Description
Subject – 2024 Spring – Organ Leader & Decision Making (ITS-630-M30) – Full Term
Week 9 Discussion
After completing the reading this week, we reflect on a few key concepts this week:
Discuss and identify leader traits and attributes that are most beneficial in implementing the best decisions in an organization.
Explain the differences in charismatic and transformational leadership and how both leadership styles impact organizational effectiveness. Please note how these leadership styles affect implementing new innovative technologies.
Review table 8.1 in the reading this week, note the work characteristics and the traditional versus high-performance focus, note which focus is best for strategic decisions and which is best for operational decisions. Please explain.
Optional Resources: Chapters 6, 7, & 8 Journal articles
Journal Article 6.1: Russell, R.G. and Mizrahi, R. (1995) ‘Development of a situational model for transformational leadership,’ Journal of Leadership Studies, 2(3): 154–163.
Journal Article 6.2: Tyssen, A.K., Wald, A. and Spieth, P. (2013) ‘Leadership in temporary organizations: a review of leadership theories and a research agenda’, Project Management Journal, 44(6): 52–67.
Journal Article 6.3: Greenwood, R.G. (1996) ‘Leadership theory: a historical look at its evolution’, Journal of Leadership Studies, 3(1): 3–16.
Journal Article 7.1: Chaturvedi, S., Arvey, R.D., Zhang, Z. and Christoforou, P.T. (2011) ‘Genetic underpinnings of transformational leadership: The mediating role of dispositional hope’, Journal of Leadership & Organizational Studies, 18(4): 469–479.
Journal Article 7.2: Groves, K.S. (2005). ‘Linking leader skills, follower attitudes, and contextual variables via an integrated model of charismatic Leadership’, Journal of Management, 31(2): 255–277.
Journal Article 7.3: Heracleous, L. and Klaering, L. A. (2014) ‘Charismatic leadership and rhetorical competence: an analysis of Steve Jobs’s rhetoric’, Group & Organization Management, 39(2): 131–161.
Journal Article 8.1: Madlock, P.E. (2008). ‘The link between leadership style, communicator competence, and employee satisfaction’, The Journal of Business Communication (1973), 45(1): 61–78.
Journal Article 8.2: Carmeli, A., Tishler, A. and Edmondson, A.C. (2012) ‘CEO relational leadership and strategic decision quality in top management teams: the role of team trust and learning from failure’, Strategic Organization, 10(1): 31–54.
Unformatted Attachment Preview
434797
2011
SOQ10110.1177/1476127011434797Carmeli et al.Strategic Organization
Article
CEO relational leadership and
strategic decision quality in top
management teams: The role of
team trust and learning from failure
Strategic Organization
10(1) 31–54
© The Author(s) 2011
Reprints and permission: sagepub.
co.uk/journalsPermissions.nav
DOI: 10.1177/1476127011434797
soq.sagepub.com
Abraham Carmeli and Asher Tishler
Tel Aviv University, Israel
Amy C. Edmondson
Harvard University, USA
Abstract
In this study, we examine a complex pathway through which CEOs, who exhibit relational leadership, may
improve the quality of strategic decisions of their top management teams (TMTs) by creating psychological
conditions of trust and facilitating learning from failures in their teams. Structural equation modeling (SEM)
analyses of survey data collected from 77 TMTs indicate that (1) the relationship between CEO relational
leadership and team learning from failures was mediated by trust between TMT members; (2) team learning
from failures mediated the relationship between team trust and strategic decision quality. Supplemented
by qualitative data from two TMTs, these findings suggest that CEOs can improve the quality of strategic
decisions their TMTs make by shaping a relational context of trust and facilitating learning from failures.
Keywords
CEO relational leadership, learning from failures, strategic decisions, top management teams, trust
Introduction
Upper echelon research has amply illustrated the power of chief executive officer (CEO) leadership in driving organizational performance (Hambrick, 2007; Hambrick and Finkelstein, 1987;
Hambrick and Mason, 1984). Yet a better understanding of the mechanisms and conditions that
account for these leadership effects is needed (e.g., Peterson et al., 2003; Waldman et al., 2001).
Upper echelon scholars have also called for an integrative approach to unravel processes at different levels (CEO, team, and organization), but this kind of research has been slow to accumulate
(Boone and Van Witteloostijn, 2007; Boone et al., 1996; Carmeli et al., 2010; Hambrick, 2007).
