the moderating role of top management team interdependence x

THE MODERATING ROLE OF TOP MANAGEMENT TEAMINTERDEPENDENCE: IMPLICATIONS FOR REAL TEAMS AND

WORKING GROUPS

MURRAY R. BARRICKTexas A&M University

BRET H. BRADLEYAMY L. KRISTOF-BROWN

University of Iowa

AMY E. COLBERTUniversity of Notre Dame

Prior research evidence shows that within-team interdependence moderates the pro-cess-performance relationship in small groups. Data collected from 94 top manage-ment teams (TMTs) replicated and extended the small groups finding. Specifically,TMTs with high interdependence (i.e., real teams) had higher team and subsequentfirm performance when the team was more cohesive and had more communication.However, teams with low interdependence (i.e., working groups) had higher perfor-mance when communication and cohesion were lower. This constructive replicationprovides the first examination of the moderating effect for team interdependencewithin TMTs on both team and firm performance.

Top management teams (TMTs) have long beenstudied as an important determinant of corporatesuccess (Certo, Lester, Dalton, & Dalton, 2006; Co-hen & Bailey, 1997; Hambrick & Mason, 1984). Yetresearch documenting the impact of TMT processeson organizational performance has been slow toaccumulate (Carpenter, Geletkanycz, & Sanders2004; Kozlowski & Bell, 2003; Lawrence, 1997). Infact, a current article sums up the state of TMTprocess research by stating that “researchers havenot gained a good understanding of the nature ofTMT process” (Simsek, Veiga, Lubatkin, & Dino,2005: 69). Why? The challenge of gaining access tothese teams and past claims that the direct assess-ment of TMT processes is unnecessary (Pfeffer,1983) both contribute to the problem; however, arecent review also noted that “one troubling aspectof [TMT research] . . . is its relative independenceof the broader work teams literature” (Kozlowski &Bell, 2003: 336). Thus, the lack of integration ofestablished findings from small groups researchinto new TMT research is another reason why re-searchers have not gained a good understanding ofTMT processes.

One of the most important topics in current smallgroups research is that of within-team interdepen-dence. Meta-analytic results suggest that interde-pendence moderates the process and performancerelationship in small groups (Beal, Cohen, Burke, &

McLendon, 2003; Gully, Devine, & Whitney, 1995;Gully, Incalcaterra, Joshi, & Beaubien, 2002), lead-ing Kozlowski and Bell (2003) to conclude thatresearch that fails to address interdependence haslimited value for building knowledge about teameffectiveness. Thus, in small groups research with-in-team interdependence is understood to be a de-fining characteristic of teams and an important con-tingency condition (Kozlowski & Bell, 2003; Ilgen,Hollenbeck, Johnson, & Jundt, 2005).

However, existing research on interdependencehas been limited primarily to cross-sectional stud-ies of short-term project teams (Beal et al., 2003;Gully et al., 2002). This has left important gaps inscholars’ understanding of potential boundaryconditions for the contingency finding. First, nosample to date has examined within-team interde-pendence as a moderator of the process and perfor-mance relationship in TMTs. It is critical to exam-ine whether a contingency model of teaminterdependence applies specifically to TMTs andtheir outcomes, because relationships among teamconstructs often differ in different types of teams(Cohen & Bailey, 1997; Zaccaro & Marks, 1999). Forexample, TMTs are unique in their composition ofhigh-status, highly paid executives with a clearlydefined leader, a CEO. Furthermore, TMTs are per-ceived as having chief responsibility for their or-ganizations and multiple stakeholders, making

� Academy of Management Journal2007, Vol. 50, No. 3, 544–557.

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them an important influence on organizationallevel outcomes. Given these differences betweenTMTs and the teams traditionally assessed in smallgroups research, there is a need to constructivelyreplicate the contingency finding of team interde-pendence in TMTs.

Second, the vast majority of the small groupsdata showing interdependence as a moderator vari-able is cross-sectional (Beal et al., 2003; Gully et al.,1995, 2002). Finding that these results exist with alagged measure of performance would further un-derscore the strength of the contingency relation-ship. Third, studies in the small groups literaturehave only focused on team performance as a reflec-tion of team effectiveness. Yet, given their centralrole in organizations and their influence on organ-izational strategy, TMTs are expected to have adisproportionate impact on organizational success(Hambrick & Mason, 1984). Thus, although upperechelons research has focused on firm performancemeasures, the small groups literature has not doneso, even though there is often an implicit assump-tion that the broad adoption of work teams posi-tively affects firm performance. Consequently, thisstudy captured measures of team performance andthe ultimate criterion, organizational performance.

The construct of behavioral integration (Ham-brick, 1994; Simsek et al., 2005) represents the bestattempt to understand TMT process to date. It is a“meta-construct” for describing various elements ofgroup process and is defined as the degree to whicha group engages in mutual and collective interac-tion. Hambrick’s concept of behavioral integrationincludes information exchange, collaborative be-havior, and joint decision making. However, behav-ioral integration also appears to incorporateelements of interdependence. Given that interde-pendence has been shown to moderate the processand performance relationship in small groups andis a defining characteristic of teams (Kozlowski &Bell, 2003), we argue that distinguishing betweenteam interdependence and team processes is vitalto understanding how TMT functioning relates toteam and organizational outcomes.

