title: The role of strategic leaders in international business: competitive strategies and international complexity
Creators: name: Vallone, Tommaso
Publisher: name: University of Reading
Year: 2022

description: This research investigates the role of the top management teams (TMT), their composition and past experiences in international strategic decision-making. Specifically, the empirical chapters of this thesis posit their attention on the influence of group and individual executives’ demographics and career experiences on firms internationalisation decisions. In the first theoretical chapter, I take stock of the existing strategic leadership (SL) literature that has dealt with international business (IB) phenomena and thus contributed to IB research. Drawing on some of the identified research gaps, I1 then develop three empirical studies. The first two empirical chapters examine how TMT composition and work experiences can shape and influence two crucial IB choices, i.e. the establishment mode strategy and the foreign investment location choice. The last empirical chapter takes a different perspective, and it considers how the country environment complexity faced by the firm in its international environment influences the background of newly appointed executives. Broadly, these three studies investigate how TMT members’ experience and backgrounds, at an individual and group level (team composition), shape the firm propensity to engage with complex international competitive strategies and environments and thus help the firm navigate and handle the information demands complexity associated with the latter at the subsidiary and company portfolio level. The systematic review of the literature is timely and important as the literature has substantially developed in the last two decades to allow such investigation. By implementing a rigorous and structured methodological approach, I identify 114 empirical papers published in scientific outlets ranked in the Academic Journal Guide (2018) of the Chartered Association of Business Schools as three stars (*) and above between 1984 and the beginning of 2019. I develop an organising framework to assist me in reviewing the literature, which I argue investigates four main broad IB outcomes: international strategic decisions, global strategic posture, international competitive moves and firm performance. The literature shows that TMT composition, individual executives’ characteristics, experiences, and economic incentives influence strategic decision-making; therefore, it contributes to shaping the firm internationalisation process, its related strategic decisions and, in turn, company financial and non-financial performance. However, I point out that literature has not uniformly developed across the four IB outcomes, and limited theoretical integration has occurred among different SL’s theoretical perspectives and between SL and IB theories. I conclude by suggesting some critical unanswered research questions and methodological enhancements that would advance SL's theoretical and empirical contribution to the IB research. In the first of my three empirical chapters, I investigate the entry mode misalignment phenomenon for the first time in the establishment mode choice (EMC) context. Establishment mode deviation2 (ESMD) is defined consistently with the existing literature, i.e., the governance strategy misalignment between the theoretically predicted establishment mode strategy and the actual one. This study contributes to the emerging entry mode deviation3 (EMD) research maintaining that ESMD may not simply result from ineffective decision-making but rather the result of a more exhaustive and non-stereotypical managerial research process for new and alternative solutions to the theoretically predicted establishment mode strategy. Certain managerial factors will be needed to prompt and enable this search, and I identify them at the TMT level. I argue that TMT diversity is instrumental to generating and executing the ESMD strategy. Nonetheless, team-level diversity is a complex phenomenon. I distinguish between two different sources of diversity, i.e. deep-level and surface-level diversity. I contend that they are likely to produce opposite effects on the probability of adopting ESMD. Additionally, I explore the impact of specific organisational and environmental conditions, i.e. firm declining and industry declining performance, on the relationship between TMT deep-level and surface-level diversity and the ESMD. The second empirical chapter deals with the foreign investment location complexity decision. In this study, I investigate how the TMT’s work experience diversity can differently influence the location of foreign market investments. Specifically, this research piece examines foreign locations in respect to different dimensions of IB complexity, which I call institutional and economic complexity. The former refers to the challenges associated with weak and low quality national institutional environments. The latter reflects the difficulties of operating in highly innovative and diversified national production systems. This conceptualisation of host-country complexity contributes to IB research by unravelling some decision-specific mechanisms that can influence TMT preferences for one or the other location complexity type. Drawing on the Upper Echelons Theory (UET), this research maintains that company executives will more likely invest in those countries whose institutional and knowledge environment, and thus their related information-processing demands, constitute a better fit with their expertise and capabilities. I hypothesise that TMT work experience diversity, i.e. international, functional and industry work experience, will be positively associated with the choice of investing in institutional complex countries but negatively associated with economic complex locations. The third empirical study takes a different perspective from the previous two chapters. It investigates how the complexity of the country environments that compose firm IB operations influences the background of newly appointed executives. Drawing on the concept of executive job demands, I maintain that distinct sources of country environment complexity will generate demands for different types of executives’ backgrounds, i.e. generalist vs specialist. SL literature has suggested that task demands are one of the main drivers of executive appointments; thus, by arguing that institutional and economic complex environments will be associated with different task and job demands, I explain how different country environment complexity will lead to appointing executives with distinct backgrounds. Specifically, high institutional complexity will increase the chances of selecting a generalist executive, while high economic complexity will prompt the need to hire a more specialist executive. Some supplementary analyses explore the interaction effect between the two sources of complexity and contingent effects of the firm and industry-level performance. The econometrics analyses are performed on a sample of 116 UK-based public manufacturing firms, with a number of employees between 50 and 10004 , whose information was collected for the 2010-2016 period. However, empirical chapter five leverages an extended version of the database for which companies up to 2000 employees were added (i.e. reaching 144 companies), and the sample period was also extended to 2008-2018. For all the companies, I retrieved various firm and industry�level information. I hand-collected in-depth information on TMT members’ characteristics and experiences and firm internationalisation data concerning their foreign investments and subsidiaries. Overall, the systematic literature review and the empirical chapters’ findingssuggest that there are significant advantages in more consistently accounting for the role and influence of the firm’s decision-makers in companies’ internationalisation process and strategic decisions, both in theoretical and empirical development. Deeper integration of the SL managerial perspective into IB research could complement and strengthen the explanatory power of macro and meso IB theories by generating a more comprehensive understanding of the mechanisms underlying the formulation and execution of firms’ internationalisation strategies.