Research on CEO leadership, top management team (TMT) processes, and outcomes has been
limited by the challenges of acquiring access to such teams and their processes. Much of the existing research has thus focused on CEO characteristics (e.g., age, tenure) and TMT (homogeneous
and heterogeneous) composition – attributes that can be found in public data sources – and only a
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Strategic Organization 10(1)
handful of attempts have examined CEO leadership behaviors and TMT processes and outcomes
(e.g., Carmeli et al., 2010, 2011; Ling et al., 2008). Understanding these processes is crucial,
because CEOs hold a unique position of influence on the processes within the TMT and its outcomes (Edmondson et al., 2003a; Hambrick, 1994). We offer a socio-learning approach that
emphasizes relational qualities of CEO leadership and the learning potential provided by experiences of failure, which, unlike research on non-executive teams (Hirak et al., in press), can inform
the phenomenon of TMT decision-making processes.
This study contributes to this line of research by examining how CEO relational leadership
facilitates learning from failures and improves strategic decisions in the TMT. Making strategic
decisions is a complex and challenging task (Elbanna and Child, 2007b). It involves integrating the
diverse perceptions, judgments, and orientations of TMT members to develop a set of specific
strategic actions (Hambrick, 2007). When members of TMTs work together, they bring diverse
experience to solve such difficult and unstructured problems as strategy making, while building
involvement and commitment of key senior executives (Ancona and Nadler, 1989; Bauman et al.,
1997). At the same time, research suggests that TMTs often fail to achieve synergy (Hackman,
1990; Hambrick, 1994; Katzenbach, 1998), find it difficult to resolve conflicts (Amason, 1996;
Edmondson and Smith, 2006), build commitment (Wooldridge and Floyd, 1990), or reach closure
in a timely fashion (Eisenhardt, 1989; Hickson et al., 1986).
Evidence suggests that senior executives and their management teams fail frequently and often
remarkably when making strategic choices (Nutt, 2002, 2004), in part because executive teams
face decisions that are both ill-structured and complex (Edmondson et al., 2003a; Eisenhardt,
1999). Since TMTs are likely to make numerous strategic choices during their tenure, whether
and why some TMTs learn from their direct experience to improve their decisions and others do
not is an important question for team research which increasingly seeks understanding of teams
in varied contexts, from the operating room to the board room (Edmondson et al., 2007; Wageman
et al., 2008). In this article, we address a specific type of learning from experience – learning from
failures – thereby responding to calls for further research on learning from failures in the
workplace (e.g., Baumard and Starbuck, 2005; Cannon and Edmondson, 2005; Carmeli and
Schaubroeck, 2008; Haunschild and Sullivan, 2002; Sitkin, 1992; Tucker and Edmondson, 2003).
The complexity of the strategic work that TMTs must handle makes failures virtually inevitable.
While research on group learning has increased since the 1990s, evidence of contextual factors
that facilitate or inhibit these processes is limited. Exploring this issue is essential because the
extant literature suggests that contextual factors such as a team’s learning climate and leader
behavior are key in facilitating or inhibiting team learning processes, and thereby influence work
outcomes (Edmondson, 1999, 2004; Kozlowski and Ilgen, 2006).
Our study extends the literatures on team learning and upper echelons by examining whether
TMT learning from failures improves strategic decisions, and by investigating the role of CEO
relational leadership in both facilitating learning from failures and reaching quality strategic decisions. We contribute to theory and research by addressing a recent call to examine ‘other important
dimensions of (CEO) leadership’, as it has the potential to increase our understanding of the ways
CEOs influence TMT processes and outcomes (Carmeli et al., 2011: 408). We propose a potentially
important pathway by which CEOs can improve TMT strategic decisions by building trust, which
in turn facilitates team learning from failures. We focus on CEO relational leadership, drawing on
an emergent area of research dealing with relationship building (Fletcher, 2004). We examine CEO
relational leadership as a factor in shaping such contextual conditions as trust between TMT members, which may facilitate learning processes (Edmondson, 2004; Nembhard and Edmondson,
2006). Thus we provide one of the first studies that attempts to link CEO relational leadership and
Carmeli et al.