Thus, the purpose of this study was to conduct aconstructive replication of the finding that teaminterdependence moderates the process and perfor-mance relationship in small groups, using both rat-ings of team performance and a lagged objectivemeasure of firm performance in the previously un-studied context of TMTs. A constructive replica-tion is research that tests the same relationshipsamong the same constructs as an earlier study butvaries the operationalization of those constructs.Eden (2002) argued persuasively that replicationsthat are different from previous studies are needed

to advance theory. Our study is dissimilar fromothers in that it tests team interdependence as amoderator in the context of TMTs with a laggedobjective measure of organizational performance,in addition to team performance. Because no stud-ies have empirically examined the impact of with-in-TMT interdependence on organizational perfor-mance, this study not only contributes to smallgroups research on team interdependence but alsoadvances understanding of the impact of within-TMT processes.

THEORETICAL BACKGROUND ANDHYPOTHESIZED MODEL

Team Mechanisms

In the traditional inputs-process-outputs (IPO)framework for teams (Hackman, 1987; McGrath,1964; Steiner, 1972), processes are the linking vari-ables between inputs and outcomes (e.g., Pelled,Eisenhardt, & Xin, 1999). Recent research hasbroadened the process domain to also includeemergent states that dynamically represent how ateam is doing and vary over time with team inputs,processes, outcomes, and context (Ilgen et al., 2005;Marks, Mathieu, & Zaccaro, 2001). Emergent statesdescribe cognitive, motivational, and affectivestates of teams, as opposed to team member inter-action. In this study, we examine the relationshipsof both a conceptually pure team process (commu-nication) and an emergent state (cohesion) withteam and organizational performance. We refer tothese jointly as team mechanisms to reflect thebroadened IPO model (Ilgen et al., 2005).

Within-team processes describe the nature of in-teractions among team members (Marks et al., 2001;McGrath, 1984). Communication is a key team pro-cess, as it clarifies “how” a team interpersonallyorchestrates its work to get things done and per-form effectively. Communication is particularlyimportant to executives who coordinate and coop-erate with other TMT members to achieve collec-tive goals. Hyatt and Ruddy (1997) and Campion,Papper, and Medsker (1996) found within-teamcommunication was related to effective teamperformance.

Cohesion is an affective, psychological state thatreflects the shared commitment, attraction, andteam pride that emerges from the experiences andinteractions among team members. Cohesion is animportant indicator of the bond among team mem-bers, which influences the execution of subsequentteamwork processes and outcomes (Beal et al.,2003; Gully et al., 1995). Marks and colleagues(2001) specifically referred to cohesion as an emer-

2007 545Barrick, Bradley, Kristof-Brown, and Colbert

gent state because it is dynamic and varies as afunction of previous team inputs, processes, con-text, and outcomes. Recent meta-analyses (Beal etal., 2003; Gully et al., 1995; Mullen & Copper, 1994)provide compelling evidence that team cohesion issignificantly related to measures of team perfor-mance. However, Gully et al. (1995) and Beal et al.(2003) found that interdependence could changethe magnitude of this relationship.

We examined the impact of communication andcohesion on team and organizational performancefor three reasons: (1) communication and cohesioncapture key aspects of interpersonal mechanisms,thereby reflecting the importance of the larger so-cial component to teams; (2) communication is arelatively pure measure of team member process,but cohesion is an emergent state; and (3) commu-nication captures behavioral contributions to ateam, but cohesion represents the affective or mo-tivational states of team members.

Despite considerable evidence indicating thatboth communication and cohesion are importantantecedents to team performance (Beal et al., 2003;Campion et al., 1996; Hyatt & Ruddy, 1997), resultsregarding the effects of these TMT processes onfirm performance have been mixed. For example,Smith, Smith, Olian, Sims, O’Bannon, and Scully(1994) found that communication and cohesion (la-beled “social integration”) improved firm perfor-mance, but Glick, Miller, and Huber (1993) did not.These conflicting results suggest the presence ofmoderator variables. Thus, we do not propose orig-inal hypotheses about direct relationships betweenteam mechanisms and team or organizational per-formance. Instead, for the first time, we explore thecritical question of whether within-team interde-pendence moderates the relationship between TMTmechanisms and both team and firm performance.

Team Interdependence

We argue that the mixed results regarding TMTprocesses and firm performance are due, in part, toresearchers’ not considering within-team interde-pendence. Interdependence is defined as the extentto which contextual features outside an individualand his or her behavior (i.e., tasks and outcomes)define a relationship between entities as collective,so that one entity should affect and be affected bythe other (Campion et al., 1993; Stewart & Barrick,2000; Wageman, 2001). Interdependence amongmembers is an important characteristic of teams(Campion et al., 1993; Kozlowski & Bell, 2003;Stewart, 2006) because it determines the degree towhich members need to rely on one another tocomplete projects and fulfill member needs. A team

with high interdependence is often referred to as a“real team,” whereas teams with low interdepen-dence are more commonly labeled “workinggroups” (Katzenbach & Smith, 1993).

