Top management teams’ influence on strategic decision making and firms’ outcome in the case of Saudi Arabia’s private sector

Abstract

Even though firms face strong influential environmental forces, they ‘are in some important sense a reflection of their top managers’ (Pitcher and Smith, 2001: 2). Despite the vast amount of TMT research, there are several areas where research remains sparse, rare and, when available, generates conflicting results (Menz, 2012; Hambrick, 2007; and Higgs, 2006). Researchers have attributed the lack of empirical research to the difficulty in gaining access to TMTs, resulting in a huge number of studies relying on demographic data and/or archival documents.
The primary objective of the current study, and the main gap addressed, was the investigation of the TMT strategic decision making process and organisational outcome in a new cultural context, drawing conclusions from qualitative primary data. In addressing the research gap, a pragmatic ontology with a critical realism epistemology was adopted. The multi-case research design was informed by Eisenhardt (1989)’s research design, with Hambrick and Mason (1984) UET as the theoretical lens applied. A qualitative methodology was applied, assisted by mixed methods. Strategies for this research were: semi structured interviews, a survey in the form of a pre-existing questionnaire (Higgs, 2006), and document analysis.
The data was collected in a cross-sectional research framework, looking at a particular event at a specific time in fourteen different private organisations. The data was collected from four cities, covering the three main regions of Saudi Arabia. Thirty two interviews were conducted with TMT members, who then completed a short survey. Documents were collected for analysis.
The TMTs in the sample were demographically heterogeneous (nationalities, education, age, tenure, and experience), with team sizes between two and three members. TMT diversity led to conflict and slowed the decision process down. Politics, power, internal alliances within the firms, and lobbying were used to overcome conflict. Decisions were challenged by market labour laws and a lack of skilled nationals. Centralisation of decisions was witnessed via the strong grip held by the Board of Directors. This resulted in strong Board influence in order to enforce decisions. The current study contributes to TMT literature, national context and practice. The limitations and future research are discussed.

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ORCID for M.J. Higgs: orcid.org/0000-0002-9032-0416

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