33
strategic decisions, and respond to research calls to go beyond TMT demographic variables and
organizational outcomes and examine intervening process constructs (Lawrence, 1997). We seek to
broaden this line of research and deepen our understanding of the contextual factors that affect
strategic decision-making practices in TMTs (Hambrick, 1994; Pettigrew, 1992; Smith et al., 1994).
Theory and hypotheses
Learning from failures and strategic decisions
Team learning refers to a process of action and reflection (Edmondson, 1999), through which
knowledge is acquired, shared, and combined (Argote, 1999; Argote et al., 2001). The process by
which team members reflect on their mission, tasks, and processes also has been referred to as
reflexivity (Carter and West, 1998), and been shown to promote motivation to process information
systematically through open group discussion, thereby enabling the selection of a correct decision
alternative (Scholten et al., 2007). Through learning, a group improves its effectiveness by increasing the processing, not the amount, of information (De Dreu, 2007).
Effective team learning takes discipline and skill (Edmondson, 2002), and can lead to a relatively permanent alteration in the collective level of knowledge and skill produced by the shared
experience of the team members (Ellis et al., 2003). Teams learn when members engage in trial
and error and joint problem solving (Edmondson, 1999, 2002). Learning involves a willingness
to detect resemblances between past and current situations and their underlying causes and effects
(Argyris and Schön, 1978; Tjosvold et al., 2004; Turner and Toft, 2006) or through a performance
feedback gap (Argote and Greve, 2007). Furthermore, it involves critical thinking (Dewey, 1986
[1933]), encountering problems (Cyert and March, 1963), engaging failures, investigating problems, and using error management programs (Carmeli and Gittell, 2009; Carroll et al., 2006;
Keith and Frese, 2005; Weick and Sutcliffe, 2001).
Our focus is on team learning from failures, defined here as the extent to which a TMT reflects
upon the problems and errors it experiences, interprets and makes sense of why they occurred,
and discusses what actions are needed to produce improved outcomes. Theory and research point
to the importance of learning from failures as a process through which better outcomes can be
attained (Baumard and Starbuck, 2005; Edmondson, 1996; Madsen and Desai, 2010; Reagans
et al., 2005; Sitkin, 1992; Tucker and Edmondson, 2003). Specifically, learning from experiences
of failure is useful for cultivating mindful attention to work processes (Weick and Sutcliffe, 2001;
Weick et al., 1999), thereby decreasing subsequent accident and incident rates (Haunschild and
Sullivan, 2002), reducing the risk of future accidents and failure (Baum and Ingram, 1998),
improving system reliability (Weick and Sutcliffe, 2001) and crisis-preparedness (Carmeli and
Schaubroeck, 2008; Nystrom and Starbuck, 1984), and enhancing outcomes such as service
quality, safety, adaptability, innovativeness, and productivity (Argote and Darr, 2000; Argote
et al., 1990; Cannon and Edmondson, 2005; Carmeli and Sheaffer, 2008; Sitkin, 1992).
We suggest that TMTs that engage in the process of learning from failures (that is, the teams
actively learn from direct experiences of failure) are likely to make higher quality strategic decisions than TMTs that do not learn from their failures. Strategic decisions address complex and
ambiguous issues such as penetrating an occupied market or entering a new market, responding to
a competitive attack, and developing core capabilities, technologies, and products that involve
large amounts (i.e., commitment) of organizational resources (Amason, 1996; Mason and Mitroff,
1981). Following Amason (1996), the quality of TMT strategic decisions is defined as the extent to
which the effects of these choices on the company have been poor or good.
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Senior executives often encounter contextual pressures that lead them to persist with their
prior strategic choices and orientation. They thus tend to disregard signals that their choices and
orientations are no longer appropriate (Milliken and Lant, 1991). When a TMT reflects upon
past experiences and attempts to thoroughly understand what went wrong its members are more
mindful and comprehensive. That is, TMT members open themselves up to new opportunities and
options, and may be capable of overcoming potential biases such as sunk costs and escalation of
commitment. In addition, they are able to fully comprehend the experience in context, thus allowing them to more fully realize the implications for choices to be made and the best ways to pursue
them (Dillon and Tinsley, 2008).
Research suggests that managerial cognition (executives’ mental models) underpins the
choices and decisions that executives make (Day and Lord, 1992; Walsh, 1995). A team mental
model is conceptualized as the shared knowledge representation and organized understanding of
the team’s task environment (Cannon-Bowers et al., 1993; Klimoski and Mohammed, 1994).