Essentially, there are two different conceptionsof team interdependence: (1) structural and (2) psy-chological (Thompson, 1967; Wageman, 1995). Inthe structural conception, the level of interdepen-dence among a team’s members differs according tothe nature of the team’s task or technological re-quirements (e.g., Thompson, 1967). In the psycho-logical conception, interdependence begins withthe task requirements of work, but it extends to thesocial demand to work together to achieve collec-tive outcomes such as goals and rewards (McGrath,Arrow, & Berdahl, 2000; Wageman, 1995). Al-though some previous research has examined thedifferential impacts of various types of interdepen-dence (e.g., Wageman, 1995), our study remainsconsistent with most prior research on interdepen-dence as a moderator, in that we examine the over-all impact of a composite measure of team interde-pendence (Gully et al., 2002).

The more that team members need to coordinatetheir work to achieve collective tasks, goals, andrewards, the more team performance should be in-fluenced by team communication and cohesion.When team members are highly interdependent,there is greater need to communicate to achievehigh performance. Similarly, a shared commitmentto, attraction to, and pride in the team (i.e., highcohesion) should have a greater impact on perfor-mance as team interdependence increases (Beal etal., 2003). Members of a highly cohesive team willbe motivated to work to achieve the shared goalsthat characterize interdependent teams because oftheir commitment to the team. Conversely, becauseteams with low levels of interdependence requireless coordination among members, communicationand cohesion should be less important for effectivefunctioning. This view underscores the importanceof the fit between team mechanisms and the level ofteam interdependence. In a meta-analysis of 46studies, Gully and colleagues (1995) found that co-hesion had a stronger impact on team performancewhen tasks were highly interdependent (� � .46)than when they were less interdependent (� � .21).The fit between team mechanisms and the level ofteam interdependence will also affect firm perfor-mance, since gains in within-team functioning inTMTs should translate into better decision makingand enable firms to more effectively achieve theirgoals, ultimately resulting in higher firm perfor-mance. Thus, as shown in Figure 1, our initialmodel of top management team performance, wehypothesize that team interdependence moderates

546 JuneAcademy of Management Journal

the relationships between team mechanisms (com-munication and cohesion) and team performanceand, ultimately, firm performance.

Hypothesis 1. Team interdependence moder-ates the positive relationship between teammechanisms (communication and cohesion)and team performance in such a way that thesemechanisms are more strongly, positively re-lated to team performance when interdepen-dence is high rather than low.

Hypothesis 2. Team interdependence moder-ates the positive relationship between teammechanisms (communication and cohesion)and subsequent organizational performance insuch a way that these mechanisms are morestrongly, positively related to organizationalperformance when team interdependence ishigh rather than low.

METHODS

Procedures and Sample

A nonprofit organization dedicated to conduct-ing research about credit unions identified 117 or-ganizations interested in participating in this re-search; 96 ultimately provided data. Hence, allrespondents in this study were from the creditunion industry. CEOs identified members of theirTMTs and, approximately four months later, wesurveyed CEOs and their TMT members. The actualsize of the TMTs ranged from 4 to 14 members,with an average of 6.4 (s.d. � 1.9) members. The

size of the firms ranged from 23 employees to 800employees, with an average of 147 employees ineach firm (s.d. � 139.7). We required that at least 3TMT members respond if we were to retain data forthat team. As a result, 2 firms were dropped fromthe analysis. Thus, our sample consisted of mem-bers of the TMTs from 94 different firms. A total of517 out of a possible 601 team members (an averageof 5.5 of the 6.4 members on each team) respondedto surveys representing the 94 TMTs, giving us aresponse rate of 86 percent. The high response ratesupported the use of the data at the team level ofanalysis.

Fifty-four percent of the respondents were male;11 percent were 26–35 years old; 46 percent,36–45 years old; 27 percent, 46–55 years old; and16 percent, over 55 years old; 93 percent wereCaucasian; none of the respondents had less than ahigh school degree; 4 percent had a high schooldegree; 26 percent had associate’s degrees or somecollege coursework; 42 percent had bachelor’s de-grees; 9 percent had some graduate coursework be-yond a bachelor’s degree; and 19 percent had grad-uate degrees. The average organizational tenurewas 11.5 years, and the average tenure on theirTMT was 7.1 years.

Measures

All constructs except for organizational perfor-mance were measured with multi-item scales basedon standard scales from previous research. TMTmembers rated their team’s cohesion, communica-

FIGURE 1Team-Level Model of Top Management Team Performance


tion, and degree of interdependence on a responsescale ranging from 1, “strongly disagree,” to 6,“strongly agree.” We averaged ratings to createteam-level variables and report reliability estimates(�’s) for both individual- and team-level data. Torule out common method bias as an explanation forrelationships with performance, we relied solely onCEO ratings of team performance (also using a six-point scale) and objective financial data for firmperformance.

