Top management team decision making: The role of functional and organisational identities on the outcomes of TMT diversity

Despite the theoretical advantages of diversity, scholars have come to recognise that diversity among team members can operate as a source of conflict that disrupts team processes and hinders team performance. Diversity creates a problem for teams when members use the features that create diversity, i.e. background, demography, values, to socially categorise members into various subgroups. Consequently, subgroups prevent teams from functioning effectively since they create faultlines that separate members and promote negative interpersonal conflict. In this paper, we argue that TMT members' functional backgrounds can lead to the formation of salient subgroups when members are highly identified with their functional departments. Furthermore, in contexts where the organisation's identity is strong and team members are highly identified with organisation, TMTs are likely to overcome the negative effects of their functional backgrounds and function effectively as a group. Accordingly, this paper contributes to the TMT literature by exploring how diversity affects TMT processes and outcomes.