Management International Review

, Volume 50, Issue 2, pp 185–206 | Cite as

Top Management Team Internationalization and Firm Performance

The Mediating Role of Foreign Market Entry
  • Sabina Nielsen
Research Article


  • This paper develops a multi-dimensional construct of top management team (TMT) internationalization reflecting TMT ability to deal with challenges of managing firm foreign operations in the process of ongoing globalization.

  • Drawing upon upper echelons and firm internationalization theories, the relationships between TMT internationalization, foreign market entry and performance are empirically investigated in a sample of 165 Swiss listed companies.

  • The results confirm the validity of the multi-dimensional construct and suggest that TMT internationalization leads to subsequent foreign market entries, which in turn are positively related to firm performance.


TMT internationalization Nationality diversity International experience Firm internationalization Foreign market entry Corporate performance Executive effects 



Sabina Nielsen would like to acknowledge financial support from the Marie Curie European Re-Integration Grant PERG-2008-239310.


  1. Andersen, O. (1997). Internationalization and market entry mode: A review of theories and conceptual networks. Management International Review, 2, 27(2),–42.Google Scholar
  2. Ashby, W. R. (1956). An introduction to cybernetics. London: Chapman & Hall.Google Scholar
  3. Athanassiou, N., & Nigh, D. (1999). The impact of U.S. company internationalization on top management team advice networks. Strategic Management Journal, 20(1), 83–92.CrossRefGoogle Scholar
  4. Athanassiou N., & Nigh, D. (2000). Internationalization, tacit knowledge and the top management teams of MNCs. Journal of International Business Studies, 31(3), 471–488.CrossRefGoogle Scholar
  5. Athanassiou, N., & Nigh, D. (2002). The impact of the top management team's international business experience on the firm's internationalization: Social networks at work. Management International Review, 42(2), 157–181.Google Scholar
  6. Athanassiou, N., & Roth, K. (2006). International experience heterogeneity effects on top management team advice networks: A hierarchical analysis. Management International Review, 46(6), 749–769.CrossRefGoogle Scholar
  7. Barkema, H. G., & Chvyrkov, O. (2007). Does top management team diversity promote or hamper foreign expansion? Strategic Management Journal, 28(7), 663–680.CrossRefGoogle Scholar
  8. Barkema, H. G., & Vermeulen, F. (1998). International expansion through start-up or acquisition: A learning perspective. Academy of Management Journal, 41(1), 7–26.CrossRefGoogle Scholar
  9. Barkema, H. G., Bell, J. H. J., & Pennings, J. M. (1996). Foreign entry, cultural barriers, and learning. Strategic Management Journal, 17(2), 151–166.CrossRefGoogle Scholar
  10. Bartlett, C., & Ghoshal, S. (1989). Managing across borders. Boston: Harvard Business School Press.Google Scholar
  11. Bentler, P. M. (1990). Comparative fit indexes in structural models. Psychological Bulletin, 107(2), 238–246.CrossRefGoogle Scholar
  12. Bentler, P. M., & Bonett, D. G. (1980). Significance tests and goodness of fit in the analysis of covariance structures. Psychological Bulletin, 88(3), 588–606.CrossRefGoogle Scholar
  13. Berman, M. (1997). How CEOs drive global growth. The Conference Board, 1184-97-RR 1997.Google Scholar
  14. Byrne, B. M. (2006). Structural equation modeling with EQS: Basic concepts, applications, and programming (Second Edition). New Jersey: Laurence Erlbaum Associates.Google Scholar
  15. Caligiuri, P. M., & DeSanto, V. (2001). Global competence: What is it, and can it be developed through global assignments? Human Resource Planning Journal, 24(3), 27–38.Google Scholar
  16. Caliguri, P., Lazarova, M., & Zehetbauer, S. (2004). Top managers' national diversity and boundary spanning: Attitudinal indicators of a firm's internationalization. Journal of Management Development, 23(9), 848–859.CrossRefGoogle Scholar
  17. Carlsson, J., Nordegren, A., & Sjöholm, F. (2005). International experience and the performance of Scandinavian firms in China. International Business Review, 14(1), 21–40.CrossRefGoogle Scholar
  18. 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), 275–284.CrossRefGoogle Scholar
  19. 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), 533–545.CrossRefGoogle Scholar
  20. Carpenter, M. A., & Reilly, G. P. (2006). Constructs and construct measurement in upper echelon research. In D. Ketchen & D. Bergh (Eds.), Research methodology in strategy and management (Vol. 3). New York: Elsevier.Google Scholar
