An upper echelons perspective of organizational capacity for change: an international study of initial public offerings

Organizational capacity for change (OCC) is a dynamic capability that captures an organization’s ability to anticipate and/or react to pressures to adapt. Prior research has shown that OCC tends to be positively associated with firm performance. However, knowledge on the antecedents of this important dynamic capability is still limited. The present paper analyzes the determinants of OCC from an upper echelons perspective. We argue that both the top management team’s (TMT) composition and processes influence OCC. Hypotheses are developed and tested with a unique primary dataset gathered from IPOs in 15 countries. Our findings suggest that TMT processes appear to be much better predictors of OCC than TMT demographic characteristics. These results have important implications for research on TMTs and organizational change.