Team performance. CEOs completed Kirkmanand Rosen’s (1999) six-item measure of team per-formance. Examples of items are, “This team meetsor exceeds its goals” and “This team completes itstasks on time.” The alpha reliability for this mea-sure was .81.

Subsequent firm performance. We assessedfirm performance the year following survey admin-istration using data provided by the National CreditUnion Administration. This federal agency chartersand supervises credit unions and uses the follow-ing as the four key financial ratios of their perfor-mance: net worth to total assets, which assesses thecapital adequacy of a firm; delinquent loans to totalloans and net charge-offs to average loans, whichboth assess the asset quality of the firm; and returnon average assets (ROA), which assesses the earn-ings of the firm. Each score was converted to aZ-score, and the final score reflects the mean overthese four measures of organizational performancefor the year following the TMT surveys. The alphareliability for this measure was .65.

Communication. We assessed communicationusing the four items from the Lester, Meglino, andKorsgaard (2002) scale that focus on communica-tion rather than coordination. Items were, “Mem-bers are willing to share information with otherteam members about our work,” “Members of thisteam enjoy talking to each other,” “When memberstalk to each other, there is a great deal of under-standing,” and “Team members are comfortabletalking to each other about what needs to be done.”Across TMT members, the reliability of the scalewas .92 at the individual level and .97 at the teamlevel, and checks for aggregation yielded accept-able values (F93, 506 � 3.44, p � .01; ICC[1] � .31;ICC[2] � .71; rwg � .91).

Cohesion. We combined three underlying facetsidentified by Beal et al. (2003) to comprehensivelyassess team cohesion, including measures of socialcohesion (Seashore, 1954), group pride (Festinger,1950), and team commitment (Kirkman & Rosen,1999). Items included, “Members of this team getalong with each other very well,” “I really valuebeing a member of this team,” and “My team mem-bers are all committed to our team.” Across all TMT

members, the reliability of the 13-item scale was.93 at the individual level and .97 at the team level,and checks for aggregating team cohesion yieldedacceptable values (F93, 506 � 3.61, p � .01; ICC[1] �.32; ICC[2] � .72; rwg � .91).

Interdependence. We measured interdepen-dence with 12 items, 9 from Campion et al.’s (1993)scale, and 3 new items added to enhance reliability(the original alphas ranged from .59 to .68). Itemsfocused on the extent to which tasks performed bymembers were interrelated within a team andwhether member goals, rewards, and feedback wererelated to the team’s objectives and success. Exam-ples included, “I do very few activities that are notrelated to goals of the senior management team”and “Within my team, work performed by otherteam members is dependent on another’s work.”The scale reliability was .80 at the individual leveland .95 at the team level, and checks for aggregatingteam interdependence were acceptable (F93, 506 �2.49, p � .01; ICC[1] � .21; ICC[2] � .60; rwg � .94).

Covariates. Firm size, firm age, and team sizehave been shown to relate to firm performance, andso we included them as covariates (Carpenter et al.,2004; Cohen & Bailey, 1997; Hambrick, 1994;Michel & Hambrick, 1992). Additional covariatesincluded the demographic composition of a TMTwith regard to team tenure, age, education, and sex,all of which have been demonstrated to influenceteam mechanisms and performance (Smith et al.,1994; Tsui & Gutek, 1999). Racial composition didnot vary enough among teams to examine. Surveyrespondents reported each characteristic with asingle item. For team tenure, we considered boththe average length of team members’ time on a TMT(Smith et al., 1994) and the variability of teamtenure among members (Pelled et al., 1999). Weused the standard deviation to assess the variabilityof tenure and age, rather than the often-used coef-ficient of variation, which is better suited for ratiodata (Bedian & Mossholder, 2000; Harrison & Sin,2006). Because sex and education are categoricalvariables, we used Teachman’s (1980) index to as-sess their variability in the teams (Pelled et al.,1999).

RESULTS

Measurement Evaluation

To investigate the factor structure of the threeteam-level variables (communication, cohesion,and interdependence) prior to testing hypotheses,we specified three measurement models using LIS-REL 8.7 (Joreskog & Sorbom, 1996) at the TMTlevel. Both a three-factor measurement model (�2 �


332.21, df � 249, p � .01; NNFI � .94, CFI � .95,IFI � .95, RMSEA � .06) and a two-factor modelwith communication and cohesion items loadingon the same factor (�2 � 333.56, df � 251, p � .01;NNFI � .94, CFI � .95, IFI � .95, RMSEA � .06)provided good fits to the data. However, the fitstatistics for the one-factor model did not indicate agood fit to the data (�2 � 804.32, df � 252, p � .01;NNFI � .88, CFI � .89, IFI � .89, RMSEA � .15).Because the difference in chi-squares between thetwo- and three-factor models was not significant(��2 � 1.35, df � 2, p � .05) and because thetwo-factor model, which combined communicationand cohesion into one factor (which we call “teammechanisms”), was more parsimonious, we used itin all subsequent analyses. Thus, although commu-nication and cohesion are theoretically distinct, inour sample they empirically load on one factor.

