Assessing psychological and environmental factors influencing the long-term orientation of TMTs

Abstract

PurposeThis study identifies and examines psychological and environmental factors that influence the long-term orientation of top management teams (TMTs).Design/methodology/approachData on S&P 500 companies from 2011 to 2020 are collected from the Compustat database. Additional variables were measured through content analysis of earnings conference calls. This study used two-stage least squares regression with fixed effects to analyze the data and test the hypotheses. Appropriate diagnostic tests were conducted to ensure validity and eliminate endogeneity.FindingsThe results indicate that a chief executive officer’s (CEO) promotion focus positively and significantly influences the TMT's long-term orientation. However, the influence of prevention focus is statistically insignificant. Furthermore, the results indicate that environmental hostility moderates both relationships.Practical implicationsThe TMT's long-term orientation can be improved through the insights provided by this study.Originality/valueTo the authors’ knowledge, this is the first study to examine the collective effects of psychological and task environmental factors on the long-term orientation of the TMT. Additionally, this study sheds light on the internal dynamics of the top-management team.