Skip to main content
SpringerLink
Log in

Board Heterogeneity and Organisational Performance: The Mediating Effects of Line Managers and Staff Satisfaction

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

Upper echelons (UE) theory posits that organisational performance reflects the personal values and cognitive frames of the top management team (TMT) and, crucially, that greater heterogeneity in individual backgrounds of senior executives leads to better outcomes. However, often missing from this research is a more developed account of how this relationship between the characteristics of TMTs and performance is also mediated by internal conditions within organisations. In this paper we begin to address this deficiency focusing on the mediating impact of employee satisfaction and the styles and practices of line managers. Looking at the empirical case of English National Health Services acute care hospital trusts, we use a multiple mediation model to analyse the relationship between board heterogeneity, performance and these two (internal) organisational factors. A variance-based structural equation modelling approach (partial least square) is applied to a sample of 102 boards of directors. First, the results lend support to the UE hypothesis that there is a positive impact of board heterogeneity and hospital-level performance. Second, the analysis shows that the relationship heterogeneity–performance is positively influenced by: (a) the styles and practices of line managers; (b) the levels of staff satisfaction; and by their mutually reinforcing roles.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

References

  • Adler, P. S., & Kwon, S. (2002). Social capital: Prospects for a new concept. Academy of Management Review, 27(1), 17–40.

    Article  Google Scholar 

  • Bailey, E. E., & Helfat, C. E. (2003). External management succession, human capital, and firm performance: An integrative analysis. Managerial and Decision Economics, 24(4), 347–369.

    Article  Google Scholar 

  • Blau, P. M. (1977). Inequality and heterogeneity: A primitive theory of social structure. New York: The Free Press.

    Google Scholar 

  • 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), 165–180.

    Article  Google Scholar 

  • Büchner, V. A., Schreyögg, J., & Schultz, C. (2014). The impact of the board’s strategy-setting role on board-management relations and hospital performance. Health Care Management Review, 39(4), 305–317.

    Article  Google Scholar 

  • Bunderson, J. S. (2003). Team member functional background and involvement in management teams: Direct effects and the moderating role of power centralization. Academy of Management Journal, 46(4), 458–474.

    Google Scholar 

  • Carmeli, A., & Sheaffer, Z. (2009). How leadership characteristics affect organisational decline and downsizing. Journal of Business Ethics, 86(3), 363–378.

    Article  Google Scholar 

  • 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, 275–284.

    Article  Google Scholar 

  • 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), 749–778.

    Article  Google Scholar 

  • Chin, W. W. (2010). How to write up and report PLS analyses. In V. Vinzi, W. W. Chin, J. Henseler, & H. Wang (Eds.), Handbook of partial least squares: Concepts, methods and application (pp. 645–689). Berlin: Springer.

    Google Scholar 

  • Cho, Y. J., & Ringquist, E. J. (2011). Managerial trustworthiness and organisational outcomes. Journal of Public Administration Research and Theory, 21(1), 53–86.

    Article  Google Scholar 

  • Choi, S. (2013). Demographic diversity of managers and employee job satisfaction: Empirical analysis of the federal case. Review of Public Personnel Administration, 33(3), 275–298. doi:10.1177/0734371x12453054.

    Article  Google Scholar 

  • Daily, C. M., Dalton, D. R., & Cannella, A. A., Jr. (2003). Corporate governance: Decades of dialogue and data. Academy of Management Review, 28, 371–382.

    Article  Google Scholar 

  • Ellis, K., & Shockley-Zalabak, P. (2001). Trust in top management and immediate supervisor: The relationship to satisfaction, perceived organisational effectiveness, and information receiving. Communication Quarterly, 49(4), 382–398.

    Article  Google Scholar 

  • Finkelstein, S., & Hambrick, D. C. (1996). Strategic leadership: Top executives and their effects on organisations. St. Paul, MN: West.

    Google Scholar 

  • 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), 489–505.

    Article  Google Scholar 

  • Hair, J. F., Ringle, C. M., & Arstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 137–149.

