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THE MODERATING EFFECT OF EMOTIONAL

INTELLIGENCE ON THE PERFORMANCE OF TOP


MANAGEMENT TEAM
Wenhui Zhang
Shuyao Wang
Yumeng Zhu
Kihwan Kim
Kean University, Union NJ

ABSTRACT

Research on stress showed that stress affects adversely mental and physical health,
resulting in performance loss. This study theoretically explores whether emotional intelligence
will moderate (1) the effect of top management team’s heterogeneity on employee turnover rate,
lower psychological attachment, and less communication, (2) the effect of conflict-oriented
decision making on top management team’ harmony, and (3) the effect of an uncertain, complex
business environment on top management team’s occupational stress. It is expected that emotional
intelligence will moderate the three relationships.

Keywords: Emotional intelligence, performance, top management team

INTRODUCTION

Due to its central role in guiding the direction of an organization, top management team
(TMT) is claimed to play a critical role in determining the performance of the organization. The
significance of TMT in the organization leads researchers to delve into a variety of aspects of
TMT that may have an influence on firm performance. Although there have been consistent
results from the research on characteristics of TMT, still, many researchers debate the
controversial effects of team heterogeneity and TMT process on performance.
Team heterogeneity refers to the variation of the demography of TMT such as job and
industry experience, level of education, and functional background. Some strand of studies claim
that team heterogeneity has a positive association with performance because diverse views can
stimulate consideration of non-obvious alternatives (Cox & Blake, 1991), and the heterogeneous
team is more creative than the homogeneous team (Hambrick et al., 1996; Triandis et al., 1965).
However, the heterogeneity of TMT has shown to closely relate to higher turnover rate
(Jackson et al., 1991; Wiersema & Bird, 1993), lower psychological attachment to the
organization ( Tsui et al.,1992), less frequent communication( Zenger & Lawrence, 1989).
Another debating issue in TMT research is a decision-making process, which refers to the
process that is employed by TMT in making strategic decisions. Usually, two types of processes
have been studied in TMT study: Consensus and Conflict oriented process.
Many scholars (e.g., Schweiger & Sandberg, 1989; Schweiger et al., 1986) insist that
conflict-oriented process be superior to consensus in that it generates the higher quality of
assumptions and recommendations and makes better use of the capabilities. However, conflict-
oriented process hurts harmony within a group and weakens the ability to work in the future
(Schwieger et al., 1986).

International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018 95
The mixed effects of team diversity and conflict orient process on performance remain
still irreconcilable. This study attempts to seek the way to preserve the advantages of team
heterogeneity and conflict-oriented process while reducing their adverse impacts by combining
the influence of emotional intelligence. Emotional intelligence refers to the ability to aware self
and other's emotions, regulate self-emotion and motivate self and others (Goleman, 1995, 1998).
Many studies (e.g., Dulewicz & Higgs, 2000; Janovics & Christianse, 2001) show that
emotionally intelligent individuals and groups better perform than those with low emotional
intelligence. The goal of this study is to explore the moderating effect of emotional intelligence
on the relationship between team heterogeneity and team process, and performance.
On the other hand, compared with any other types of teams, TMT faces more complex,
uncertain, and unstable task environment which causes stressful situations and events, imposing
cognitive and emotional pressure on TMT. Many studies on stress demonstrate that successful
handling of stress has a close relationship with good performance. Another goal of the current
study is to explore how emotional intelligence help TMT members efficiently cope with
occupational stress, leading to superior performance.
This study explores whether emotional intelligence will moderate (1) the effect of top
management team’s heterogeneity on employee turnover rate, lower psychological attachment,
and less communication, (2) the effect of conflict-oriented decision making on top management
team’ harmony, and (3) the effect of an uncertain, complex business environment on top
management team’s occupational stress.