Descriptive Statistics, Correlations, and Effects ofCovariates

Table 1 presents means, standard deviations, andcorrelations among the variables and with the co-variates. Table 2 reports the results of the regres-sion analyses including only covariates as predic-tors of team mechanisms, team interdependence,team performance, and firm performance. Asshown, the only significant regression model wasthe one used to predict team mechanisms, wherewe found differences in age, education, and teamtenure significantly related to these mechanisms. In

addition, firm size was a significant predictor ofteam mechanisms and team interdependence.Since the remaining covariates did not alter theresults of the regression models, and because oursample was modest in size, the following tablesreport regression results with only the four signifi-cant covariates.

Hypothesized Relationships with Performance

To test the hypotheses examining whether teaminterdependence is an important moderator of therelationships between team mechanisms and out-comes, we used moderated hierarchical regressionanalysis. In step 1, we entered the significant co-variates and in step 2, the main effects of teaminterdependence and team mechanisms (the aver-age score on communication and cohesion). In step3, we entered their product term to signify theinteraction of interdependence and team mecha-nisms. To test an interaction, we examine thechange in variance explained (�R2) yielded in step3. Table 3 reports the results from a series of hier-archical models. When a model was predictingteam performance, the interaction effect was signif-icant for team mechanisms and interdependence(�R2 � .10, p � .01), supporting Hypothesis 1.Similarly, when a model predicted subsequent firmperformance, team mechanisms interacted with in-terdependence (�R2 � .07, p � .05), supportingHypothesis 2. However, it should be noted that themain effects from the team mechanisms were not

TABLE 1Descriptive Statistics and Correlationsa

Variablesb Mean s.d. 1 2 3 4 5 6

1. Team interdependence 4.28 0.392. Communication 4.65 0.60 .38**3. Cohesion 4.64 0.61 .34** .89**4. Team mechanisms 4.64 0.60 .37** .97** .99**5. Team performance 4.06 0.51 .17 .24* .27** .27**6. Firm performance 0.00 0.69 �.01 .01 .08 .04 .15

Firm size 147.30 139.00 .24* .07 .11 .10 .09 .15Firm age 51.97 18.20 �.16 �.03 .01 �.01 �.17 �.04Team size 6.39 1.91 .05 .04 .03 .03 .05 �.07Mean age 46.40 5.25 �.02 �.09 �.05 �.05 �.05 .14Age diversity 7.57 3.04 �.04 .18† .15 .16 .09 �.11Sex diversity 0.76 0.19 �.04 .03 .02 .02 �.09 �.11Education diversity 0.77 0.30 .23* .23* .29** .27** .28** .23*Mean team tenure 8.91 3.75 �.01 �.02 .04 .04 �.01 .25*Team tenure diversity 6.80 3.23 �.16 �.07 �.07 �.07 .03 .12

a n � 94 (top management teams). Correlations below the gap are between the covariates and the team variables numbered 1–6.bAge and team tenure diversity were calculated using standard deviations. Sex and education diversity used Teachman’s index.

† p � .10* p � .05

** p � .01


significantly related to either team performance orfirm performance in step 2. Yet, as shown in Table1, team mechanisms were significantly correlatedwith team performance (r � .27). These mixed re-sults provide only limited support for the widelyheld notion that team processes and emergentstates directly relate to team performance, and theysuggest that a more complicated relationship isoccurring.

Figure 2 shows the plot of the significant inter-action (Aiken & West, 1991) between team interde-pendence and team mechanisms that occurs when

we are predicting team performance, and Figure 3shows the plot when we are predicting subsequentfirm performance. Both graphs are plotted at themean and one standard deviation above or belowthe mean (Cohen & Cohen, 1984). As Figures 2 and3 show, team mechanisms were positively relatedto both team and firm performance for teams thatwere high in interdependence, and the mecha-nisms were negatively related to both team andfirm performance for those low in interdepen-dence. The most effective TMTs are those thatmatch high interdependence with a high level of

TABLE 2Regression Results for Covariates on Mediating Mechanisms, Interdependence, and Performancea

Variables Team MechanismsTeam

InterdependenceTeam

PerformanceFirm

Performance

Firm size .01 (.00)* .01 (.00)* .00 (.00) .00 (.00)Firm age .01 (.00) .00 (.00) .00 (.00) .00 (.00)Team size �.02 (.03) .00 (.02) .00 (.03) �.03 (.04)Mean age �.03 (.01)† �.01 (.01) �.02 (.01) .00 (.02)Age diversity .06 (.02)** �.01 (.02) .02 (.02) �.02 (.03)Sex diversity .30 (.45) �.17 (.30) �.23 (.41) .88 (.55)Education diversity .51 (.21)* .32 (.14)* .31 (.19) .15 (.26)Mean team tenure .04 (.02)† .01 (.02) .01 (.02) .05 (.03)†

Team tenure diversity �.06 (.03)* �.03 (.02) .00 (.02) �.01 (.03)

F 2.45* 1.96 0.94 1.30R2 0.22* 0.18 0.10 0.13

a n � 94 (top management teams). Values in parentheses are standard errors. Variance estimates use standard deviations for age and teamtenure and Teachman’s index for sex and education.

