Cause or effect?: An investigation of the relationship between top management team group dynamics and organizational performance

The group dynamics of top management teams have been linked with organizational performance in a number of recent studies. These studies most often discuss their findings as though differences in group process cause the differences in organizational performance. They do not test the alternative possibility that some third contextual variable (e.g., economic recession, political events, etc.) caused organizational performance, which then caused changes in top management team process. The paper explores the causal relationships between top management team group dynamics and organizational performance in nine large companies. Results reveal that the intellectual flexibility of the team, decentralization of power within the group, and leader openness to dissent are significantly correlated with past organizational performance. These results provide tangible evidence for the often discussed, but seldom studied, argument that organizational performance can cause changes in top management team dynamics. The authors conclude by arguing that a greater understanding of when performance predicts group process and when group process predicts performance is necessary for understanding how to obtain and sustain superior organizational performance.