Are all cracks bad? The influences of top management team relationship-related versus task-related demographic faultlines on corporate digital transformation

Purpose With the development of the digital economy, the pressure on firms to transform digitally continues to increase. The top management team (TMT) is the subject of decision-making, and its structure is expected to influence the process and outcome of corporate digital transformation. This study aims to explore the impact of the TMT structure on corporate digital transformation from perspectives on TMT relationship-related and task-related faultlines. Design/methodology/approach This study obtained 7,510 observations belonging to 1,971 publicly listed Chinese manufacturing firms between 2011 and 2019. It analyzed the above data with ordinary least squares fixed-effects panel regression models and used instrumental variables to solve potential endogeneity problems. Findings Drawing on social categorization theory and information processing theory and the concept of demographic faultlines, we proposed and found that relationship-related (i.e. gender and age) faultlines within a TMT may hinder digital transformation while task-related (i.e. education level, functional background and tenure) faultlines have an inverted U-shaped effect on digital transformation. In addition, we posited and confirmed that market competition weakens the negative effect of relationship-related faultlines but strengthens the inverted U-shaped effect of task-related faultlines. Originality/value By exploring the nuanced roles of TMT demographic faultlines in corporate digital transformation, our study enriches research on the antecedents of digital transformation from the TMT structure perspective and deepens the understanding of the decision process for digital transformation. In addition, this study extends existing claims about the contrasting roles of relationship-related and task-related faultlines, thereby enhancing our understanding of TMT demographic faultlines. Further, this study augments our knowledge about market competition by revealing its nuanced roles within TMT dynamics and providing supportive evidence for its positive impact on TMT function within firms. This study also offers managerial guidance for corporate digitization practice and the optimization of the internal structures of the TMTs.