† p � .10* p � .05

** p � .01

TABLE 3Moderated Regression Analysis Results: Team Interdependence as a Moderatora

Variables

Team Performance Firm Performance

Step 1 Step 2 Step 3 Step 1 Step 2 Step 3

Firm size 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00) 0.00 (0.00)Age diversity 0.02 (0.02) 0.02 (0.02) 0.02 (0.02) 0.03 (0.03) �0.03 (0.03) �0.03 (0.03)Education diversity �0.15 (0.41)† �0.20 (0.41) �0.05 (0.39) 0.75 (0.54) 0.67 (0.55) 0.84 (0.53)Team tenure diversity 0.00 (0.02) 0.00 (0.02) �0.01 (0.02) 0.03 (0.02) 0.03 (0.02) 0.02 (0.02)Team interdependence 0.12 (0.16) �2.94 (0.99)** �0.35 (0.21) �3.48 (1.40)*Team mechanisms 0.16 (0.10) �2.68 (0.91)** 0.10 (0.14) �2.81 (1.30)*Interaction: Interdependence � team mechanisms 0.67 (0.21)** 0.69 (0.30)*

F 0.73 1.50 2.65* 1.55 1.34 2.21*R2 .03 .09 .19* .07 .09 .16*F for model change 2.40† 9.89** 0.92 6.83*�R2 .05† .10** .02 .07*

a n � 94 (top management teams). Values in parentheses are standard errors. Variance estimates use standard deviations for age and teamtenure and Teachman’s index for education.

† p � .10* p � .05

** p � .01


team mechanisms, or alternatively, match low in-terdependence with a low level of team mecha-nisms. The least successful teams were those re-porting a “mismatch” between interdependenceand team mechanisms.

However, inspection of the two figures also indi-cates that the benefit of matching a low level ofteam mechanisms with low interdependence dif-fers for team and organizational performance. Spe-cifically, firm performance for working groups withlow levels of team mechanisms is nearly as high asit is for real teams with high levels of team mech-

anisms. However, team performance for workinggroups scoring low for team mechanisms is onlymarginally higher than for both mismatchedgroups—those scoring low on interdependence andhigh on mechanisms or high on interdependenceand low on mechanisms. In addition, the cost of amismatch is greatest for real teams with low levelsof team mechanisms when firm performance is be-ing predicted. These results suggest that the bene-fits and costs of matching the type of team (realteam or working group) with team mechanisms dif-fer slightly depending on the outcome, underscor-

FIGURE 2Moderating Effect of Team Interdependence on the Relationship between

Team Mechanisms and Team Performance


ing the value of considering both performancemeasures.

DISCUSSION

Small groups research shows that within-teaminterdependence moderates the relationship be-tween team mechanisms and performance (Beal etal., 2003; Gully et al., 1995; 2002; Kozlowski & Bell,2003), yet research on TMTs has not differentiatedand independently examined interdependence and

TMT mechanisms. Using a combination of surveydata collected from members of TMTs, CEO ratingsof team performance, and subsequent objective or-ganizational performance data, this study providesconvincing evidence that TMT interdependencemoderates the relationship of team mechanisms—that is, communication and cohesion—with theperformance of a TMT and an organization.

This constructive replication is similar to pastresearch in the small groups literature showing thatteam interdependence moderates the process and

FIGURE 3Moderating Effect of Team Interdependence on the Relationship between

Team Mechanisms and Subsequent Firm Performance


performance relationship in small groups. We useda comprehensive operationalization of team inter-dependence, two common measures of team mech-anisms, and a rating of team performance. In addi-tion, the replication is distinct from this pastresearch because it used the previously unstudiedcontext of TMTs and incorporated a lagged objec-tive measure of firm performance in addition to therating of team performance. Thus, because no stud-ies have empirically examined the moderating im-pact of within-TMT interdependence on organiza-tional performance, this study not only contributesto small groups research on team interdependencebut also advances understanding of the impact ofwithin-TMT processes.

Theoretical Implications

First, existing research on team interdependencefrom the small groups perspective has, to date, notused TMTs, which have a unique position andstatus in organizations (Cohen & Bailey, 1997;Hambrick, 1994). In addition, the literature hasbeen limited primarily to cross-sectional researchon short-term project teams (Beal et al., 2003; Gullyet al., 1995, 2002) using only measures of teamperformance. The literature is strengthened be-cause this constructive replication shows the rela-tionship extends beyond these boundary condi-tions.

Second, our results advance understanding of theinfluence of team interdependence on TMT suc-cess. There is a widely held belief that TMT mem-bers must extensively rely on each other (i.e., actinterdependently) to achieve optimal performance.A sample of CEOs, for example, reported the num-ber one obstacle to TMT effectiveness was within-team fragmentation (Hambrick, 1995). Katzenbachand Smith (1993) also identified not being a “realteam” as a clear limiter of success. Contradictingthe opinions expressed by the sample of CEOs andKatzenbach and Smith (1993), our results revealthat increased levels of interaction among TMTmembers are not always beneficial to team or firmperformance. Future research should adopt a con-tingency perspective, matching a team’s mecha-nisms (team processes and emergent states) withthe demands of the team’s situation (the level ofinterdependence among the TMT members). SomeTMTs will be very successful even when theirmembers work independently of each other (havevery low interdependence).

