DISCUSSION
By contextualizing our study in Chinese high tech
firms, we have developed theoretical arguments
about the ways in which competitive uncertainty
and institutional support moderate the relationships
relating TMT functional diversity with conflicts
and a firm’s innovation. The results show
that the impact of TMT functional diversity on
conflicts depends on the beneficence of a firm’s
institutional environment. Managing a firm that
receives good institutional support alleviates both
cognitive and affective tension within a functionally
diverse TMT. Interestingly, this study did not
find that TMT functional diversity is associated
with cognitive or affective conflict. Considering
Chinese cultural characteristics, this lack of main
effects is not very surprising. Where harmony is
emphasized, only hostile environments that impose
excessive pressure on managers will trigger them
to pay attention to their different backgrounds and
exacerbate the difference into explicit conflict. In
a favorable environment when top managers are
under less job pressure, there is more room for
them to appreciate and accommodate each other’s
unique functional backgrounds.
This study found that a highly uncertain competitive
environment is likely to make a TMT less
capable of implementing any innovative ideas arising
from cognitive conflict. However, heavy pressure
from both the competitive and institutional
environments apparently can mitigate the negative
effects of affective conflict by shifting managers’
limited attention and energy to collective tasks and
away from interpersonal clashes. Interestingly, in
extremely hostile environments, affective conflict
may even generate positive outcomes. Such an
intriguing reversal of effects can be understood
by reference to the Chinese philosophy of the
unity of opposites, which indicates that tension will
compel people get to know each other better and
appreciate one another’s competencies. The Chinese
emphasize turning the strongest enemy into
the best friend for joint action in pursuit of collective
interests, overriding individual emotions when
the collective entity faces severe external threat.
Through such deep contextualization (Tsui, 2007),
the results of this study extend prior research and
provide more comprehensive insights.
This study has several limitations. First, its
cross-sectional design rules out any discussion
of causality, though tests based on Landis and
Dunlap’s (2000) approach yielded minimal concern
for reverse causality. Also, researchers have
pointed out that demographic measures have inherent
limitations in reflecting psychological traits
(Priem, Lyon, and Dess, 1999). Future research
might incorporate other factors such as a TMT’s
power distribution to provide a more profound
understanding of executive influence. In addition,
future research might look at individual differences
among top managers such as their locus
of control to examine the extent to which the
effects of a hostile environment might be mitigated.
Care is, of course, called for in generalizing
the findings of this study to other cultures and
contexts.