LITERATURE REVIEW

Emotional Intelligence

Although scholars have recognized that emotion plays a critical role in determining a
person's short-term or long-term performance in the organization, there have been obstacles to
prevent them from doing scientific research. Goleman’s brilliant work (1995) opened a new era
of the research on emotion by constructing emotional intelligence with five dimensions: self-
awareness, managing self-emotions, self-motivation, empathy, and social skills. Bar-on (1997)
defines emotional intelligence as a set of non-cognitive capabilities and skills that affect a
person's ability to cope successfully with environmental demands and pressures. The most
widely accepted definition is that emotional intelligence is the ability to monitor one's own and
others; emotions, to discriminate among them, and to use the information to guide one's thinking
and actions (Salovey & Mayer, 1990).
Emotional intelligence is claimed to have an impact on a variety of work behaviors such
as commitment to the organization (Abraham, 2000; Nikolau & Tsaousis, 2002), teamwork
(Druskat & Wolff, 2001), development of talent, innovation, quality of service, and customer
loyalty (Goleman, 1998). Cooper (1997) argued that people with high emotional intelligence
experience more career success, build stronger personal relationships, lead more effectively, and
enjoy better health than those with low emotional intelligence.
More emotionally intelligent people succeed at communicating their ideas, goals, and
intentions in interesting and assertive ways, making others feel better suited to an occupational
environment (Goleman, 1998). Second, emotional intelligence is closely related to the social
skills needed for teamwork (Mayer & Salovey, 1995; Goleman, 1998; Sjoberg, 2001). People
with high emotional intelligence have proficiency in managing relationships and building

96 International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018
network and an ability to find common ground and build rapport (Goleman, 1998; Kim et
al.,2014). Kim (2010) found that emotional intelligence promoted the trustful relationship,
satisfaction, and the desire to work again with the counter partner in the negotiation Third,
emotional intelligence helps people to cope successfully with environmental demands and
pressures (Bar-on, 1997).
Because people with high emotional intelligence have the ability to control or redirect
disruptive impulses and moods, they feel comfortable with ambiguity and are open to change
(Goleman, 1998). Finally, emotional intelligence is claimed to be a critical factor in
organizational leadership. Goleman (1998) argued that although general intelligence and
technical skills were crucial traits for a successful leadership, emotional intelligence was the
essential contributor to an effective leadership. Leaders with high emotional intelligence better
appraise and influence followers’ emotions, creating a supportive working environment
(Goleman, 1998; Cherniss, 2001).
Several empirical studies evidenced that individual or group with high emotional
intelligence show higher performance than those with low emotional intelligence. Janovics and
Christiansen (2001) found that emotional intelligence was modestly correlated with job
performances, using an incidental sample of 176 undergraduates. Dulewicz and Higgs (2000)
assessed three domains of self-reported ability: EQ, IQ, and managerial competency, reanalyzing
data from a seven-year study of the career progress of 58 managers in the UK and Ireland. The
study reveals that emotional intelligence contributes to the prediction of the job advancement.
Bar-on (1997) found that individuals in the Young President Organization had high EQ scores
exceeding the average, but chronically unemployed individuals show low EQ scores.

Team Heterogeneity

Cox and Blake (1991) considered TMT heterogeneity as a competitive advantage because
a variety of perspective could stimulate consideration of non-obvious alternations in task groups.
Hambrick et al. (1996) argued that heterogeneous teams have shown more creativity than
homogeneous teams. Dess (1987) and Murray (1989) discussed that organizations in a dynamic
environment may benefit from team heterogeneity. A variety of opinions as to potential
competitive moves and their likelihood of success would be more representative of an unstable
and complex external environment. From the survey of the top 500 fastest growing startups in
the U.S. and a national random sample of new ventures, in dynamic industry environment
heterogeneous top management team performed best when lead by directive leaders (Hmieleski
& Ensley, 2007).
Bantel and Jackson (1989) discussed that when solving non-routine complex problems,
more effective are groups that compose of individuals having a variety of skills, knowledge,
abilities, and perspective. Even in the context of large public academic institutions, the study on
the presidents and provosts of universities in the U.S. found that the heterogeneity in top
management teams affected many performance indicators such as goals access, affordability, and
quality (Rutherford, 2016). In the study on 356 Chinese companies listed in the Shanghai and
Shenzhen Stock Exchanges, the heterogeneity in tenure and functional experience of the top
management team are inversely related to firm performance (Zhang, 2007).
However, Michel and Hambrick (1992) insisted that teams with high variability in
demography have different schemata or ways of seeing the world and that the increased
heterogeneity results in an increased attitudinal or cognitively diversity. Several researchers