Third, our results offer some insight into the rolethat demographic composition plays in TMTs. Al-though extensive research has been conducted onthe effects of TMT demographic composition on

organizations, the results may be viewed as gener-ally weak or inconsistent (Carpenter et al., 2004;Certo et al., 2006; Webber & Donahue, 2001; West &Schwenk, 1996). Our research suggests that demo-graphic composition has a greater impact on teammechanisms than it has on team or firm perfor-mance (O’Reilly, Snyder, & Boothe, 1993) and thatthe impact of these mechanisms on performancedepends on the level of team interdependence.Thus, it may be only in highly interdependentTMTs that demographic effects are likely tostrongly impact performance.

Fourth, turning to an examination of the out-comes, our results powerfully demonstrate the im-portant role TMT functioning has in influencingnot just team performance, but also the success ofan organization. The studied teams consisted ofjust 6.4 of the nearly 150 employees in these organ-izations on average, yet the results show how dra-matically the organizations’ success varied with thefunctioning of these small yet dominant coalitionsof top managers. When designing this study, weexpected that measures of team interdependenceand team mechanisms would relate more stronglyto team performance than to organizational perfor-mance for two reasons. First, more potential influ-ences on organizational performance are outsidethe control of a TMT than is true for team perfor-mance (a firm’s board of directors and its industryare examples of influences on organizational per-formance that a TMT does not control) (Beal et al.,2003). Second, organizational performance is not asclosely tied to team mechanisms as team perfor-mance. The comparability of the results found forthese two conceptually different outcomes sup-ports the upper echelons argument that the effectsstemming from a TMT are often as large for organ-izational performance as for team performance(Carpenter et al., 2004). Such findings persuasivelyreveal the value of aligning team mechanisms andwithin-team interdependence in TMTs.

Finally, our results contribute to upper echelonsresearch by using both survey data and archivaldata to show that within-team interdependencemoderates the process and performance relation-ship and thus should be evaluated separately fromTMT mechanisms (processes and emergent states).These findings have important implications for theconstruct of behavioral integration proposed as ameta-construct of TMT process (Hambrick, 1994;Simsek et al., 2005). The contingency findingsshow that team interdependence and team mecha-nisms should be treated separately. Therefore, thisstudy cautions against the use of behavioral inte-gration as a meta-construct for the whole of TMTdynamics if it doesn’t separate within-team inter-


dependence from team processes and emergentstates.

Managerial Implications

Our results also have practical implications forTMTs. The performance of a TMT is thought to beessential to a company’s survival and growth, yetvery little research has clarified how a firm shoulddesign and utilize its TMT. The results indicatethat practitioners need to align a team’s social psy-chology variables with the demands of the situa-tion. If there is little need for TMT members towork together in view of the nature of the members’tasks, goals, and rewards, then little communica-tion or cohesion is necessary for team and firm tobe successful. However, if a situation demands thatTMT members rely on each other to accomplishtheir work, then the route to high performance ap-pears to be through high levels of team mechanisms(i.e., communication and/or cohesion).

In addition, our results demonstrate the impor-tance of a realistic appraisal of the level of interde-pendence among team members before resourcesare put into team-building efforts intended to in-crease cohesion and communication. In our study,the most effective TMTs were real teams (i.e.,highly interdependent ones) who devoted more ef-fort to team mechanisms. However, nearly as effec-tive, in terms of organizational performance, werethose teams with low interdependence (i.e., work-ing groups) who spent little time on team mecha-nisms. If organizations strive to turn their TMTsinto real teams (Hambrick, 1995; Katzenbach &Smith, 1993), they may waste a tremendousamount of time and money because, in actuality,many TMTs function well as working groups. Fi-nally, managers should consider such antecedentsto team interdependence as leadership style, aswell as firm and industry characteristics, whenconsidering the match between team interdepen-dence and team mechanisms.

Limitations and Future Research

This study has the strength of employing bothpsychological and archival measures of 94 TMTs’mechanisms, interdependence, and performance.However, it also has limitations. First, all of theteam constructs relied on member perceptions;hence, no objective measures of team interdepen-dence or mechanisms were available. However, re-search shows that a subjective assessment of inter-dependence or team mechanisms can effectivelymeasure the extent to which team members shouldor do interact and rely on each other (Wageman,

