Upper Echelons Theory

Upper Echelons Theory suggests that an organization's strategies and performance are heavily influenced by the experiences, values, and personalities of its top executives. In other words, the backgrounds and perspectives of leadership shape the decisions made and, ultimately, the company's direction. This theory emphasizes that leadership isn't just about management skills, but also how personal characteristics and cognitive frameworks impact organizational outcomes. It highlights the importance of leadership composition in understanding why organizations act and perform the way they do.