  21. 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), 747–778.CrossRefGoogle Scholar
  22. Carpenter, M. A., Sanders, W. G., & Gregersen, H. B. (2001). Bundling human capital with organizational context: The impact of international assignment experience on multinational firm performance and CEO pay. Academy of Management Journal, 44(3), 493–511.CrossRefGoogle Scholar
  23. Certo, S. T., Lester, R. H., Dalton, C. M., & Dalton, D. R. (2006). Top management teams, strategy and financial performance: A Meta-Analytical Examination. Journal of Management Studies, 43(4), 813–839.CrossRefGoogle Scholar
  24. Child, J. (1972). Organization structure, environment and performance: The role of strategic choice. Sociology, 6(1), 1–22.CrossRefGoogle Scholar
  25. Contractor, F. J. (2007). Is international business good for companies? The evolutionary or multi-stage theory of internationalization vs. the transaction cost perspective. Management International Review, 47(3), 453–475.CrossRefGoogle Scholar
  26. Cook, T. D., & Campbell, D. T. (1979). Quasi-experimentation: Design and analysis for field settings. Chicago: Rand McNally.Google Scholar
  27. Cox, T. H., Lobel, S. A., & McLeod, P. L. (1991). Effects of ethnic group cultural differences on cooperative and competitive behavior on a group task. Academy of Management Journal, 34(4), 827–847.CrossRefGoogle Scholar
  28. Cyert, R. M., & March, J. A. (1963). A behavioral theory of the firm. Englewood Cliffs: Prentice-Hall.Google Scholar
  29. Daily, C. M., Certo, S. T., & Dalton, D. R. (2000). International experience in the executive suite: The path to prosperity. Strategic Management Journal, 21(4), 515–523.CrossRefGoogle Scholar
  30. Earley, P. C., & Mosakowski, E. (2000). Creating hybrid team cultures: An empirical test of transnational team functioning. Academy of Management Journal, 43(1), 26–49.CrossRefGoogle Scholar
  31. Elron, E. (1997). Top management teams within multinational corporations: Effects of cultural heterogeneity. Leadership Quarterly, 8(4), 393–412.CrossRefGoogle Scholar
  32. Eriksson, K., Johanson, J., Majkgaard, A., & Sharma, D. (1997). Experiential knowledge and cost in the internationalization process. Journal of International Business Studies, 28(2), 1033–1053.CrossRefGoogle Scholar
  33. Finkelstein, S., & Hambrick, D. C. (1996). Strategic leadership: Top executives and their effects on organizations. St. Paul, MN: West Publishing.Google Scholar
  34. Finkelstein, S., Hambrick, D. C., & Cannella, A. A. (2008). Strategic Leadership: Theory and research on executives, top management teams, and boards. New York: Oxford University Press.Google Scholar
  35. Geletkanycz, M. A. (1997). The salience of ‘culture's consequences’: The effects of cultural values on top executive commitment to the status quo. Strategic Management Journal, 18(8), 615–634.CrossRefGoogle Scholar
  36. Geringer, J. M., Tallman, S., & Olson, D. M. (2000). Product and international diversification among Japanese firms. Strategic Management Journal, 21(1), 51–80.CrossRefGoogle Scholar
  37. Gong, Y. (2006). The impact of subsidiary top management team nationality diversity on subsidiary performance: Knowledge and legitimacy perspectives. Management International Review, 46(6), 771–789.CrossRefGoogle Scholar
  38. Greve, P., & Ruigrok, W. (2008). The rise of an international market for executive labour. In L. Oxelheim (Ed.), Markets and compensation for executives in Europe. Bingley, UK: Emerald Group Publishing.Google Scholar
  39. Greve, P., Nielsen, S., & Ruigrok, W. (2010). Transcending borders with international top management teams: A study of European financial MNCs. European Management Journal, 27(3), 213–224.CrossRefGoogle Scholar
  40. Gunz, H. P., & Jalland, R. M. (1996). Managerial careers and business strategies. Academy of Management Review, 21(3), 718–756.CrossRefGoogle Scholar
  41. Hambrick, D. C. (2007). Upper echelons theory: An update. Academy of Management Review, 32, 334–343.Google Scholar
  42. Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206.CrossRefGoogle Scholar
  43. Hambrick, D. C., Davison, S. C., Snell, S. A., & Snow, C. C. (1998). When groups consist of different nationalities: Towards a new understanding of the implications. Organization Studies, 19(2), 181–205.CrossRefGoogle Scholar
  44. Heijltjes, M., Olie, R., & Glunk, U. (2003). Internationalization of top management teams in Europe. European Management Journal, 21(1), 89–97.CrossRefGoogle Scholar
  45. Hennart, J-F. (2007). The theoretical rational for a multinationality-performance relationship. Management International Review, 47(3), 423–452.CrossRefGoogle Scholar
