Skip to main content

The Influence of Top Management Team on Chinese Firms’ FDI Ambidexterity

  • Yi Li (a1) and Lin Cui (a2)

Strategic ambidexterity has been under researched in the context of Chinese outward foreign direct investment (FDI). An ambidextrous FDI, balancing between exploratory and exploitive activities, is strategically desirable but managerially challenging. We examine the role of top management team (TMT) functional diversity in influencing Chinese firms’ degree of FDI ambidexterity, and its boundary conditions in relation to the informal and formal institutional environments within which the TMT operates. Based on a panel of Chinese outward-investing manufacturing firms, our empirical analyses show that a marginal positive effect of TMT functional diversity on a firm's FDI ambidexterity is strengthened by the social faultline presence in the firm's TMT, but is weakened by the development of formal institutions in the firm's external environment.

Corresponding author
Corresponding author: Yi Li (
Hide All

This article earned an Open Data badge for transparent practices. The data are available at

Hide All
Amason, A. C. 1996. Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: Resolving a paradox for top management teams. Academy of Management Journal, 39 (1): 123148.
Ancona, D. G., & Caldwell, D. C. 1992. Demography and design: Predictors of new product team performance. Organization Science, 3 (3): 321341.
Bantel, K. A., & Jackson, S. E. 1989. Top management and innovations in banking: Does the composition of the top team make a difference? Strategic Management Journal, Summer Special Issue 10 (S1): 107124.
Barkema, H., & Drogendijk, R. 2007. Internationalizing in small, incremental or large steps? Journal of International Business Studies, 38: 11321148.
Barkema, H., & Shvyrkov, O. 2007. Does top management team diversity promote or hamper foreign expansion? Strategic Management Journal, 28 (7): 663680.
Besharov, M. L., & Smith, W. K. 2014. Multiple institutional logics in organizations: Explaining their varied nature and implication. Academy of Management Review, 39 (3): 364381.
Bezrukova, K., Jehn, K. A., Zanutto, E. L., & Thatcher, S. M. B. 2009. Do workgroup faultlines help or hurt? A moderated model of faultlines, team identification, and group performance. Organization Science, 20 (1): 3550.
Blau, P. M. 1977. Inequality and heterogeneity. New York: Free Press.
Boeker, W., & Wiltbank, R. 2005. New venture evolution and managerial capabilities. Organization Science, 16 (2): 123133.
Boone, C., & Hendriks, W. 2009. Top management team diversity and firm performance: Moderators of functional-background and locus-of-control diversity. Management Science, 55 (2): 165180.
Brambor, T., Clark, W. R., & Golder, M. 2006. Understanding interaction models: Improving empirical analyses. Political Analysis, 14 (1): 6382.
Cannella, A. A. Jr., Park, J., & Lee, H. 2008. Top management team functional background diversity and firm performance: Examining the roles of team member collocation and environmental uncertainty. Academy of Management Journal, 51 (4): 768784.
Cao, Q., Gedajlovic, E., & Zhang, H. 2009. Unpacking organizational ambidexterity: Dimensions, contingencies, and synergistic effects. Organization Science, 20: 781796.
Cao, Q., Simsek, Z., & Zhang, H. 2010. Modelling the joint impact of the CEO and the TMT on organizational ambidexterity. Journal of Management Studies, 47 (7): 12721296.
Carpenter, M. A. 2002. The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance. Strategic Management Journal, 23 (3): 275284.
Carpenter, M. A., & Fredrickson, J. W. 2001. Top management teams, global strategic posture, and the moderating role of uncertainty. Academy of Management Journal, 44 (3): 533545.
Carpenter, M. A., Geletkanycz, M. A., & Sanders, W. G. 2004. Upper echelons research revisited: Antecedents, elements, and consequences of top management team composition. Journal of Management, 30 (6): 749778.
Carpenter, M. A., & Sanders, W. G. 2004. The effects of top management team pay and firm internationalization on MNC performance. Journal of Management, 30 (4): 509528.
Caves, R. E. 1971. International corporations: The industrial economics of foreign investment. Economica, 38 (149): 127.
Chizema, A., Liu, X., Lu, J., & Gao, L. 2015. Politically connected boards and top executive pay in Chinese listed firms. Strategic Management Journal, 36 (6): 890906.
Claessens, S., Djankov, S., Fan, J. R. H., & Lang, L. H. P. 2002. Disentangling the incentive and entrenchment effects of large shareholdings. Journal of Finance, 57 (6): 27412771.
Cropanzano, R., & Mitchell, M. S. 2005. Social exchange theory: An interdisciplinary review. Journal of Management, 31: 874900.
