The relative importance of the top management team's managerial skills

Abstract

PurposeThe goal of this study is to examine the effect that nine managerial skills of the firm's top management team (TMT) (persuasiveness, administrative ability, fluency in speaking, knowledge about group tasks, diplomacy and tact, social skills, creativity, conceptual skills, and cleverness) have on the performance of industrial firms (a weighted average of seven performance measures).Design/methodology/approachData were collected from chief executive officers of 93 industrial enterprises in Israel through structured questionnaires and complementary in‐depth investigation. Both multivariate (robust canonical analysis and hierarchical regressions) and in‐depth analyses were used to analyze the study's results.FindingsThe results show that managerial skills possessed by the TMT strongly affect firm performance, their impact apparently being greater than that of variables representing industry sectors, firm size and age, and perceived environmental uncertainty. In particular, skills that are required to manage people (human resources skills) are found to be more important to firm performance than intellectual abilities.Practical implicationsThe study emphasizes the importance of complementary managerial skills as an indicator of quality TMT. The TMT's ability to make good decisions and lead the organization to meet external and internal constituents is a very complex task.Originality/valueThe study contributes to the literature by first, providing support to the importance of managerial skills for firm performance; second, suggesting a new avenue to incorporate the resource based view into the field of strategic leadership in general and managerial skills in particular; and finally, indicating the importance of simultaneously testing the effect of a set of predictors (managerial skills) on a set of performance measures.