Mental models enable team members ‘to organize and acquire information necessary to anticipate
and execute actions’ (Kozlowski and Ilgen, 2006: 83), thus cultivating a shared understanding
about the equipment used by the team, the tasks and problems the team has to cope with, as
well as recognizing individual team members’ knowledge and perceptions, and team members’
beliefs about effective processes (Cannon-Bowers et al., 1993). Research suggests that decisionmakers use mental models to imagine their competitors’ strategic orientations (Reger and Huff,
1993), as a process by which they define the competition and interpret the competitive conditions
in the task environment (Porac and Thomas, 1990). This is in line with upper echelon theory,
which maintains that cognitive models held by the senior management teams influence their strategic choices and orientations (Finkelstein and Hambrick, 1996; Hambrick and Mason, 1984).
Learning from experience produces tacit knowledge, which helps explain why teams at
different sites learn at significantly different rates. When teams learn from experience the tacit
knowledge acquired requires proactive coordination for its transfer and use (Edmondson et al.,
2003b). In addition, learning from failures may involve team members figuring out who knows
what (i.e., transactive memory system; Wegner, 1995) and what role each member played in the
failure experience. Team members benefit from knowledge gained by others, which enables them
to diagnose a problem, or determine how to divide and coordinate activities and make better decisions (Reagans et al., 2005).
Theory and research also point to the advantages of a double-loop learning process where errors
are not only detected and corrected, but the underlying causes are also explored or challenged
(Argyris and Schön, 1978), especially when much is at stake. Learning from failures in TMTs
requires a willingness to seek root causes and understand the sequences of events that produced
them. This can help executives become willing to abandon prior commitments to a course of action
that no longer makes sense (Ross and Staw, 1993). Unlike success, experiencing failures can inhibit
an inclination toward inertia and increase openness to exploring new opportunities or alternative
courses of action (Amason and Mooney, 2008; Cyert and March, 1963).
Consistent with this notion, we suggest that when teams actively learn from experiences of
failure they may benefit from having accountability diffused among members rather than being
borne by an individual member. This learning process thus allows team members to share information and expertise to put the issue in context and to challenge their own assumptions and
practices to improve their decision-making. When teams learn from failures they engage in a type
of critical yet constructive discussion that is aimed not to place blame on team members but rather
to understand the root issue and what needs to be revised and refined. The experience itself can
influence subsequent decisions and behaviors (Simon and Lieberman, 2010) and thus a reflection
Carmeli et al.
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process, particularly on experiences of failures, can improve decision quality and drive outcomes
such as high reliability (Weick and Sutcliffe, 2001).
Taken together, we predict that TMTs that reflect on failure experiences, interpret and make
sense of them, will make higher quality strategic decisions.
hypothesis 1: TMT learning from failures will be positively related to quality strategic
decisions.
TMT trust, learning from failures, and strategic decisions
Despite the potential benefits, research indicates that teams vary significantly in the extent to which
they actively learn from experience (Dutton and Thomas, 1984; Reagans et al., 2005). Furthermore,
due to structural inertia and other persistent forces, organizational systems may inhibit making
changes based on learning from failure such that the learning is not translated into necessary adaptations in strategic orientations (Lant et al., 1992). To facilitate learning from failed experiences,
we need to better understand ‘barriers to learning from failure and identifying strategies to overcome them’ (Wilkinson and Mellahi, 2005: 233). One barrier is lack of trust among team members.
Conversely, when there is trust within the TMT, its members are more fully engaged in learning
from failures and can make better strategic decisions.
Trust is a core relational construct, commonly conceptualized as a psychological state in which
individuals make themselves vulnerable in a relationship based upon expectations, assumptions, or
beliefs that another’s future behaviors will be positive, beneficial, or favorable (Deutsch, 1958;
Robinson, 1996; Rousseau et al., 1998). Thus, trust denotes ‘the willingness of a party to be vulnerable to the actions of another party’ (Mayer et al., 1995: 712) and is an expression of confidence by
a party that his or her vulnerability will not be exploited and that he or she will not be harmed by
the behaviors or actions of the other party (Jones and George, 1998).