  46. Hermann, P., & Datta, D. K. (2005). Relationships between top management team characteristics and international diversification: An empirical investigation. British Journal of Management, 16(1), 69–78.CrossRefGoogle Scholar
  47. Herrmann, P., & Datta, D. K. (2006). CEO experiences: Effects on the choice of FDI entry mode. Journal of Management Studies, 43(4), 755–778.CrossRefGoogle Scholar
  48. Hofstede, G. (1980). Culture's consequences: International differences in work-related values. Newbury Park, CA: Sage.Google Scholar
  49. Hoskinsson, R. E., Hitt, M. A., Johnson, R. A., & Moesel, D. D. (1993). Construct validity of an objective (entropy) categorical measure of diversification strategy. Strategic Management Journal, 14(3), 215–235.CrossRefGoogle Scholar
  50. Jackson, S. E., & Joshi, A. (2004). Diversity in social context: A multi-attribute, multilevel analysis of team diversity and sales performance. Journal of Organizational Behavior, 25(3), 675–702.CrossRefGoogle Scholar
  51. Jensen, M., & Zajac, E. J. (2004). Corporate elites and corporate strategy: How demographic preferences and structural position shape the scope of the firm. Strategic Management Journal, 25(6), 507–524.CrossRefGoogle Scholar
  52. Johanson, J., & Vahlne, J.-E. (1977). The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23–32.CrossRefGoogle Scholar
  53. Johanson, J., & Wiedersheim-Paul, F. (1975). The internationalization of the firm: Four Swedish cases. Journal of Management Studies, 12(3), 305–322.CrossRefGoogle Scholar
  54. Keck, S. (1997). Top management team structure: Differential effects of environmental context. Organizational Science, 8(2), 143–156.CrossRefGoogle Scholar
  55. Kilduff, M., Angelmar, R., & Mehra, A. (2000). Top management team diversity and firm performance: Examining the role of cognitions. Organization Science, 11(2), 21–34.CrossRefGoogle Scholar
  56. Kline, R. B. (2005). Principles and practice of structural equation modeling, (Second Edition). New York: The Guildford Press.Google Scholar
  57. Kobrin, S. J. (1984). International expertise in American business: How to learn to play with the kids on the street. New York: Institute of International Education.Google Scholar
  58. Kor, Y. Y. (2003). Experience-based top management team competence and sustained growth. Organization Science, 14(6), 707–719.CrossRefGoogle Scholar
  59. Lawrence, B. S. (1997). The black box of organizational demography. Organization Science, 8(1), 1–22.CrossRefGoogle Scholar
  60. Lee, H. U., & Park, J. H. (2006). Top team diversity, internationalization and the mediating effect of international alliances. British Journal of Management, 17(3), 195–213.CrossRefGoogle Scholar
  61. Loehlin, J. C. (2004). Latent Variable Models, (Forth Edition). New Jersey: Laurence Erlbaum Associates.Google Scholar
  62. Lu, J., & Beamish, P. (2004). International diversification and firm performance: The S-curve hypothesis. Academy of Management Journal, 57(4), 598–609.Google Scholar
  63. Luo, Y. (2005). How does globalization affect corporate governance and accountability? A perspective from MNEs. Journal of International Management, 11(1), 19–41.CrossRefGoogle Scholar
  64. March, J. G., & Simon, H. A. (1958). Organizations. New York: Wiley.Google Scholar
  65. Melin, L. (1992). Internationalization as a strategy process. Strategic Management Journal, 13(8), 99–118.CrossRefGoogle Scholar
  66. Milliken, F. J., & Martins, L. L. (1996). Searching for common treads: Understanding the multiple effects of diversity in organizational groups. Academy of Management Journal, 21(1), 402–433.CrossRefGoogle Scholar
  67. Murray, A. (1989). Top management team heterogeneity and firm performance. Strategic Management Journal, 10(Special Issue), 125–141.CrossRefGoogle Scholar
  68. Nielsen, S. (2009). Why do top management teams look the way they do? A multilevel exploration of industry, organizational and corporate elite antecedents. Strategic Organization, 7(3), 277–305.CrossRefGoogle Scholar
  69. Nielsen, S., & Nielsen, B. B. (2008). The effects of top management team and board nationality diversity and compensation systems on firm performance. Academy of Management Proceedings.Google Scholar
  70. Nielsen, B. B., & Nielsen, S. (2011). The role of top management team nationality diversity in international strategic decision-making: The choice of foreign entry mode. Journal of World Business.Google Scholar
  71. Nunnally, I. H., & Bernstein, J. C. (1994). Psychometric theory, (Third Edition). New York: McGraw-Hill.Google Scholar
  72. Palepu, K. (1985). Diversification strategy, profit performance and the entropy measure. Strategic Management Journal, 6(3), 239–255.CrossRefGoogle Scholar