    Google Scholar 

  • Hambrick, D. C. (2007). Upper echelons theory: An update. Academy of Management Review, 32(2), 334–343.

    Article  Google Scholar 

  • Hambrick, D. C., Cho, T. S., & Chen, M. (1996). The influence of top manager heterogeneity on firms’ competitive moves. Administrative Science Quarterly, 41, 659–684.

    Article  Google Scholar 

  • Hambrick, D., & Mason, P. (1984). Upper echelons: The organisation as a reflection of its top managers. Academy of Management Review, 9(2), 193–206.

    Article  Google Scholar 

  • Harjoto, M., Laksmana, I., & Lee, R. (2014). Board diversity and corporate social responsibility. Journal of Business Ethics, 132(4), 641–660. doi:10.1007/s10551-014-2343-0.

    Article  Google Scholar 

  • Harrison, D. A., & Klein, K. J. (2007). What’s the difference? Diversity constructs as separation, variety, or disparity in organisations. Academy of Management Review, 32(4), 1199–1228.

    Article  Google Scholar 

  • Hassan, S., & Hatmaker, D. M. (2014). Leadership and performance of public employees: Effects of the quality and characteristics of manager-employee relationships. Journal of Public Administration Research and Theory, 25, 1127–1155.

    Article  Google Scholar 

  • Henseler, J., Dijkstra, T. K., Sarstedt, M., Ringle, C. M., Diamantopoulos, A., Straub, D. W., et al. (2014). Common beliefs and reality about PLS: Comments on Rönkkö & Evermann (2013). Organisational Research Methods, 17(2), 182–209. doi:10.1177/1094428114526928.

    Article  Google Scholar 

  • Henseler, J., Hubona, G., & Ray, P. A. (2016). Using PLS path modeling in new technology research: Updated guidelines. Industrial Management & Data Systems, 116(1), 2–20.

    Article  Google Scholar 

  • Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135. doi:10.1007/s11747-014-0403-8.

    Article  Google Scholar 

  • Henseler, J., & Sarstedt, M. (2013). Goodness-of-fit indices for partial least squares path modeling. Computational Statistics, 28(2), 565–580.

    Article  Google Scholar 

  • Hillman, A. J., Cannella, A. A., & Paetzold, R. L. (2000). The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. Journal of Management Studies, 37, 235–255.

    Article  Google Scholar 

  • Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28, 383–396.

    Article  Google Scholar 

  • Homberg, F., & Bui, H. T. M. (2013). Top Management team diversity: A systematic review. Group & Organisation Management, 38(4), 455–479.

    Article  Google Scholar 

  • Hong, Y., Liao, H., Hu, J., & Jiang, K. (2013). Missing link in the service profit chain: A meta-analytic review of the antecedents, consequences, and moderators of service climate. Journal of Applied Psychology, 98(2), 237–267.

    Article  Google Scholar 

  • Huber, F., Herrmann, A., Frederik, M., Vogel, J., & Vollhardt, K. (2007). Kausalmodellierung mit Partial Least Squares-Eine anwendungsorientierte Einführung. Wiesbaden: Gabler.

    Google Scholar 

  • Iacobucci, D., Saldanha, N., & Deng, X. (2007). A meditation on mediation: Evidence that structural equations models perform better than regressions. Journal of Consumer Psychology, 17(2), 139–153.

    Article  Google Scholar 

  • Judge, T. A., Thoresen, C. J., Bono, J. E., & Patton, G. K. (2001). The job satisfaction-job performance relationship: A qualitative and quantitative review. Psychological Bulletin, 127(3), 376–407.

    Article  Google Scholar 

  • Kim, K. H., & Rasheed, A. A. (2014). Board heterogeneity, corporate diversification and firm performance. Journal of Management Research, 14(2), 121–139.

    Google Scholar 

  • Kim, S. (2005). Individual-level factors and organisational performance in government organisations. Journal of Public Administration Research and Theory, 15(2), 245–261.

    Article  Google Scholar 

  • Kim, T. Y., Bateman, T. S., Gilbreath, B., & Andersson, L. M. (2009). Top management credibility and employee cynicism: A comprehensive model. Human Relations, 62(10), 1435–1458.

