Top team cultural diversity and innovation: sequential mediation via absorptive capacity—evidence from Colombian firms

This study examines the impact of cultural diversity in top management teams (TMT) on firms’ innovation outcomes, incorporating the mediating role of absorptive capacity (ACAP), disaggregated into its two core components: potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP). Based on a sample of 155 medium and large firms located in Colombia’s Caribbean region, the research employs a split-respondent design—collecting predictor and outcome variables from different executives within each firm—to mitigate common method bias. Using covariance-based structural equation modeling (CB-SEM), the results show that TMT cultural diversity has a positive direct effect on innovation (β = 0.243; p < 0.05) and an indirect effect through the sequential mediation of PACAP and RACAP (β = 0.016; p < 0.10). The originality of the study lies in integrating the TMT diversity and absorptive capacity literatures, providing empirical evidence on the microfoundations that link cultural attributes of top teams to strategic innovation outcomes. From a managerial standpoint, it highlights the importance of fostering inclusive team climates and formal knowledge translation routines that enable firms to transform cultural heterogeneity into a sustainable source of innovation.