The Effects of Cohesion and Structural Position on the Top Management Team Boundary Spanning-Firm Performance Relationship

Top management teams (TMTs) interact with key external stakeholders through boundary spanning, often by holding outside directorships. Yet research suggests these activities have an equivocal relationship with firm financial performance. Although outside directorships promise informational benefits (i.e., the social network perspective), they also present challenges in the form of managerial opportunism (i.e., the agency perspective). Here, we adopt a contingency perspective to reconcile these perspectives, investigating the moderating role of cohesion, or the degree to which team members mutually support and get along with one another. We argue that boundary spanning will yield performance benefits for TMTs with high cohesion, because their increased commitment to the team will enable members to use their external relationships for the benefit of their firms. However, we also identify a boundary condition for this effect based on structural position in the TMT: that cohesion is especially relevant when proportionally more non-chief executive officer (CEO) TMT members span boundaries than CEOs span boundaries. Results from an archival study of TMTs using q-sort methodology provide support for these predictions.