International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018 97
argue the adverse effect of the increased team heterogeneity on TMT performance. Jackson et al.
(1991) claimed that the demographic diversity in TMT is closely related to the high turnover
rate. Also, the increased level of workgroup heterogeneity is closely associated with lower
psychological attachment to the organization (Tsui et al., 1992), and less frequent
communication (Zenger & Lawrence, 1989).
Emotionally intelligent TMT will successfully communicate their ideas, goals, and
intentions in interesting and assertive ways, thus making others feel better suited the
occupational environments (Goleman, 1998). In addition, emotional intelligence benefits group
development because a large part of effective and smooth teamwork is knowing each other's
strengths and weakness, and leveraging strengths whenever possible (Bar-on, 1997). Abraham
(2000) and Nikolau and Tsaousis (2002) claimed that emotional intelligence was a significant
predictor of organizational commitment.
Therefore, TMT members with high emotional intelligence can effectively reduce
disadvantages from team heterogeneity-high turnover rate, lower psychological attachment, and
less frequent communication, while preserving advantages from team diversity at the same time.
Thus, high emotionally intelligent TMT with heterogeneous backgrounds will show better
performance than low emotionally intelligent TMT with heterogeneous backgrounds.

Proposition 1: Emotional intelligence will moderate the effect of top management team’s
heterogeneity on turnover rate, lower psychological attachment, and less
frequent communication.

Decision Making Process

The process used by TMT in making strategic decisions is closely related to firm
performance (Smith et al., 1994). Also, given the novelty, complexity, and open-endedness of
strategic problems, different decision-making process results in a different level of performance
(Mintzberg et al., 1976). When it comes to the decision-making process used by TMT, two types
of processes- consensus-oriented process and conflict-oriented process- have dominated the
research on TMT's decision-making process. Some researchers argue that a consensus-oriented
process has a positive relationship with firm performance (Bourgeois, 1980; Quinn, 1980; Dess,
1987).
However, Janis (1972) criticized the consensus-oriented process in that it generated too
little conflict in the group decision making process and uncritical acceptance of invalid
assumptions and inferior recommendations. In the study that compared the consensus-oriented
process with the conflict-oriented process, Schweiger et al. (1986) found that conflict-oriented
process generated a higher quality of assumptions and recommendations than the consensus-
oriented process in solving the complex strategic problem.
In another study, Schweiger and Sandberg (1989) argued that groups using the conflict-
oriented process make better use of the capabilities of group members than do groups using the
consensus-oriented process. Schweiger et al. (1986) added that under the context of strategic
problems, the conflict-oriented process was superior to consensus-oriented process, which may
be useful for some non-strategic tasks, in terms of the overall quality of the assumptions and
recommendations made. However, the consensus-oriented process may be more functional than
the conflict-oriented process for preserving harmony within a group. The conflict-oriented

98 International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018
process improved decision quality, but it weakened the ability of a group to work together in the
future (Schweiger et al., 1986).
At the level of the workgroup, Abraham (2000) claimed that emotional intelligence was
closely associated with harmonious relationships among workers. The control of self-emotion
helps the effective management of disruptive emotions and impulses or the buffering of negative
emotion in favor of mood enhancement. Goleman (1995) addressed that this harmony was the
basis of synergistic sharing of skills within groups whose performance surpasses that of other
groups with similar technical skills but fewer social skills. In another study, Abraham (1999)
discussed that emotional intelligence was directly related to workgroup cohesion, which was
closely related to superior TMT performance (Michalison et al., 2004).

