Characteristics of Start-Ups - Entrepreneurship in Germany Term Paper

Characteristics of Start-Ups - Entrepreneurship in Germany - Term Paper Example Diversity in teams is considered to be a positive force leading to the effective functioning of the team (Knight et al. 1999). The Top Management Team (TMT) comprises of individuals with power and authority to make strategic decisions (Camelo-Ordaz, Herna ´ndez-Lara, & Valle-Cabrera) and thus, diversity in TMT can impact the organizational outcome. Top Management Team (TMT) has been defined as the â€Å"the relatively small group of most influential executives at the apex of an organization†¦the top three to ten executives† (Finkelstein & Hambrick, 1996: 8, cited by Tacheva, 2007). An entrepreneurial team consists of two or more members who jointly invest in a business in which they have an equal financial interest (Cooney, 2009). They have shared commitment, shared accountability and shared independent tasks and outcomes for these tasks. In this report, the TMT team includes a team of four experienced entrepreneurial CEOs at Omnis Mundi AG, who have pooled in their talent and expertise to foster the creation of new businesses in Europe. This report would hence evaluate the TMT characteristics in startups. Diversity in TMT is desirable in different fields but this report would focus on functional or task-related diversity, background affiliation, tenure/turnover and demographic heterogeneity. Diversity and heterogeneity are synonymous and hence interchangeably used throughout the report. Diversity can be observable (demographic) or non-observable (cognitive) diversity attributes (Tacheva, 2007). The observable characteristics include age, tenure, functional and educational background, and these account for managerial psychological behaviour. These are also known as relations-oriented attributes. Knowledge, skills and expertise or functional background are observable task-related attributes. Non-observable attributes are difficult to assess and hence the TMT is selected based on their observable attributes. According to the upper echelon theory, the TMT behaviour influences firm performance.