The relationship between top management team diversity and organizational resilience: Evidence from the automotive industry in Japan

Organizational resilience has attracted much attention with regard to a company’s survival and to achieve higher performance in today’s uncertain conditions. However, how organizational resilience is built remains unclear. This study sheds light on the function of the top management team (TMT) from upper echelons theory and argues that its deep-level diversity has a positive impact on organizational resilience. Our empirical study of the Japanese automotive industry found that tenure, international, and wise diversity have a positive impact on building organizational resilience. In contrast, educational background diversity was found to have a negative impact on building organizational resilience, contrary to our hypothesis. Our results revealed that diversity was a double-edged sword and established the need to focus on environmental and industrial contexts in linking diversity and organizational resilience. Further elucidation of the relationship between diversity and organizational resilience can be achieved by simultaneously focusing on other aspects of diversity, in concurrence with existing diversity indices for variety.