Top Management Team's Performance in New Technology-Based Firms: - A Quantitative Study of the Impact of Network Capabilities, Top Management Team's Behavioural Integration and Board Service Role on Top Management Team's Effectiveness

Abstract

In the latter years, the focus on entrepreneurial firms has increased, and as a result, our understanding of these firms has improved significantly. However, in the evolution of modern business, there are still many things to reveal and investigate, for instance the management of these firms. This study focuses on the relationship between top management team s (TMT) effectiveness, their network capabilities and behavioural integration, as well as the board of directors service role. We wanted to investigate how the latter three affect the top management team s effectiveness. Through a quantitative method, we examined 54 new technology-based firms, most of which were academic spin-offs (ASOs), and the rest were non-academic firms who raised venture capital investment. Companies of this type often lack resources and networks, and in order to solve these problems they often acquire new members to the top management team or the board of directors. The board members can contribute by providing resources, sharing networks and contacts, increasing legitimacy, and participate in strategic decision-makings. On the other hand, as the members of the top management team are responsible for the daily operations and strategic development, their human impact and collaboration culture has an essential impact on the firm s success.

Five hypotheses about the connection between network capabilities, top management team behavioural integration, the board s service role, and top management team s effectiveness were developed. Following conclusions were drawn from the study: (1) increased network capabilities in the top management team increase its effectiveness, (2) increased board s service role increase the top management team s effectiveness, (3) the board s service role strengthens the positive relation between top management team s network capabilities and effectiveness. The study did not support our assumption that increased TMT behavioural integration positively correlates with TMT effectiveness, which was contradictory to our hypothesis. One hypothesis was inconclusive: we could not claim whether increased TMT behavioural integration would positively affect the relationship between network capabilities and the TMT s effectiveness.