Top management teams may be critical for developing organizations that can keep abreast of marketplace changes and innovate. Several streams of strategy research have argued that conflict and diversity promote top management team effectiveness. This study proposes that how top management teams manage conflict can greatly contribute to their effective leadership of organizational innovation. A total of 378 executives from 105 organizations in China completed measures of conflict management (cooperative, competitive, and avoiding) and productive conflict (an outcome of conflict). Separately, 105 CEOs from these firms indicated their team's effectiveness and their organization's innovativeness. Results support the theory that conflict management can contribute to making top management teams effective. Structural equation analysis suggests that cooperative conflict management promotes productive conflict and top management team effectiveness that in turn result in organizational innovation. These results, coupled with previous research, were interpreted as suggesting that cooperative conflict management is an important contributor to effective top management teams even in the collectivist culture of China.