Trust within TMTs is a key psychological state that enables members to engage in learning from
failures. Trust is likely to increase members’ sense of confidence that speaking up is accepted and
expected, and allows them to admit and take responsibility for errors and problems and discuss
them openly (Edmondson, 1999, 2004). Tjosvold et al.’s (2004) findings indicate that a cooperative orientation is positively related to team learning from mistakes. Further, when teams discuss
and reflect on problem and error relationships, destructive conflicts may emerge between their
members. While task and process conflicts are important for improving processes and outcomes,
research suggests that cognitive and constructive conflicts may reach a level where they become
destructive (Jehn and Bendersky, 2003). This is particularly applicable to situations where team
members reflect on failed experiences, which can be stressful. Research has indicated that task and
relational conflicts are tightly related (Jehn and Bendersky, 2003) and that trust within teams may
be a fruitful mechanism as it moderates this linkage by helping TMT members to tolerate task
conflicts in a way that does not slide into destructive relationship conflicts (Simons and Peterson,
2000). Thus, trust enables TMT members to handle conflicts that can emerge while discussing
problems and errors associated with work tasks and processes.
We also reason that trust within TMTs is indirectly, through learning from failures, associated
with quality strategic decisions. Studies have reported inconsistent findings about the direct effect
of trust on behaviors and outcomes (see Dirks and Ferrin, 2001). We reason that this is because
trust, as a psychological state, is essential for facilitating work processes that may give rise to work
behaviors and outcomes. As a psychological state, trust is likely to have an indirect effect on the
quality of strategic decisions of a TMT because it underpins learning from failed experiences. Trust
enables learning in the form of reflection on what has happened (Edmondson et al., 2003a). This
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process alleviates a tendency to oversimplify events (Weick and Sutcliffe, 2001), enables comprehensiveness (Fredrickson and Mitchell, 1984), and builds decision-makers’ confidence in that they
have left ‘no stone unturned in the decision making’ (Eisenhardt, 1989: 572). This constellation of
cognitive, conflict, and emotional processes is essential for quality choices and closure (Eisenhardt,
1989). Thus,
hypothesis 2: TMT trust (trust among members of a TMT) will be positively related to TMT
learning from failures.
hypothesis 3: The relationship between TMT trust (trust among members of a TMT) and quality strategic decisions will be mediated by TMT learning from failures.
CEO relational leadership, TMT trust, and learning from failures
Recent research has pointed to relational aspects of leadership that are essential for developing
psychological states that facilitate learning processes (Edmondson, 2004; Nembhard and
Edmondson, 2006). We suggest that CEO relational leadership, which refers to a leader who
models relational behaviors by encouraging collaboration and open communication and promoting sincere behaviors (Carmeli et al., 2009), is a key for augmenting trust within the TMT, thereby
facilitating learning from failures.
Leadership has long been seen as a relational construct, which implies that good leaders are able
‘to work in and through relationships and to foster relational health in their organizations’ (Fletcher,
2007: 348) as emphasized in theories such as Hollander’s relational theory (Hollander, 1978), the
leader–member exchange (LMX) perspective (Graen and Uhl-Bien, 1995), and the social identity
theory of leadership (Van Knippenberg et al., 2004), as well as in more general perspectives such
as social exchange theory (Blau, 1964), relational cognition theory (Berscheid, 1994; Fiske, 1992),
social capital (Coleman, 1988), network theory (Burt, 1992), and more recently in the writings of
organizational scholars on positive work relationships (Dutton, 2003; Dutton and Heaphy, 2003;
Dutton and Ragins, 2007).
We posit that CEO relational leadership nurtures trust among TMT members. This is because
CEOs who display relational leadership play a major role in building positive relationships
between members (Fletcher, 2007). Through collaborations people get to know each other in a
more intimate way; when members experience positive collaboration with each other they are
more willing to expose themselves as they develop positive expectations of others’ intentions and
behaviors. In addition, when relational leaders encourage open communication TMT members
feel psychologically safe to speak up and express their views freely (Edmondson, 1999, 2004).
