TMT Human Capital and Industry Dynamism in The Adoption of Digital Transformation: Evidence from the S&P 500

This study investigates the determinants of digital transformation (DT) in S&P 500 firms, examining how the human capital breadth and depth of top management teams (TMTs) influence strategic change. Drawing primarily on Upper Echelons Theory (UET), we theorize that a team’s collective resource portfolio serves as a critical antecedent to digital adoption. Our results demonstrate that TMT role heterogeneity (breadth) exhibits a consistent, linear positive influence on DT. In contrast, TMT tenure (depth) follows a non-monotonic, cubic life cycle. We identify three distinct phases: an “initial liability of newness” (coordination-driven trough), a mid-term “adeptness step” (absorptive capacity-driven peak), and a final “strategic persistence” (fossilization-driven decline). Crucially, these patterns are moderated by environmental dynamism; the cubic tenure-DT relationship is uniquely pronounced in high-dynamism industries, peaking at approximately 17 years, while remaining latent in stable environments. By introducing a validated, text-based measure of digital transformation and migrating the breadth-and-depth framework from board governance to the executive suite, this research provides a nuanced understanding of the cognitive and structural drivers of radical strategic change. We conclude with implications for board-level succession and the strategic design of management teams.