Proposition 2: Emotional Intelligence will moderate the effect of conflict-oriented decision


making on top management team’s harmony.

Stress

Stress occurs to individuals, groups, and organizations when their situation is overly
complex, ambiguous, and unclear as well as highly motivating and demanding in relation to the
competence or structural adequacy to deal with the demands. TMT faces more complex,
uncertain task environment than any other group (Duncan, 1972; Sharfman & Dean, 1991).
Environmental uncertainty places tremendous cognitive demands on senior managers. A
difficulty inherent in environmental uncertainty is the constant need to adapt one’s perception of
the environment to fit its current reality.
Top managers must change their routine problem-solving habits by being more structured
and vigilant in environmental scanning and problem solving (Ancona, 1990). As environmental
complexity creates demands from a variety of external interest groups, the organization responds
by becoming more highly differentiated (Pfeffer & Salancik, 1978; Thompson, 1967), also
reflected in the executive team. As top managers attempt to respond to the uncertainty and
complexity of the firm’s environment, they will tend to focus more of their attention on scanning
the greater variety and numbers of relevant environmental sectors (Daft et al., 1988).
Because top managers confront with more uncertain, complex task environment, they are
likely to have more stress than managers in any other level. In the workplace, failure in the
successful management of stress causes negative impacts on performance. Stress, also, results in
emotional arousal; frustration; defensiveness in fight or flight; Since stress is conceived mainly
as an emotional reaction (usually negative) to various stimuli, emotional intelligence can be used
as a framework, within which the individual could learn how to cope with it and how to control
strong emotions (Nikolaou & Tsaousis, 2002). Emotional intelligence is claimed to influence
one's ability to succeed in coping with environmental demands and pressures, clearly on an
important set of behaviors to harness under stressful work conditions (Bar-on, 1997).
Several empirical studies demonstrate the relationship between emotional intelligence
and occupational stress. From the study with the sample of college students, Birrjdar (2016)
found that there was a significant relationship between emotional intelligence and stress on one
hand and with interpersonal skills on the other. Shukla and Srivastava (2016) revealed that trait
EI is a more significant influencing factor for job stress than gender, age, marital status,
education annual incomes and work experience.

International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018 99
In the study of 564 retail employees, Walia and Tulsi (2014) found that emotionally
intelligent college teachers had less occupational stress. Nikolaou and Tsaousis (2002) revealed
that a person with high EI scores suffered less occupational stress such as work relationships,
overload, resource & communication, and pay & benefits. Slaski and Cartwright (2002) studied
224 middle and superior managers form the UK's largest supermarket chain. In this study, total
EQ score was moderately related to morale, distress, general mental health, and quality of work
satisfaction. Bar-on (1997) found that individuals from the group of Young President
Organization obtain EQ scored exceeding the average significantly. According to the study, this
group's success is dependent on an ability to be very independent and to assert their
individuality, while being able to withstand various stressors occurring within the job. Thus,
emotional intelligence helps TMT members cope efficiently with occupational stress, resulting in
superior performance.

Proposition 3: Emotional Intelligence will moderate the effect of an uncertain, complex business
environment on top management team’s occupational stress.

PROPOSED METHODOLOGY

Sample and Data Collection

This study will employ an experimental design to test the proposed hypotheses. The
participants will be senior business major students in a mid-sized university in the U.S. During
the experiment, the participants will play a business simulation game as a team. Each team will
consist of 4-5 team members with diverse majors including management, marketing, finance,
accounting, and production. The sample could be a random sample, a stratified sample, or a
convenient sample.
The simulation game mimics the processes of a corporation, the key decisions to be made
to run a company in a competitive environment, and the effects of competition on product sales
and corporate performance. The game will provide the participants the opportunity to play
roles of TMT. The participants will make strategic decisions in each round to bring in the best
performances while competing with other teams. Each team will play a total of eight rounds
which will last for eight weeks.
The data will be collected before, during, and after the simulation game.