  73. Penrose, E. T. (1959). The theory of the growth of the firm. New York: Wiley.Google Scholar
  74. Perlmutter, H. V., & Heenan, D. A. (1974). How multinational should your top managers be? Harvard Business Review, 52(6), 121–132.Google Scholar
  75. Pettigrew, A. (1992). On studying managerial elites. Strategic Management Journal, 13(Special Issue), 163–182.CrossRefGoogle Scholar
  76. Priem, R. L., Lyon, D. W., & Dess, G. (1999). Inherent limitations of demographic proxies in top management team heterogeneity research. Journal of Management, 25(6), 935–953.CrossRefGoogle Scholar
  77. Reuber, A. R., & Fischer, E. (1997). The influence of the management team's international experience on the internationalization behaviors of SMEs. Journal of International Business Studies, 28(4), 807–825.CrossRefGoogle Scholar
  78. Richard, O. C., Barnett, T., Dwyer, S., & Chadwick, K. (2004). Cultural diversity in management, firm performance, and the moderating role of entrepreneurial orientation dimensions. Academy of Management Journal, 47(2), 255–266.CrossRefGoogle Scholar
  79. Roth, K. (1995). Managing international interdependence: CEO characteristics in a resource based framework. Academy of Management Journal, 38(1), 200–231.CrossRefGoogle Scholar
  80. Ruigrok, W., Amann, W., & Wagner H. (2007). The internationalization-performance relationship at Swiss firms: A test of the S-shape and extreme degrees of internationalization. Management International Review, 47(3), 349–368.CrossRefGoogle Scholar
  81. Sambharya, R. B. (1996). Foreign experience of top management teams and international diversification strategies of U.S. multinational corporations. Strategic Management Journal, 17, 739–746.CrossRefGoogle Scholar
  82. Sanders, W. M., & Carpenter, M. A. (1998). Internationalization and firm governance: The roles of CEO compensation, top team composition, and board structure. Academy of Management Journal, 41(2), 58–178.CrossRefGoogle Scholar
  83. Simons, T. L., & Peterson, R. S. (2000). Task conflict and relationship conflict in top management teams: The pivotal role of intra-group trust. Journal of Applied Psychology, 85(1), 102–111.CrossRefGoogle Scholar
  84. Staples, C. L (2007). Board globalization in the world's largest TNCs 1993–2005. Corporate Governance: An International Review, 15(2), 311–321.CrossRefGoogle Scholar
  85. Stata. (2003). Stata Cross-Sectional Time-Series Analysis: Reference Manual Release 8. Texas: Stata Press Corporation.Google Scholar
  86. Sullivan, D. (1994). Measuring the degree of internationalization of a firm. Journal of International Business Studies, 25(2), 325–342.CrossRefGoogle Scholar
  87. Swissinfo. (2004). Switzerland continues to draw multinationals, Dec 2, 2004
  88. Szilagyi, A. D., Schweiger, D. M. (1984). Matching managers to strategies: A review and suggested framework. Academy of Management Review, 9(4), 626–637.CrossRefGoogle Scholar
  89. Takeuchi, R., Tesluk, P. E., Yun, S., & Lepak, D. P. (2005). An integrative view of international experience. Academy of Management Journal, 48(1), 85–100.Google Scholar
  90. Tihanyi, L., Ellstrand, A. E., Daily, C. M., & Dalton, D. R. (2000). Composition of the top management team and firm international diversification. Journal of Management, 26(6), 1157–1177.CrossRefGoogle Scholar
  91. Triandis, H. C., & Suh, E. M. (2002). Cultural influences on personality. Annual Review of Psychology, 53(1), 133–160.CrossRefGoogle Scholar
  92. Van Veen, K., & Marsmann, I. (2008). How international are executive boards of European MNCs? Nationality diversity in 15 European countries. European Management Journal, 26(3), 188–198.CrossRefGoogle Scholar
  93. Verbeke, A., Li, L., & Goerzen, A. (2009). Toward more effective research on the multinationality-performance relationship. Management International Review, 49(2), 149–162.CrossRefGoogle Scholar
  94. Wally, S., & Becerra, M. (2001). Top management team characteristics and strategic changes in international diversification. Group & Organization Management, 26(2), 165–188.Google Scholar
  95. Watson, W. E., Kumar, K., & Michaelsen, L. K. (1993). Cultural diversity's impact on interaction process and performance: Comparing homogeneous and diverse task groups. Academy of Management Journal, 36(3), 590–602.CrossRefGoogle Scholar
  96. Wiersema, M., & Bantel, K. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35(1), 91–121.CrossRefGoogle Scholar

Copyright information

© Gabler-Verlag 2010

Authors and Affiliations

  1. 1.Department of International Economics and ManagementCopenhagen Business SchoolFrederiksbergDenmark
  2. 2.School of MarketingUniversity of TechnologySydneyAustralia

Personalised recommendations