    Article  Google Scholar 

  • Kor, Y., & Sundaramurthy, C. (2009). Experience-based human and social capital of outside directors. Journal of Management, 35(4), 981–1006.

    Article  Google Scholar 

  • Kor, Y. Y. (2003). Experience-based top management team competence and sustained growth. Organization Science, 14, 707–719.

    Article  Google Scholar 

  • Kuenzi, M., & Schminke, M. (2009). Assembling fragments into a lens: A review, critique, and proposed research agenda for the organizational work climate literature. Journal of Management, 35(3), 634–717. doi:10.1177/0149206308330559.

    Article  Google Scholar 

  • Liao, H., Toya, K., Lepak, D. P., & Hong, Y. (2009). Do they see eye to eye? Management and employee perspectives of high-performance work systems and influence processes on service quality. Journal of Applied Psychology, 94(2), 371–391.

    Article  Google Scholar 

  • Mayer, R. C., & Gavin, M. B. (2005). Trust in management and performance: Who minds the shop while the employees watch the boss? Academy of Management Journal, 48(5), 874–888.

    Article  Google Scholar 

  • Milliken, F. J., & Martins, L. L. (1996). Searching for common threads: Understanding the multiple effects of diversity in organisational groups. The Academy of Management Review, 21(2), 402–433.

    Article  Google Scholar 

  • Naranjo-Gil, D., Hartmann, F., & Maas, V. S. (2008). Top management team heterogeneity, strategic change and operational performance. British Journal of Management, 19(3), 222–234.

    Article  Google Scholar 

  • Nielsen, S. (2010). Top management team diversity: A review of theories and methodologies. International Journal of Management Reviews, 12(3), 301–316.

    Google Scholar 

  • Nishii, L. H., & Wright, P. (2008). Variability at multiple levels of analysis: Implications for strategic human resource management. In D. B. Smith (Ed.), The people make the place (pp. 225–248). Mahwah, NJ: Erlbaum.

    Google Scholar 

  • Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879–891.

    Article  Google Scholar 

  • Purcell, J., & Hutchinson, S. (2007). Front-line managers as agents in the HRM-performance causal chain: Theory, analysis and evidence. Human Resource Management Journal, 17(1), 3–20.

    Article  Google Scholar 

  • Raes, A. M., Bruch, H., & De Jong, S. B. (2013). How top management team behavioural integration can impact employee work outcomes: Theory development and first empirical tests. Human Relations, 66(2), 167–192.

    Article  Google Scholar 

  • Raes, A. M. L., Heijltjes, M. G., Glunk, U., & Roe, R. A. (2011). The interface of the top management team and middle managers: A process model. Academy of Management Review, 36(1), 102–126.

    Article  Google Scholar 

  • Roldán, J. L., & Sánchez-Franco, M. J. (2012). Variance-based structural equation modeling: Guidelines for using partial least squares in information systems research. In M. Mora, O. Gelman, A. Steenkamp, & M. Raisinghani (Eds.), Research methodologies, innovations and philosophies in software systems engineering and information systems (pp. 193–221). Hershey, PA: Information Science Reference.

    Chapter  Google Scholar 

  • Sarstedt, M., Ringle, C., Henseler, J., & Hair, J. (2014). On the emancipation of PLS-SEM: A commentary on Rigdon (2012). Long Range Planning, 47(3), 154–160.

    Article  Google Scholar 

  • Schneider, B., Ehrhart, M. G., & Macey, W. H. (2011). Perspectives on organizational climate and culture. In S. Zedeck (Ed.), APA handbook of industrial and organizational psychology. Building and developing the organization (pp. 373–414). Washington, DC: American Psychological Association.

    Chapter  Google Scholar 

  • Schneider, B., Ehrhart, M. G., & Macey, W. H. (2013). Organizational climate and culture. Annual Review of Psychology, 64(1), 361–388. doi:10.1146/annurev-psych-113011-143809.

