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Upper Echelon Theory

Upper echelon theory is based on the idea that to better understand organizations, one must understand the decision makers who lead those organizations. In other words, firms are a reflection of their top managers. Upper echelon theory was first articulated in 1984 as a response to theory and research at the time that focused on the environmental forces that shaped firm actions but tended to minimize the importance of individuals in organizations. Upper echelon theory clearly put the strategist back into the forefront of the discipline of strategic management. Since that time, a large body of research based on upper echelon theory has clearly shown that by examining the observable characteristics of executives, we can better understand their strategic decisions and, ultimately, important firm outcomes. ...

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