The Influence of Top Manager's Age Diversity on Firm Performance: The Moderation Effect of Top Manager's Average Age

Abstract

This study examines the effect of top managers' team age diversity on firm performance and the moderation effect of top managers' average age on the top manager's age diversity and firm performance. The study used quantitative data from 63 listed firms on East African stock exchanges. It used hierarchical linear modeling to test the hypotheses. Results indicated that the main effect of top managers' team age diversity is statistically significant and positively related to firm performance as measured by ROA. Furthermore, the moderation effect of top managers’ average age is statistically significant but negatively moderates the relationship between top managers' age diversity and firm performance. The study theoretically contributed to upper-echelon literature by introducing other theories– the information and decision-making theory, and the socioemotional theory that collaborates with upper-echelon literature to explain the effect of top managers' age diversity on firm performance as moderated by the average age of top managers. The innovation of this study comes from extended knowledge of the micro-contextual factor, which has been used to moderate this relationship.