Thus, when members sense genuine openness in their interactions with each other they are more
likely to accept vulnerability (Fletcher, 2004). Dutton (2003) noted that by being relationally
attentive, leaders know how to cultivate connections, and that their willingness to convey openness and emotional accessibility builds a foundation for high-quality relationships. Similarly,
Carmeli et al. (2009) showed that relational leaders play a key role in building and nurturing
bonding social capital. Finally, relational leaders who promote sincere behaviors cultivate
members’ beliefs that others are reliable, thus engendering willingness to be vulnerable (Mishra,
1996) and a sense that they can rely on each other (Doney et al., 1998).
In addition, relational leaders sense changes in the relational dynamics between team members; these leaders notice factors affecting the connective tissue that relates team members
(Dutton, 2003; Fletcher, 1999). When leaders signal sensitivity to the relational dynamics within
the team, they create conditions for mutuality and trust (Dutton, 2003). This motivates TMT
members to reciprocate and accept vulnerability, which is vital for facilitating a process of
Carmeli et al.
37
reflecting and making sense of failed experiences. Further, CEOs who exhibit relational leadership provide support for expressing and tolerating conflicting opinions and feelings held by
members, both of which are essential for learning from failures. The CEO thus has a key role in
shaping norms that conflicting thoughts and feelings are legitimate and often essential for enabling the team to learn and move forward (Berg and Smith, 1995). Thus,
hypothesis 4: CEO relational leadership will be positively associated with TMT trust (trust
among members of a TMT).
hypothesis 5: TMT trust (trust among members of a TMT) will mediate the relationship
between relational leadership and TMT learning from failures.
Method
Sample and data collection
We sent a request to 500 alumni of executive MBA programs in Israel to help us access their firms’
CEOs and TMT members to complete a structured questionnaire. In our letter, we explained that
the questionnaire data were part of a larger research project on the role of leadership, team processes, and firm outcomes operating in diverse industries. To encourage participation, we promised
that each participating firm would receive the findings of the research.
We followed previous research (Hambrick and Mason, 1984) to identify the ‘direct reports’, i.e.,
senior executives with whom the CEO shares the strategic decision-making process. Thus, the
CEOs in our sample were asked to identify the TMT members they considered to be ‘direct reports’
and assist in recruiting them to participate in the study. We received responses from 81 firms’
TMTs. However, following previous studies (e.g., Lubatkin et al., 2006), we excluded two firms
for which fewer than 50% of the TMT members responded to our questionnaire, as well as two
firms whose TMTs provided incomplete information. Thus, usable questionnaires were obtained
only from 237 members – 77 CEOs and 160 senior executives who are members of their TMT.
Overall, we received complete data from 15.4% of the targeted research population of TMTs.
The firms in the sample operated in diverse industries, including food and beverages, medical
equipment and pharmaceuticals, computers (e.g., semiconductor and software), infrastructure
and construction, and finance. There were no significant differences between the participating
and non-participating firms in terms of size as measured by the number of employees (p > .10).
Following Armstrong and Overton (1977), we also assessed potential response bias by comparing
early with late respondents in terms of all key variables and did not find significant differences
(p > .10).
Measures
As described below, most items in the questionnaires were originally developed by other researchers in English. Following conventional practice (Brislin, 1986), we translated the items into Hebrew
and then back-translated them into English to ensure that the content was accurately represented in
the Hebrew items. Prior to administering the questionnaire we asked 25 senior executives to review
the items and indicate to us whether the questions were clear and reflected the constructs they were
intended to measure. Following this procedure we made minor revisions to improve the clarity of
certain items. To reduce potential common source bias, we collected data as follows: TMT members (excluding the CEO) provided data on CEO relational leadership; the CEO and the other TMT
members provided data on TMT trust, TMT learning from failures, and strategic decision quality.
In addition, the CEO provided data on past firm performance and TMT size.
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CEO relational leadership. We adapted the three-item scale developed and validated by Carmeli
et al. (2009) for assessing the extent to which a firm’s CEO exhibits relational leadership behavior.
We asked TMT members (i.e., direct reports) to assess on a five-point Likert scale (ranging from
1 = ‘not at all’ to 5 = ‘to a large extent’) the extent to which the firm’s CEO: (1) encourages collaboration among TMT members; (2) cultivates a credible work environment in the TMT; and (3)
encourages open communication among TMT members. The Cronbach alpha for this scale was
.75, similar to the reliability reported in Carmeli et al.’s (2009) study.
