustafa, A. (2020). Board Characteristics and Firm Performance: Evidence From Manufacture Sector of Jordan. Accounting Analysis Journal, 9(3), 146–151. https://doi.org/10.15294/aaj.v9i3.39577

Naidu, D., & Ranjeeni, K. (2024). Did outside directors’ firm-specific accumulated knowledge benefit the firm’s stock performance during COVID-19? Australian Journal of Management, 49(4), 605–635. https://doi.org/10.1177/03128962231166831

Namatovu, R., & Larsen, M. M. (2021). Responding to COVID-19: Insights from African firms. Africa Journal of Management, 7(1), 104–120. https://doi.org/10.1080/23322373.2021.1878809

Nandy, M., Lodh, S., Kaur, J., & Wang, J. (2020). Impact of directors’ networks on corporate social responsibility: A cross country study. International Review of Financial Analysis, 72, 101601. https://doi.org/10.1016/j.irfa.2020.101601

Nguyen, H. T., Pham, M. H., & Truong, C. (2023). Leadership in a pandemic: Do more able managers keep firms out of trouble? Journal of Behavioral and Experimental Finance, 37, 100781. https://doi.org/10.1016/j.jbef.2022.100781

Oketch, J. O., Kilika, J. M., & Kinyua, G. M. (2021). TMT Characteristics and Organizational Performance in a Regulatory Setting in Kenya. Journal of Economics and Business, 4(1), 79–92. https://doi.org/10.31014/aior.1992.04.01.322

Park, A.-Y., & Oh, G. (2023). The core of board networks and firm value. Frontiers in Physics, 11, 1099870. https://doi.org/10.3389/fphy.2023.1099870

Pham, A. D., & Hoang, A. T. P. (2019). Does female representation on board improve firm performance? A case study of non-financial corporations in vietnam. In Studies in Computational Intelligence (Vol. 809). Springer International Publishing. https://doi.org/10.1007/978-3-030-04200-4_36

Pham, T. D. T., & Lo, F. Y. (2023). How does top management team diversity influence firm performance? A causal complexity analysis. Technological Forecasting and Social Change, 186. https://doi.org/10.1016/j.techfore.2022.122162

Pham, T.-D. T., & Lo, F.-Y. (2023). How does top management team diversity influence firm performance? A causal complexity analysis. Technological Forecasting and Social Change, 186, 122162. https://doi.org/10.1016/j.techfore.2022.122162

Phuong, T. T., Le, A.-T., & Ouyang, P. (2022). Board tenure diversity and investment efficiency: A global analysis. Journal of International Financial Markets, Institutions and Money, 81, 101657. https://doi.org/10.1016/j.intfin.2022.101657

Purkayastha, S., Manolova, T. S., & Edelman, L. F. (2012). Diversification and Performance in Developed and Emerging Market Contexts: A Review of the Literature*. International Journal of Management Reviews, 14(1), 18–38. https://doi.org/10.1111/j.1468-2370.2011.00302.x

Putra, S. T. (2022, July 20). Dealing with Shortage of Medical Doctors in Indonesia. kompas.id. https://www.kompas.id/baca/english/2022/07/20/dealing-with-shortage-of-medical-doctors-in-indonesia

Ramadhani, zhafarina isti, & Adhariani, D. (2017). Pengaruh Keberagaman Gender Terhadap Kinerja Keuangan Perusahaan dan Efisiensi Investasi. Simposium Nasional Akuntansi XVIII, 21(1), 1–20.

Robbins, S. P., & Judge, T. A. (2019). Organizational Behavior, Eighteenth Edition, Global Edition. In Journal of Chemical Information and Modeling (Issue 9).

Rokhyani, I., Widodo, S., & Sari, M. K. (2023). Do financial ratios affect stock prices in the consumer non-cyclical sector? Sebelas Maret Business Review, 8(2), 78. https://doi.org/10.20961/smbr.v8i1.77448

Rudyanto, A., Julisar, J., & Debora, D. (2023). Political Connection as a Double-edged Sword: The Case of Tax Aggressiveness Practice during the COVID 19 pandemic. Asian Journal of Accounting Research, 8(4), 400–410.

Sagita, N. S. (2024). Kemenkes RI: 3,3 Persen Calon Dokter Spesialis Depresi hingga Ingin Bunuh Diri. detikHealth. https://health.detik.com/berita-detikhealth/d-7294279/kemenkes-ri-3-3-persen-calon-dokter-spesialis-depresi-hingga-ingin-bunuh-diri

Salleh, S. S. M. M., Fareed, M., & Yusoff, R. Z. (2016). Top Management Team Networking as an Imperative Predictor of the Firm Performance: A Case of Permodalan Nasional Berhad Invested Companies Rohaizah SAAD. International Journal of Economic Perspectives, 10(4), 739–750.

