Does participatory decision‐making in top management teams enhance decision effectiveness and firm performance?

Purpose – The purpose of this paper is to examine how participatory decision‐making processes in top management teams (TMT) influence strategic decision effectiveness and firm performance. Design/methodology/approach – Data from 94 TMTs are collected from structured surveys. Each firm's CEO provides data on strategic decision effectiveness, and a senior executive member of the TMT provided data on participatory decision‐making processes and firm performance. Findings – Results show that participatory decision‐making processes in the TMT are positively associated with decision effectiveness, but there is both a direct and an indirect relationship (through decision effectiveness) between participatory decision‐making processes and firm performance. Originality/value – This paper sheds light on the importance of joint decision‐making processes among TMT members for improving choices and enhances firm performance.