Cui, L. 2016. The primacy of institutional explanation of Chinese outward FDI: Is it understated or overstated? Management and Organization Review, 12 (3): 457467.
Cui, L., & Jiang, F. M. 2012. State ownership effect on firms' FDI ownership decisions under institutional pressure: A study of Chinese outward-investing firms. Journal of International Business Studies, 43 (3): 264284.
Cui, L., Li, Y., Meyer, K., & Li, Z. 2015. Leadership experience meets ownership structure: Returnee managers and internationalization of emerging economy firms. Management International Review, 55 (3): 355387.
Cui, L., Meyer, K. E., & Hu, H. W. 2014. What drives firms’ intent to seek strategic assets by foreign direct investment? A study of emerging economy firms. Journal of World Business, 49 (4): 488501.
Dau, L. A. 2016. Biculturalism, team performance, and cultural-faultline bridges. Journal of International Management, 22 (1): 4862.
D'Aveni, R., & Kesner, I. 1993. Top managerial prestige, power and tender offer response: A study of elite social networks and target firm cooperation during takeovers. Organization Science, 4 (2): 123151.
Deng, P. 2013. Chinese outward direct investment research: Theoretical integration and recommendations. Management and Organization Review, 9 (3): 513–39.
Doz, Y. L., & Kosonen, M. 2007. The new deal at the top. Harvard Business Review, 85 (6): 98104.
Dunning, J. H. 1988. The electric paradigm of international production: A restatement and some possible extensions. Journal of International Business Studies, 19 (1): 131.
Dunning, J. H., & Lundan, S. M. 2008. Multinational enterprises and the global economy. Cambridge, MA: Edward Elgar Publishing.
Eisenhardt, K. M., & Bourgeois, L. J. 1988. Politics of strategic decision making in high-velocity environments: Toward a midrange theory. Academy of Management Journal, 31 (4): 737770.
Ellemers, N., & Rink, F. 2005. Identity in work groups: The beneficial and detrimental consequences of multiple identities and group norms for collaboration and group performance. Advances in Group Processes, 22: 141.
Estrin, S., Poukiakova, S., & Shapiro, D. 2009. The performance of business groups in Russia. Journal of Management Studies, 46 (3): 393420.
Fan, G., Wang, X. L., & Zhu, H. P. 2007. Marketization index in China: The regional process report of 2006. Beijing: Economic Science Press (in Chinese).
Fernhaber, S., & Patel, P. 2012. How do young firms manage product portfolio complexity? The role of absorptive capacity and ambidexterity. Strategic Management Journal, 33 (13): 15161539.
Finkelstein, S., & Hambrick, D. C. 1990. Top-management-team tenure and organizational outcomes: The moderating role of managerial discretion. Administrative Science Quarterly, 35 (3): 484503.
Floyd, S., & Lane, P. 2000. Strategizing throughout the organization: Managing role conflict in strategic renewal. Academy of Management Review, 25 (1): 154–77.
Forbes, D. P., & Milliken, F. J. 1999. Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Academy of Management Review, 24 (3): 489505.
Gibson, C. B., & Birkinshaw, J. 2004. The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of management Journal, 47 (2): 209226.
Granger, C. W. J. 1969. Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37 (3): 424438.
Greve, H. R. 2003. A behavioral theory of R&D expenditures and innovations: Evidence from shipbuilding. Academy of Management Journal, 46 (6): 685702.
Haleblian, J., & Finkelstein, S. 1993. Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion. Academy of Management Journal, 36 (4): 844863.
Hambrick, D. C., Cho, S. T., & Chen, M. J. 1996. The influence of TMT heterogeneity on firm's competitive moves. Administrative Science Quarterly, 41: 659684.
Hambrick, D. C., & Mason, P. A. 1984. Upper echelons: The organization as a reflection of its top managers. Academy of Management Journal, 9 (2): 193206.
Harzing, A. W., Brown, M., Koster, K., & Zhao, S. M. 2012. Response style differences in cross-national research dispositional and situational determinants. Management International Review, 52 (3): 341363.
He, Z. L., & Wong, P. K. 2004. Exploration vs. exploitation: An empirical test of the ambidexterity hypothesis. Organization science, 15 (4): 481494.
Hitt, M., Hoskisson, R., & Kim, H. 1997. International diversification: Effects on innovation and firm performance in product-diversified firms. Academy of Management Journal, 40 (4): 767798.
Hsu, C. W., Lien, Y. C., & Chen, H. 2013. International ambidexterity and firm performance in small emerging economies. Journal of World Business, 48 (1): 5867.
Hutzschenreuter, T., & Horstkotte, J. 2013. Performance effects of top management team demographic faultlines in the process of product diversification. Strategic Management Journal, 34 (6): 704726.