Schislyaeva, E. R., Krasovskaya, I. P., & Plis, K. S. (2022). Post COVID green intellectual capital management with the mediation of organizational learning capability. Frontiers in Energy Research, 10, 1028476. https://doi.org/10.3389/fenrg.2022.1028476

Shaheen, R., Yang, H., Bhutto, M. Y., Bala, H., & Khan, F. N. (2021). Assessing the Effect of Board Gender Diversity on CSR Reporting Through Moderating Role of Political Connections in Chinese Listed Firms. Frontiers in Psychology, 12, 1–16.

Shaw, T. S., Cordeiro, J. J., & Saravanan, P. (2016). Director network resources and firm performance: Evidence from Indian corporate governance reforms. Asian Business and Management, 15(3), 165–200. https://doi.org/10.1057/s41291-016-0003-1

Shen, H., Fu, M., Pan, H., Yu, Z., & Chen, Y. (2020). The Impact of the COVID-19 Pandemic on Firm Performance. Emerging Markets Finance and Trade, 56(10), 2213–2230. https://doi.org/10.1080/1540496X.2020.1785863

Singh, P., & Sharma, A. P. (2024). Corporate social responsibility and COVID-19 pandemic: An analytical view of community attitude. IIMT Journal of Management, 1(2), 242–263. https://doi.org/10.1108/IIMTJM-12-2023-0068

Su, Z., Chen, J., Guo, H., & Wang, D. (2022). Top management team’s participative decision-making, heterogeneity, and management innovation: An information processing perspective. Asia Pacific Journal of Management, 39(1), 149–171. https://doi.org/10.1007/s10490-021-09752-2

Sutarti, Syakhroza, A., Diyanty, V., & Dewo, S. A. (2021). Top management team (TMT) age diversity and firm performance: The moderating role of the effectiveness of TMT meetings. Team Performance Management, 27(5–6), 486–503. https://doi.org/10.1108/TPM-01-2021-0006

Tanikawa, T., & Jung, Y. (2019). CEO Power and Top Management Team Tenure Diversity: Implications for Firm Performance. Journal of Leadership and Organizational Studies, 26(2), 256–272. https://doi.org/10.1177/1548051818789371

Tanikawa, T., Kim, S., & Jung, Y. (2017). Team Performance Management: An International Journal Article information : Team Performance Management: An International Journal, 23(3/4). https://doi.org/10.1108/TPM-06-2016-0027

Toumi, F., Bouraoui, M. A., & Khlif, H. (2022). National culture and tax avoidance: A quantile regression analysis. Arab Gulf Journal of Scientific Research, 40(2), 196–211. https://doi.org/10.1108/AGJSR-05-2022-0047

Tulung, J. E., & Ramdani, D. (2015). The Influence of Top Management Team Characteristics on BPD Performance. International Research Journal of Business Studies, 8(3), 155–166. https://doi.org/10.21632/irjbs.8.3.155-166

Valls Martínez, M. del C., & Cruz Rambaud, S. (2019). Women on corporate boards and firm’s financial performance. Women’s Studies International Forum, 76(April), 102251. https://doi.org/10.1016/j.wsif.2019.102251

Xu, J., & Li, J. (2022). The interrelationship between intellectual capital and firm performance: Evidence from China’s manufacturing sector. Journal of Intellectual Capital, 23(2), 313–341. https://doi.org/10.1108/JIC-08-2019-0189

Xu, J., & Wang, B. (2019). Intellectual Capital Performance of the Textile Industry in Emerging Markets: A Comparison with China and South Korea. Sustainability, 11(8), 2354. https://doi.org/10.3390/su11082354




DOI: https://doi.org/10.24815/jaroe.v8i2.44213

Article Metrics

Abstract view : 0 times
PDF - 0 times

Refbacks

  • There are currently no refbacks.


Published by:

Department of Accounting
Faculty of Economics and Business 
Universitas Syiah Kuala
Kopelma Darussalam, Banda Aceh, Indonesia - 23111
E-ISSN: 2621-1041

 

Creative Commons License
Journal of Accounting Research, Organization and Economics by the Department of Accounting, Faculty of Economics and Business, Universitas Syiah Kuala is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at http://www.jurnal.usk.ac.id/JAROE/index.