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The double layer of Upper Echelons Theory and its influence on Strategic Renewal

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(November 05, 2015)


In any economic downturn, organisations look for ways to survive the challenge. Among the many ways of overcoming economic recession by the affected organisations is restructuring. Organisational restructuring entails bringing in new team of management including a new Chief Executive Officer to spearhead the strategic renewal process. Most often than not, the new team’s objective is to help the organisation ride through the economic recession. The new CEO begins with identifying and analysing the business defined problems, build strategies to resolve those problems, form an action plan, implement the strategies, and finally assess the outcomes. This strategic change is influenced by the Upper Echelons Theory. The theory explains that organizations and their corresponding strategic behaviors reflect the cognitive characteristics, experiences, values, personalities and other human factors of their top executive managers (Hambrick & Mason, 1984). As a result, the experiences, backgrounds, and values of senior executives in organizations can influence the decisions that they make.


The theory of Upper Echelon indicates that the top executives of an organization influence the outsiders’ views of the organisation since they are a reflective of what the organization is all about. Literature available on this topic describes the influence of the top executives and even the middle management’s influence on organizational decisions. One of the majorly affected organizational decisions is strategic renewal. Research shows that the top executives’ works closely with the corporate governance to mobilize available resources and achieve required outcomes. Often the corporate governance has more influence to achieve or not to achieve the strategic change than the top executives.

In two different occasions, I experienced strategic renewal and management restructuring within current and past careers. After observing the transformation process of the organization strategic renewal, I identified that decisions made within organizations are not only reflective of Upper Echelon of top management but also the dynamics of top executive team and corporate governance. In this study, I will examine the different perspectives of Upper Echelon Theory. These different perspectives entail a reflection of executive management and corporate governance combined. Additionally, they explain the company strategic direction and fill the gaps of Upper Echelon Theory.

Research Questions

The influence of upper echelons theory on strategic renewal leads to asking the following questions:

  1. What practical applications does the Upper Echelon Theory have on strategic renewal?

  2. How would you compare the different perspectives of Upper Echelon Theory in relation to strategic renewal?

  3. What are the most influential layers of the Upper Echelon Theory on strategic renewal?


  1. To understand the application of Upper Echelon theory on strategic renewal.

  2. To assess the shortfalls of Upper Echelon application in relation to strategic renewal

  3. To explore the complements and modifications of the theory’s shortfalls

  4. To get the application of the modified theory works in real practice


The methodology applied in any research is important as it influences the outcome or results of the undertaken project. The results in turn determine whether the objectives and aims of the study are well achieved. The researcher makes a decision between quantitative and qualitative research methods or both depending on the nature of the study project. In this research study, mixed methods approach will be ideal whereby both qualitative and quantitative methods of data collection will be applied. Experimental questionnaires and surveys from different corporate institutions will be conducted as well use of previous works and data on the topic of research study. Data collected will be analysed using statistical tools to get the correlation between Upper Echelon Theory and strategic renewal of organizations.


This research is no doubt of great significance to students of economics as well as the corporate world. Theoretically, this topic is important because it will close the gap and complement the Upper Echelon Theory. Practically, it is important because it will identify shortfalls of the theory; explain the relationship between top executives, and corporate governance, and its influence on the organization objectives. This contribution will effectively enable the organization to achieve its strategic renewal plans since very little has been done on this topic to date.


The following sources will inform the research on upper echelon’s theory and strategic renewal. They will form the bulk of the information that will appear in the literature review section of the paper.

Baum, J & Lampel, J. (2010). The Globalization of Strategy Research. UK: Emerald Group Publishing.

Heyden, M. (2012). “Essays on Upper Echelons and Strategic Renewal: A Multilevel Contingency Approach”. Erim PhD Series in Research in Management, 259

Kwee, Z, Bosch, F& Volberda, H. (2010). The Influence of Top Management Team’s Corporate Governance Orientation on Strategic Renewal Trajectories. Erim Research Series.

Longbotham, G & Gutierrez, B. (2007). “Upper Echelons Theory at Work in the Ephesian Church”. Journal of Biblical Perspectives in Leadership, vol. 1, no. 2, pp. 99-117.

Nishii, L& Gotte, A (2012). Between Upper Echelon Diversity, the Adoption of Diversity Practices, and Organizational Performance. NY: Cornell University.

Oppong, S. (2014). “Upper Echelons Theory Revisited: The Need for a Change From Causal Description to Causal Explanation”. Management, vol. 19, no. 2.

Paroutis, S, Heracleous, L & Angwin, D. (2013). Practicing Strategy: Text and Cases. California: Sage Publications.