When is top management team heterogeneity beneficial for product exploration? Understanding the role of institutional pressures

Past research suggests that although heterogeneity in the top management team (TMT) is associated with exploratory innovation, this may be contingent on factors in the firm’s external environment. In this study, we examine how mimetic and coercive institutional pressures moderate the relationship between TMT heterogeneity and product exploration. Using data obtained from 141 U.S. manufacturers, we show that this relationship is stronger when mimetic and coercive pressures are conflicting. We argue that this occurs because inconsistency between these institutional pressures creates a complex decision-making situation for the TMT. In such situations, a heterogeneous TMT is beneficial. The opposite result occurs when these pressures are consistent (e.g., both are high). Our results have implications for research and decisions regarding TMT composition and exploration strategies. They also highlight the need to appreciate the varied influences of institutional pressures on the firm.