PowerPoint Presentation

Xin LiangAssistant Professor

Hermann Achidi NdoforAssistant Professor

Richard L. PriemProfessor

Joseph C. PickenClinical ProfessorTop Management Team Communication Networks, Environmental Uncertainty, and Organizational Performance: A Contingency ViewPresented by:

Faheem RiazMehak DurraniNael ChiraghSijal Asif KhanIntroductionOpen communication and reliable information are imperative for an organization (Eisenberg and Witten, 1987)More distant communication can be useful for groups facing complex tasksImportance of TMT communication patterns and firm performance with environmental uncertainty

Literature Review & HypothesisTMT Communication PatternsTMT is the most consequential group in an organization (Carpenter et al., 2004) Communication affects organizations in a big way (DeWine, 2001 and others)Communication is important to help carry out an organizations functions (Mintzberg, 1973)Results suggest appropriate communication is sufficient for exchanging information

Structures should be appropriate for external environment to achieve success (Pfeffer and Salancik, 1978)Uncertainty is the most important environmental attribute (Duncan, 1972)Uncertainty can be dealt by:Planning ahead, delegation of authority (Thompson, 1967)Structural differentiation and specialization (Galbraith, 1973; Lawrence and Lorsch, 1967)Environmental scanning systems (Yasai-Ardekani and Nystrom, 1996)Developing flexible, informal decision-making processes (Fredrickson, 1984; Mintzberg, 1973).TMT Communication Patterns and Environmental UncertaintyInformation is processed through formal and informal procedures and interactions.Organizations perform best in uncertain environments. (Miller, 1992)Communication density vs. Communication centrality.

Communication Network Density

TMTs with a dense communication network are more effective (Eisenhardt, 1989)High uncertainty leads to ambiguous information (Milliken, 1987)Different manager interpretations could lead to group conflict (Tekleab et al., 2009)High network density glues TMT roles together (Molm, 1994)TMT communication network density affects decision making as well (Johnson, 1990)

To summarize:TMTs with uncertain environments require denser communication networksA small communication network will lead to higher performance

Therefore,Hypothesis 1: As environmental uncertainty increases, concomitant increases in TMT communication network density will be positively related to firm performance.

Communication Network DecentralizationThe more the network centralization, the more likely an individual controls communication (Wasserman and Faust, 1994)A lower TMT communication network would mean decentralizationNetwork decentralization has certain advantages (Burns and Stalker, 1961)Higher centralization is more frequently associated with CEOs (Finkelstein et al., 2009)A centralized TMT tends to be sub-optimal (Eisenhardt, 1989)Therefore,Hypothesis 2: As environmental uncertainty increases, concomitant increase centrality is negatively related to performance.

MethodologySampleCEOs and presidents of 32 organizations (Southwestern metropolitan area)Organization size 40 to 26000 employees Service and manufacturing sector 13 public and 19 private404 executivesWork experience of 9 years (2.9 years in current position)Team size 7 to 15Research ToolInterview

Mapping TMT communication network Challenges Identifying members of top management Using the technique of Amason (1996), Simons and Peterson (2000)People involved in strategic decision making Time limitations Two weeks prior to the interview Easily recall accurate information

Use of various mediaIrrelevant to the study Focus of number of communication ties and frequency

Data Collection Step 1: first interview with CEO and presidents Discuss general purpose and confidentiality Step 2: second interview with top executives Team of MBA students used structured interviewsEach TMT reported the frequency of their contactResults recorded by using four level scale

Measures (variables) TMT communication network density Strength (frequency of contacts)Number of ties (one to one contact)Network Density =YVk /g(gT)g= no. of nodes or managers Vk= value (contact frequency)*Used for assessing amount of information exchanged TMT communication network decentralization use inverse of Wasserman and faust network centralization Comparison of total flow of information

Environmental uncertainty Level of instability and unpredictability Perceptual measures Used Miles and Snows 5-item measure

Results (two factor solution) Inter-rater relibilities 0.61 to 0.98, Average of three factors 0.75Organizational PerformanceInterrelated components (efficiency and effectiveness)For uniformity, two measures were used (growth and profitability)

ResultsInter-rater reliability 0.60 to 0.80Alpha for overall performance 0.712Alpha for comparative performance 0.705

Other control Variables CEO centrality TMT tenure heterogeneity TMT functional heterogeneity

Analysis and Result Shows means, standard deviations and Pearson bivariate correlations

Contingency relationship (three regression models) First Model: two performance dependent variables and three control variables CEO centrality (positive coefficient of p