2001; Ilgen et al., 2005; Wageman, 2001), and ourinterrater agreement indexes (ICCs and rwg) sup-ported aggregation. Second, despite coming fromdifferent sources (CEO and team), the team-leveldata are cross-sectional, which precludes makingcausal inferences. Nonetheless, consistent resultswere found with firm performance assessed a yearafter the TMT surveys were collected. Third, ourrelatively small sample of 94 TMTs limits statisti-cal power and precludes the examination of morecomplex causal models. This sample size limita-tion underscores the inherent difficulty of studyingteams, especially exclusive ones like TMTs.Fourth, data are drawn from a single industry,which limits alternative explanations for perfor-mance differences, but also may limit the general-izability of our findings. Finally, we did not controlfor prior organizational performance in this study,because TMT composition was quite stable (meanteam member tenure was 8.9 years, and mean CEOteam tenure was 16.2 years). Given this stability,the TMTs’ gains from better within-team function-ing affected prior performance as well as subse-quent firm performance. Controlling for past per-formance would have extracted relevant variancefrom subsequent firm performance that was due tothe common influence of the degree of fit betweenthe mediating team processes and team interdepen-dence (i.e., within-TMT functioning). Thus, wecannot rule out a reverse causal direction betweenperformance and TMT processes.

Future research should pursue at least three av-enues. First, it should explore the distinctions be-tween team processes and emergent states overtime (Marks et al., 2001). Emergent states are likelyto continue to evolve and change, because of recip-rocal effects from team inputs, processes, context,and outcomes, and the lack of elapsed time be-tween these measures in our study may have con-tributed to the lack of empirical distinction in ourdata. Thus, longitudinal analyses may allow futureresearch to examine the distinct effects of teamprocesses and emergent states. Second, TMT re-searchers could adapt the construct of behavioralintegration to account for the critical distinctionbetween team processes, emergent states, and inter-dependence. For example, behavioral integrationcould be modified to only include processes, andemergent states and interdependence could bemeasured separately. Finally, because interdepen-dence is a critical contingency construct in teamresearch, scholars should explore the factors thataffect the level of interdependence in TMTs, suchas leadership style, team and firm size, firm strat-egy, and industry characteristics. These findingsmay also have important practical implications.


CEO leadership style, for instance, may be one sig-nificant factor in determining the degree to whichteam members need to rely on each other becausethe managerial discretion of CEOs (Finkelstein &Hambrick, 1990) may influence the level of inter-dependence among TMT members. For example,TMTs led by a transformational CEO (Bass, 1985)may be highly interdependent, relying on eachother for the resources and support necessary toachieve the goals to which they are collectivelycommitted. In addition, team and firm size likelyimpact the level of within-TMT interdependence.Also, Michel and Hambrick (1992) argued that afirm’s diversification posture affected the degree ofinterdependence among business units. Therefore,whether firm strategy also affects within-TMT in-terdependence is an important question to answer.

Conclusion

Our results reveal that organizations don’t al-ways need a “real team at the top” to improveorganizational performance. Instead, reliance onhigh levels of team mechanisms, such as commu-nication and cohesion among members, appears toimpede organizational performance in settingswhere the TMT should function as a workinggroup. In contrast, effective real teams not onlystructure their tasks and rewards in a way thatencourages them to work as one, but also spendconsiderable time talking to each other and build-ing a cohesive team spirit. These results have im-portant implications for both real teams and work-ing groups, as successful TMTs must “match” theirdesign (i.e., high or low interdependence) with theteam’s processes and the attitudinal states thatemerge among its members.

Our intent in conducting this study was not totest a new theory. Instead, we examined whetherthe same hypothesized relationship found in priorstudies of small groups would be confirmed in adifferent type of team than previously studied—specifically, TMTs. Our findings constructivelyreplicate the importance of within-team interde-pendence as a moderator of the link between teammechanisms and performance. Our findings alsosupport the notion that TMT functioning impactsorganizational success, not just team performance,underscoring the critical need to better understandinternal TMT dynamics. This study demonstratesthat there is considerable value in drawing on smallgroups research to understand how TMTs functioninternally, as the contingent nature of this relation-ship makes a significant difference to organizationsuccess.

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Murray R. Barrick ([email protected]) is thePaul M. and Rosalie Robertson Chair in Business at theMays Business School, Texas A&M University. Heearned his Ph.D. in industrial/organizational psychologyfrom the University of Akron. His research interests in-clude assessing the impact individual differences in be-havior and personality have on job and team perfor-mance and on methods of measuring and predicting suchdifferences.

Bret H. Bradley ([email protected]) is a doctoralcandidate in organizational behavior at the Henry B.Tippie College of Business, University of Iowa. He holdsa master’s degree in accounting from Brigham YoungUniversity. His research interests include team composi-tion and dynamics, ethics and misbehavior, and the pos-itive and negative effects of leadership.

Amy L. Kristof-Brown ([email protected])is the Weissman/Sinicropi Research Fellow at the HenryB. Tippie College of Business, University of Iowa. Sheearned her Ph.D. in organizational behavior and humanresource management from the University of Maryland.Her research interests include assessing the factors thatcontribute to individuals’ fit in jobs, teams, organiza-tions, and expatriate assignments.

Amy E. Colbert ([email protected]) is an assistant profes-sor in the Department of Management at the University ofNotre Dame. She received her Ph.D. in organizationalbehavior and human resource management from the Uni-versity of Iowa. Her research interests include leader-ship, individual differences, and the connections thatemployees form with their work, their coworkers, andtheir organizations.


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