The Handbook of Research on Top Management Teams
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The Handbook of Research on Top Management Teams

Edited by Mason A. Carpenter

This Handbook presents original research and theory on executives, top management teams, and boards of directors and illustrates the vital importance of this field of study.
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Chapter 10: A Practice Theory of Executive Leadership Groups: Dynamic Managerial Capabilities and the Multi-business Team

Jeffrey A. Martin


10 A practice theory of executive leadership groups: dynamic managerial capabilities and the multibusiness team Jeffrey A. Martin Multi-business organization is arguably one of the most significant organizational innovations in the history of firms (Fligstein, 1985; Freeland, 1996) and continues to be a subject of significant scholarly research (e.g., Gulati and Singh, 1998; Eisenmann and Bower, 2000; Bowman and Helfat, 2001; Galunic and Eisenhardt, 2001; Gilbert, 2005) and practical importance (Goold et al., 1994; Campbell and Luchs, 1998; Eisenhardt and Galunic, 2000). There continues to be persuasive empirical evidence that gathering multiple business units together can have significant effects on outcomes for the organization as a whole as well as the individual business units (e.g., Palich et al., 2000; Bowman and Helfat, 2001; Galunic and Weeks, 2001; Hough, 2006). In particular, studies on the sources of variances in firm performance show a significant relationship between corporate effects on variances in firm performance. This indicates that firm value can be created or diminished by gathering multiple business units together under the same organizational umbrella (Roquebert et al., 1996; Bowman and Helfat, 2001; Hough, 2006). This “corporate effect” has been identified as being distinct from industry and individual business unit effects (Brush and Bromiley, 1997; Bowman and Helfat, 2001). Yet, as Bowman and Helfat (2001) argue, the corporate effect remains a relative “black box” that provides little direct understanding of the relationship between the structures, processes, and individual actions that contribute to the corporate effect. This chapter focuses on individual actions as...

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