Transactive Memory Systems and Firm Performance: An Upper Echelons Perspective

A substantial body of research uses the concept of transactive memory systems to describe, explain, and predict the behavior and performance of teams. In a multirespondent study of 99 small to midsized technology-based firms, we extend the concept into the unique context of top management teams and discuss its implications for firm performance. Building on the multifunctional and boundary-spanning role of top managers, we develop a novel theoretical account of how the performance implications of transactive memory are shaped by the individual and conjoint influences of a top management team’s external social network ties and the rate of dynamism in the firm’s competitive environment. In so doing, we link top management team transactive memory to firm performance through transformation—more than through application—of existing scholarly understanding and through distinct operating mechanisms informed by an upper echelons perspective of the firm. Our theory and supportive findings provide new evidence on the relationship between transactive memory and firm performance. We conclude by tracing the implications of our findings for upper echelons and transactive memory research.