Exploring the antecedents of firm performance in a Latin-American and European diverse industrial context

Purpose The purpose of this paper is to determine the top management team (TMT) intangible assets (demographical and managerial experience) diversity which influences firm performance in a diverse industrial context. Design/methodology/approach The paper analyses 159 whole TMTs from Latin American and European enterprises. The study focuses on three indicators (sales, return on assets and return on sales) as proxies of firm performance. The hypotheses formulated were tested using panel data and applying a random-effects model. Findings The paper reveals a large degree of volatility in the findings depending on the type of firm performance indicator. This provides insights regarding the controversy surrounding the black box Upper Echelon Theory and for entrepreneurial purposes concerning the relationship between TMT composition and the achievement of a high level performance. Research limitations/implications This study could be extended by analysing other important variables, such as top mangers’ physiological traits and cultural differences within the TMTs. The analysis could also be applied to a wider geographical area. Practical implications This paper may help enterprises to reach a better understanding of their TMT’s internal complex diversity by providing appropriate insights for a better decision-making process required to achieve an accurate firm outcome. Originality/value The paper is an extension on prior studies not only by focusing on a different geographical area different from the traditional USA context but also applying a longitudinal study scarcely applied in the demographic literature. In addition, attributes for all the TMT’s members (not only CEOs), three different proxies of performance and a highly diverse industry context from Latin American and European companies have been considered.