Boundary conditions of a curvilinear relationship between decision comprehensiveness and performance: The role of functional and national diversity

This research examines top management team (TMT) functional and national diversity as moderators of a curvilinear relationship between decision comprehensiveness and organizational performance. Drawing on resource allocation theory, we argue that, despite the information-related benefits associated with decision comprehensiveness, the misallocation of limited TMT cognitive resources can generate an inverted U-shaped effect on performance. We hypothesize that functional and national diversity moderate this non-linear relationship, such that the impact of decision comprehensiveness in diverse teams will be significantly weaker than in their homogenous counterparts. Results from a sample of subsidiary TMTs of multinational companies (N = 107) in China support the study hypotheses. We find evidence that decision comprehensiveness has no significant effect on performance for diverse TMTs. However, as hypothesized, we find support for a positive effect of decision comprehensiveness on organizational performance in relatively homogeneous TMTs up to an inflection point, beyond which the relationship becomes negative.