TMT trust. To assess trust among team members, we adapted four items from Robinson’s (1996)
scale. Respondents (CEO and TMT members) were asked to report on the extent to which TMT
members experience trust in their relationships with each other. The items were: (1) TMT members
relate to each other with high sincerity; (2) members know that their colleagues on the TMT will
treat them in a consistent and predictable fashion; (3) TMT members are not always honest and
truthful with each other (reverse-scored item); and (4) TMT members are always open and up-front
with each other. Responses were made on a five-point Likert-type scale ranging from 1 = ‘not at
all’ to 5 = ‘to a large extent’. The Cronbach alpha for this measure was .86, similar to the reliability
reported in Robinson’s (1996) study.
TMT learning from failures. To assess team learning from experiences of failures, we adapted three
items from the scale used by Carmeli (2007) based on work by Tucker and Edmondson (2003).
Respondents (CEO and TMT members) were asked to report on the extent to which the TMT
engages in learning from failures. The items were: (1) when TMT members encounter a problem
such as lacking sufficient resources to complete the task, they resolve it immediately and inform
other TMT members about the problem; (2) when TMT members make a mistake, they inform the
relevant TMT members so they can learn from it; and (3) when a TMT member makes an error,
her/his TMT members will talk to her/him about it, not to blame but to learn and draw lessons from
the event. Responses were made on a five-point Likert-type scale ranging from 1 = ‘not at all’ to
5 = ‘to a large extent’. The Cronbach alpha for this measure was .73, slightly lower that the reliability reported in Carmeli’s (2007) study.
Strategic decision quality. We used the three-item scale developed and validated by Amason (1996)
to assess the quality of the strategic decisions made by the TMT. In line with previous research,
data were collected from TMT members who are involved in the strategic decision-making process. The outcomes of strategic decisions are a function of the people who are actually involved in
making them (Amason, 1996; Amason and Mooney, 2008). Thus, we asked the CEO and his/her
TMT members to consider strategic choices (such as penetrating occupied or new markets, launching a competitive attack or responding to a rival’s competitive attack, and choosing core capability,
technology, and products to pursue) that they had most recently made and assess on a five-point
Likert scale (ranging from 1 = ‘very poor’ to 5 = ‘very good’) the quality of the TMT strategic
decisions in terms of their impact on the company. The items were: (1) the effect of the strategic
decisions on the company have been . . . ; (2) relative to our expectations, the results of the strategic decisions have been . . . ; and (3) overall, the strategic decisions have been . . . . As in previous
studies (Amason, 1996; Olson et al., 2007), we used perceptions for assessing strategic decision
quality, which provide reliable measurements when objective data are not accessible (Dess and
Robinson, 1984). The Cronbach alpha for this scale was .85.
Control variables. We controlled for TMT size and past firm performance. TMT size was measured
by the number of TMT members (including the CEO and his/her direct reports). Research suggests
Carmeli et al.
39
that TMT size may have an effect on TMT processes (Simsek et al., 2005) such as strategic
decision-making. In addition, following previous studies (Elbanna and Child, 2007a), we controlled for the firms’ past performance (for an average of two years prior to our survey period)
because high-performance firms are likely to be associated with more quality strategic choices.
We used the average of two-year gross, operational, and net income for assessing past firm performance, as reported by the firm’s CEO.
Level of analysis. Relying on multiple respondents has been shown to be more reliable and less
subject to superficiality than a single respondent in strategy research (Bowman and Ambrosini,
1997), though it requires the assessment of the consistency of responses within a team. Following
previous research (e.g., James, 1982; Smith et al., 1994), we employed an analysis of variance to
assess this consistency. The results showed greater variability in the ratings between teams than
within teams (p < .01). We also calculated the intra-class correlations (ICCs) to assess group member agreement. ICC(1) indicated the extent of agreement among ratings from members of the same
group. ICC(2) indicated whether groups could be differentiated based on the variables of interest.
The values of ICC(1) and ICC(2) for the four measures for which we used multiple respondents
were respectively as follows: .42 and .70 for CEO relational leadership; .48 and .85 for TMT trust;
.29 and .71 for TMT learning from failures; and .48 and .85 for strategic decision quality. These
values are consistent with the conventional standards for aggregating individual questionnaire
responses into a team-level response (see Bliese, 2000).
Data analyses. Structural equation modeling (SEM) AMOS 18 was used to estimate the mode