Hymer, S. 1976. The international operations of national firms: A study of direct investment. Cambridge, MA: MIT Press.
Ireland, R. D., & Webb, J. W. 2007. Strategic entrepreneurship: Creating competitive advantage through streams of innovation. Business Horizons, 50: 4959.
Jackson, S. E. 1992. Consequences of group composition for the interpersonal dynamics of strategic issue processing. In Shrivastava, P., Huff, A., & Dutton, J. (Eds.), Advances in Strategic Management (Vol. 8): 345382. Greenwich, CT: JAI Press.
Jehn, K. A. 1995. A multimethod examination of the benefits and detriments of intragroup conflict. Administrative Science Quarterly, 40 (2): 256282.
Jehn, K. A. 1997. A qualitative analysis of conflict types and dimensions in organizational groups. Administrative Science Quarterly, 42 (3): 530557.
Jehn, K. A., Northcraft, G. B., & Neale, M. A. 1999. Why differences make difference: A field study of diversity, conflict, and performance in workgroups. Administrative Science Quarterly, 44 (4): 741763.
Karasek, R. A. 1979. Job demands, job decision latitude, and mental strain: Implications for job redesign. Administrative Science Quarterly, 24 (2): 285309.
Katila, R., & Ahuja, G. 2002. Something old, something new: A longitudinal study of search behavior and new product introduction. Academy of Management Journal, 45 (6): 11831194.
Keats, B. W., & Hitt, M. A. 1988. A causal model of linkages among environmental dimensions, macro organizational characteristics, and performance. Academy of Management Journal, 31 (3): 570598.
Khanna, T., & Palepu, K. 2006. Emerging giants: Building world-class companies in developing countries. Harvard Business Review, 84 (10): 6069.
Kim, M., Mahoney, J. T., & Tan, D. 2015. Re-conceptualizing exploitative and explorative FDI: A balancing-process approach to firm internationalization. European Journal of International Management, 9 (5): 537565.
Kim, T., Shin, D., Oh, H., & Jeong, Y. 2007. Inside the iron cage: Organizational political dynamics and institutional changes in presidential selection systems in Korean universities, 1985–2002. Administrative Science Quarterly, 52 (2): 286323.
Knudsen, T., & Madsen, T. K. 2002. Export strategy: A challenge to traditional internationalization theory. Scandinavian Journal of Management, 18 (4): 475502.
Lee, H. U., & Park, J. H. 2006. Top team diversity, internationalization and the mediating effect of international alliances. British Journal of Management, 17 (3): 195213.
Levinthal, D. A., & March, J. G. 1993. The myopia of learning. Strategic Management Journal, 14 (Winter): 95112.
Lovelace, K., Shapiro, D. L., & Weingart, L. R. 2001. Maximizing cross-functional new product teams’ innovativeness and constraint adherence: A conflict communications perspective. Academy of Management Journal, 44 (4): 779793.
Lu, J. W., & Beamish, P. W. 2004. International diversification and firm performance: The S-curve hypothesis. Academy of Management Journal, 47 (4): 598609.
Lu, J., Liu, X., & Wang, H. 2011. Motives for outward FDI of Chinese private firms: Firm resources, industry dynamics, and government policies. Management and Organization Review, 7 (2): 223248.
Luo, X., Wang, H., Raithel, S., & Zheng, Q. 2015. Corporate social performance, analyst stock recommendations, and firm future returns. Strategic Management Journal, 36: 123136.
Luo, Y. 2002. Capability exploitation and building in a foreign market: Implications for multinational enterprises. Organization Science, 13: 4863.
Luo, Y., & Rui, H. 2009. An ambidexterity perspective toward multinational enterprises from emerging economies. Academy of Management Perspective, 23: 4970.
Lyles, M., Li, D., & Yan, H. 2014. Chinese outward FDI performance: The role of learning. Management and Organization Review, 10 (3): 411437.
March, J. G. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 7187.
Markides, C. 2013. Business model innovation: What can the ambidexterity literature teach us? Academy of Management Perspectives, 27: 313323.
Meyer, K. E. 2015. Context in management research in emerging economies. Management and Organization Review, 11 (3): 369377.
Meyer, K. E., & Xin, K. R. 2017. Managing talent in emerging economy multinationals: Integrating strategic management and human resource management, International Journal of Human Resource Management, forthcoming.
Miller, C. C., Burke, L. M., Glick, W. H. 1998. Cognitive diversity among upper-echelon executives: Implications for strategic decision process. Strategic Management Journal, 19: 3958.
Minkov, M., & Hofstede, G. 2012. Is national culture a meaningful concept? Cultural values delineate homogeneous national clusters of in-country regions. Cross-Cultural Research, 46: 133159.
Morck, R., Yeung, B., & Zhao, M. 2008. Perspectives on China's outward foreign direct investment. Journal of International Business Studies, 39: 337350.