Survey Instruments and Data Analysis

Future research is needed to develop or use previous survey instrument(s) to measure


the following variables: Emotional intelligence (moderator factor), top management team’s
heterogeneity, turnover rate, lower psychological attachment, and less frequent
communication, conflict-oriented decision making, top management team’s harmony,
uncertain and complex business environment, and top management team’s occupational stress.
Performance outcomes will be collected from the simulation game. After each round of the
game, the game will generate a variety of performance outcomes such as ROI, ROA, Stock
Price, Profit, Market Share, etc. A correlation matrix can be conducted to determine the
significant correlations between the dependent and independent variables. A regression model
is an appropriate tool for testing the developed hypotheses.

100 International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018
CONCLUSION

The current study contributes to the literature on TMT by exploring the moderating effect
of emotional intelligence on TMT performance under the condition of team heterogeneity,
conflict-oriented decision-making process, and uncertain, complex business environment.
Overall, emotional intelligence enables TMT to result in superior performance by decreasing
negative effects from team heterogeneity, the conflict-oriented decision-making process, and an
uncertain, complex business environment.

IMPLICATIONS

For practitioners, the current study provides two implications: hiring and training. First,
hiring or selecting a senior manager is a very important, but difficult task. Inducement of the new
senior executive has a huge impact on the team and firm performance, but the reliability and
validity of the evaluation process tend to decrease for senior positions. Fernandez-Araoz(2001)
argues that classic profile in hiring a senior executive (relevant experience and outstanding IQ)
much more predictor of failure than success unless the relevant emotional intelligence is present.
Low emotional intelligence predicts accurately failure at senior managers. In addition, without
relevant experience, a combination of high emotional intelligence and high IQ functions pretty
well to produce success.
Therefore, emotional intelligence should be considered as an important criterion for the
selection and promotion of TMT members. Second, several researchers and practitioners claim
that emotional intelligence can be trained and developed (Goelman, 1998; Boyatzis, 2001;
Cherniss & Goleman, 2001; Kram & Cherniss, 2001).
Jordon et al. (2002) have demonstrated that coaching can improve the effectiveness of
low emotional intelligent team so that their performance is functionally identical to that of high
emotional intelligent teams. In reality, it is hardly possible to form emotionally intelligent TMT
by replacing low emotionally intelligent members with high ones. Rather than, continuous
training with a proper program seems to be a viable alternative to develop emotionally intelligent
TMT.
LIMITATIONS

The current research has limitations in its research methodology. First, the experimental
design using simulation game is widely adopted by TMT scholars, but the simulation game
cannot fully reflect the dynamics of TMT decision makings. The sample is senior business major
students, so it creates the limitation in generalizing its outcome into the real population of TMT.
Although the current research has two different data sources, most independent variables are
self-reported data from the participant. So, our data is likely to have the issue of common method
bias.

RECOMMENDATION FOR FUTURE RESEARCH

A recommendation for future research is to conduct an empirical study along the line of
the proposed methodology above in order to test the three propositions in this paper. Second,
future research needs to carry a field research from real TMT samples. Finally, the current

International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018 101
research considered the moderating effect of emotional intelligence. The future research needs to
explore additional possible moderating effects.

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International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018 105
About the Authors:

Wenhui Zhang majored in Accounting and Management at Kean University. He is currently studying at MBA
program. His research interest includes business ethics and accounting system.

Shuyao Wang majored in Global business at Kean University. Her research interest includes cultural intelligence,
global leadership, and communication.

Yumeng Zhu majored in Finance and Management at Kean University. He is currently studying at MBA program.
His research interest includes innovation, data analytics, and financial decision making.

Kihwan Kim is an assistant professor in management at Kean University. His research interest includes
contingency theory, SNSs strategy, communication, and emotional intelligence. His papers were shown in peer-
reviewed journals such as Creativity Research Journal, Personnel Review, Group Discussion and Negotiation. Also,
he presented papers at the International Business and Public Administration Discipline conference.

106 International Journal of Business and Public Administration, Volume 15, Number 1, Fall 2018
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