A research team of the Universitat de València has published a study on the effects of heterogeneity within directive boards when decisive company strategic decisions are taken. The research team is led by the professors Ana García-Granero and Anabel Fernández-Mesa. The study has been published in the magazine “Long Range Planning” and reveals that diversity is key to competitiveness.
The study relied on the collaboration of 780 executives of Spanish SMEs. Alongside with professors García-Granero and Fernández-Mesa (Department of Business Management Juan José Renau Piqueras of the Faculty of Economics), Justin Jansen (Department of strategy and entrepreneurship of the Eramus University of Rotterdam) and Jaider Vega-Jurado (professor of management of innovation in the Business school of the Universidad del Norte in Colombia) have participated in the project.
According to the researchers, “Combining strategies that head towards achieving entrepreneurial competitiveness in a short (for instance, producing more efficiently with the same resources) and long (for example, investing in innovation or studying possible ways to internationalise in the future) periods of time is necessary for survival. Because of this, “It is very important that executive boards can implement both strategies simultaneously”.
The study shows that a multi-task executive team (for example, one person specialized in finances, another one in marketing and another in R&B) is more likely to achieve both strategies. Nonetheless, an executive team whose members have different ages will implement actions setting off to one of the strategies. This is because stereotypes are created and therefore, the group is divided. This puts in danger the survival of the company.
Certain ways to manage the team, such as the general manager’s confidence or his capacity to delegate tasks) also affect to the simultaneous implementation of exploration and exploitation strategies in companies. “The study shows that executive teams whose members have widely different ages don’t tend to conduct both strategies. However, they do if they share responsibilities. This is because the stereotypes are reduced and they can reach agreements that guarantee the simultaneous implementation of short and long term strategies” the researchers explain. In addition, “If the general manager trusts in his team and makes it visible, the diversity of tasks will ameliorate the implementation of exploration and exploitation strategies at the same time. The study concludes that “It is necessary to research the best combination of different diversity types in directive boards and their management procedures, so that they can achieve the goals of the company.