Where does upper echelons collide?

The founding claim of the theory, that an organization becomes a reflection of its top managers, so that strategic choices and performance can be predicted from the characteristics of the executives who make them. Hambrick and Mason's 1984 Upper echelons: the organization as a reflection of its top managers argued that because decisions in complex situations are bounded, executives act on their own values and cognitive bases, and that observable traits of the dominant coalition therefore forecast outcomes from diversification to profitability. Hambrick's 2007 Upper echelons theory: an update restated the core and made explicit the moderating conditions the original left implicit. This is the referent: every other strand on the map is a way of operationalizing this one idea.[1][2]

Unit

A firm's strategy and performance, read from its top team

Recovery means

Not applicable

Measured by

Executive traits regressed on strategic and performance outcomes

The dominant operationalization, which measures the top team by its observable demography, age, organizational and firm tenure, functional background, education, and the heterogeneity of these across members, and treats those figures as proxies for the values and cognitions the theory cares about. Wiersema and Bantel's 1992 Top management team demography and corporate strategic change reported that teams that were younger, shorter in tenure, better educated, and more diverse in academic training were the ones that changed corporate strategy, and read those coefficients as evidence for the upper-echelons logic. The strand keeps the theory's causal claim but swaps its psychological constructs for the demographic record, because that record sits in archives while cognition does not.[3]

Unit

A top team's demographic profile and its dispersion

Recovery means

Not applicable

Measured by

Age, tenure, functional and educational background, and their heterogeneity

The moderator that says when the theory should hold, on the reasoning that executive characteristics shape outcomes only to the degree that executives have latitude of action; where discretion is low, the firm is driven by inertia, competition, or regulation, and the top team leaves little imprint. Hambrick and Finkelstein's 1987 Managerial discretion: a bridge between polar views of organizational outcomes framed discretion as the bridge between the view that leaders matter and the view that they do not, locating it in the task environment, the organization, and the manager. Finkelstein's 1992 Power in top management teams: dimensions, measurement, and validation gave the neighbouring idea of executive power a validated measure. The strand does not read executive traits at all; it conditions the whole model on how much room those traits have to operate.[4][5]

Unit

The latitude of action available to an executive

Recovery means

Not applicable

Measured by

Discretion or power indexed from the environment, organization, and manager