Nadkarni, S., & Perez, P. 2007. Prior conditions and degree of internationalization: The mediating role of domestic mindsets. Journal of International Business Studies, 38: 160176.
Nielsen, B., & Nielsen, S. 2013. Top management team nationality diversity and firm performance: A multilevel study. Strategic Management Journal, 34: 373382.
North, D. C. 1990. Institutions, institutional change and economic performance. Cambridge, UK: Cambridge University Press.
Pananond, P. 2015. Motives for foreign direct investment: A view from emerging market multinationals. The Multinational Business Review, 23 (1): 7786.
Pelled, L. H., Eisenhardt, K., & Xin, K. R. 1999. Exploring the black box: An analysis of work group diversity, conflict and performance. Administrative Science Quarterly, 44: 128.
Peng, M. W. 2012. The global strategy of emerging multinationals from China. Global Strategy Journal, 2: 97107.
Peng, M. W., Wang, D. Y., & Jiang, Y. 2008. An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39: 920936.
Porter, M. E. 1996. What is strategy? Harvard Business Review, 74 (November-December): 6178.
Posthuma, R. A., & Campion, M. A. 2009. Age stereotypes in the workplace: Common stereotypes, moderators, and future research directions. Journal of Management, 35: 158188.
Qian, C., Cao, Q., & Takeuchi, R. 2013. Top management team functional diversity and organizational innovation in China: The moderating effects of environment. Strategic Management Journal, 34: 110120.
Raisch, S., & Birkinshaw, J. 2008. Organizational ambidexterity: Antecedents, outcomes, and moderators. Journal of Management, 34: 375409.
Ramamurti, R. 2012. What is really different about emerging market multinationals? Global Strategy Journal, 2: 4147.
Rugman, A. M. 1980. Internalization as a general theory of foreign direct investment. Review of World Economics, 116 (2): 365379.
Rugman, A. M., & Verbeke, A. 2009. Location, competitiveness and the multinational enterprise. In Rugman, A. M. (Ed.), The Oxford handbook of international business (2nd ed.): 146180. Oxford: Oxford University Press.
Shi, W., Sun, S., & Peng, M. 2012. Sub-national institutional contingencies, network positions, and IJV partner selection. Journal of Management Studies, 49: 12211245.
Smith, W. K., & Tushman, M. 2005. Managing strategic paradox: A model of top management teams managing exploration and exploitation simultaneously. Organization Science, 16: 522–36.
Teece, D. J. 2010. Business models, business strategy and innovation. Long Range Planning, 43: 172194.
Thatcher, S., Jehn, K., & Zanutto, E. 2003. Cracks in diversity research: The effects of diversity faultlines on conflict and performance. Group Decision and Negotiation, 12: 217241.
Tjosvold, D., Law, K. S., & Sun, H. 2006. Effectiveness of Chinese teams: The role of conflict types and conflict management approaches. Management and Organization Review, 2 (2): 231252.
Tjosvold, D., Poon, M., &Yu, Z. 2005. Team effectiveness in China: Cooperative conflict for relationship building. Human Relations, 58: 341367.
Wang, C. L., & Ahmed, P. K. 2007. Dynamic capabilities: A review and research agenda. International Journal of Management Reviews, 9: 3151.
Wang, C., Hong, J., Kafouros, M., & Wright, M. 2012. Exploring the role of government involvement in outward FDI from emerging economies. Journal of International Business Studies, 43: 655676.
Wiersema, M. F., & Bantel, K. 1992. Top management team demography and corporate strategic change. Academy of Management Journal, 35: 91121.
Yang, H., Lin, Z., & Lin, Y. 2010. A multilevel framework of firm boundaries: Firm characteristics, dyadic differences, and network attributes. Strategic Management Journal, 31: 237261.
Yang, M. M. 1994. Gifts, favors and banquets: The arts of social relationships in China. Ithaca, NY: Cornell University Press.
Zaheer, S. 1995. Overcoming the liability of foreignness. Academy of Management Journal, 38: 341363.
Zanutto, E., Bezrukova, K., & Jehn, K. 2011. Revisiting faultline conceptualization: Measuring faultline strength and distance. Quality & Quantity, 45: 701714.
Zou, H., & Adams, M. B. 2008. Corporate ownership, equity risk and returns in the People's Republic of China. Journal of International Business Studies, 39: 11491168.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Management and Organization Review
  • ISSN: 1740-8776
  • EISSN: 1740-8784
  • URL: /core/journals/management-and-organization-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *



Full text views

Total number of HTML views: 5
Total number of PDF views: 52 *
Loading metrics...

Abstract views

Total abstract views: 187 *
Loading metrics...

* Views captured on Cambridge Core between 7th May 2018 - 15th July 2018. This data will be updated every 24 hours.