    Article  Google Scholar 

  • Shmueli, G. (2010). To explain or to predict? Statistical Science, 25(3), 289–310.

    Article  Google Scholar 

  • Shmueli, G., Ray, S., Velasquez-Estrada, J. M., & Chatla, S. B. (2016). The elephant in the room: The predictive performance of PLS models. Journal of Business Research,. doi:10.1016/j.jbusres.2016.03.049.

    Article  Google Scholar 

  • Stone, M. (1974). Cross-validatory choice and assessment of statistical predictions. Journal of Royal Statistical Society Serie B, 39, 111–147.

    Google Scholar 

  • Sundaramurthy, C., Pukthuanthong, K., & Kor, Y. (2014). Positive and negative synergies between the CEO’s and the corporate board’s human and social capital: A study of biotechnology firms. Strategic Management Journal, 35(6), 845–868.

    Article  Google Scholar 

  • Taylor, A., MacKinnon, D., & Tein, J. (2008). Tests of the three-path mediated effect. Organisational Research Methods, 11(2), 241–269.

    Article  Google Scholar 

  • Tenenhaus, M., Esposito-Vinzi, V., Chatelin, Y., & Lauro, C. (2005). PLS path modeling. Computational Statistics & Data Analysis, 48(1), 159–205.

    Article  Google Scholar 

  • Tian, J., Haleblian, J., & Rajagopalan, N. (2011). The effects of board human and social capital on investor reactions to new CEO selection. Strategic Management Journal, 32(7), 731–747. doi:10.1002/smj.909.

    Article  Google Scholar 

  • Veronesi, G., & Keasey, K. (2011). National health service boards of directors and governance models. Public Management Review, 13(6), 861–885.

    Article  Google Scholar 

  • Veronesi, G., Kirkpatrick, I., & Altanlar, A. (2015). Clinical leadership and the changing governance of public hospitals: Implications for patient experience. Public Administration, 93(4), 1031–1048. doi:10.1111/padm.12183.

    Article  Google Scholar 

  • Veronesi, G., Kirkpatrick, I., & Vallascas, F. (2013). Clinicians on the board: What difference does it make? Social Science and Medicine, 77, 147–155.

    Article  Google Scholar 

  • West, M., Dawson, J., Admasachew, L., & Topakas, A. (2011). NHS staff management and health service quality: Results from the NHS staff survey and related sata. London: Department of health.

    Google Scholar 

  • West, M. A., & Dawson, J. F. (2012). Employee engagement and NHS performance. London: King’s fund.

    Google Scholar 

  • Williams, J., & MacKinnon, D. P. (2008). Resampling and distribution of the product methods for testing indirect effects in complex models. Structural Equation Modeling, 15(1), 23–51.

    Article  Google Scholar 

  • Wooldridge, B., Schmid, T., & Floyd, S. W. (2008). The middle management perspective on strategy process: Contributions, synthesis, and future research. Journal of Management, 34(6), 1190–1221.

    Article  Google Scholar 

  • Zald, M. N. (1969). The power and functions of boards of directors: A theoretical synthesis. American Journal of Sociology, 75(1), 97–111.

    Article  Google Scholar 

  • Ziegler, R., Hagen, B., & Diehl, M. (2012). Relationship between job satisfaction and job performance: Job ambivalence as a moderator. Journal of Applied Social Psychology, 42(8), 2019–2040.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Seville (VPPI-US), Av. Ramon y Cajal, 1, 41018, Seville, Spain

    A. Blanco-Oliver

  2. Leeds University Business School, University of Leeds, Leeds, United Kingdom

    G. Veronesi & I. Kirkpatrick

Authors
  1. A. Blanco-Oliver
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. G. Veronesi
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. I. Kirkpatrick
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to A. Blanco-Oliver.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Blanco-Oliver, A., Veronesi, G. & Kirkpatrick, I. Board Heterogeneity and Organisational Performance: The Mediating Effects of Line Managers and Staff Satisfaction. J Bus Ethics 152, 393–407 (2018). https://doi.org/10.1007/s10551-016-3290-8

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-016-3290-8

Keywords

Search

Navigation