What does board capital really bring to the table?

Fernandez, Whitney Douglas; Thams, Yannick; Lehrer, Mark

doi:10.1108/ajb-09-2018-0050

Cited by 4 publications

(4 citation statements)

References 54 publications

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“…These findings provide a number of important theoretical and practical contributions to both the corporate governance and international business literatures. First, with a few notable exceptions (e.g., Kassinis & Vafeas, 2002; Khanna, Jones, & Boivie, 2014; Kor & Sundaramurthy, 2009), the vast majority of board research has primarily focused on the positive effects of boards' experience and human capital (Fernandez, Thams, & Lehrer, 2019; van Ees & van der Laan, 2012). This study represents one of the few that examines the limitations and potential costs of having excessive board capital.…”

Section: Introductionmentioning

confidence: 99%

Boards' relevant experience and international strategy: A recipe for success or a case of too many cooks?

Fernandez

Sundaramurthy

2020

Global Strategy Journal

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Board scholarship has generally taken the perspective that when it comes to board expertise, more is better. This study, in contrast, explores contingencies that may stretch board experience beyond the limits of its usefulness. We integrate insights from extant research in board leadership and international strategy to identify and test internal and external contextual factors that can limit the effectiveness of boards' international experience. Exploring this in the context of cross-border M&As, we find evidence that the positive effects of boards' international experience are attenuated when the CEO lacks such knowledge, and when the institutional distance between the home and target countries is high. Overall, our findings suggest the need to exercise caution in viewing board expertise as a "panacea" of board effectiveness. Managerial Summary: Boards are generally viewed as experts that CEOs can look to for advice when formulating corporate strategy. Accordingly, the predominant view has been that the more relevant expertise on the board, the better the strategic advice they can offer. The results of our study, however, suggest that is not always the case. As it pertains to cross-border M&As, in order to get the maximum benefit from boards' international experience, CEOs must have enough international experience of their own, and the institutional environment of the target firm's country must not be

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Section: Introductionmentioning

confidence: 99%

Boards' relevant experience and international strategy: A recipe for success or a case of too many cooks?

Fernandez

Sundaramurthy

2020

Global Strategy Journal

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“…RDT suggests that firms depend on other entities in the external environment for key resources and that their boards can increase access to these resources (Hillman et al., 2009). RDT's central premise is that “Board capital … provides an important basis through which firms can access vital resources internally and in their external environment” (Fernandez et al., 2019, p. 134).…”

Section: Theoretical Foundation and Hypothesesmentioning

confidence: 99%

Should a firm bring a supplier into the boardroom?

Ambulkar

Arunachalam

Bommaraju

et al. 2023

Production and Operations Management

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Endowed with significant firm-specific knowledge, inside directors can contribute to the decision-making processes of the boardroom. However, regulatory changes, focusing primarily on the monitoring function of the boards, have driven inside directors out of the boardroom. This article argues that suppliers with firm-and industryspecific knowledge are uniquely positioned to fill a critical void in boardrooms. It also suggests that the value of having a supplier on the board (SOTB) is influenced by environmental contingencies faced by a firm: operational efficiency, diversification, and demand uncertainty. Using an objective measure of supplier presence in the boardroom, the authors find that a supplier's presence enhances firm performance. They also find that the value of an SOTB in enhancing performance is greater in firms with lower operational efficiency and higher demand uncertainty and, is lower in firms with higher diversification. These results are robust to potential endogeneity issues, alternative estimation methods, and measures of moderator and outcome variables.

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“…The resource dependence view argues that links to the external environment, such as with corporate boards, are an important antecedent of firm performance. It helps mitigate environmental uncertainty, expand resource provision and improve firm performance (Boyd, 1990; Fernandez et al , 2019).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…However, boards’ effectiveness varies across industries (Guillet and Mattila, 2010). Although studies have examined different board’s characteristics associated with the firm decisions in the tourism industry (Guilding et al , 2005; Song et al , 2020), board capital – an attribute representing the board’s ability to perform (Fernandez et al , 2019; Hillman and Dalziel, 2003), has been generally overlooked. This study seeks to plug this gap by investigating how board capital and its facets, i.e.…”

Section: Introductionmentioning

confidence: 99%

Does board capital increase firm performance in the Chinese tourism industry?

Yousaf

Ullah

Wang

et al. 2021

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Purpose This study aims to examine the relationship between board capital and firm performance in the Chinese tourism industry. Design/methodology/approach The study’s sample includes firms from the Chinese hotel, air transportation/travel and catering industries. This study explores the governance environment in tourism industries. This study estimates three dimensions of the board, including education, expertise and directors interlock. These dimensions are further grouped as human capital (i.e. education and expertise), social capital (interlocks) and board capital (sum of social and human capital). Ordinary least square regressions with multiple robustness tests are used to investigate the effect of board capital on firm value in Chinese listed tourism firms during 2005–2018. Findings This study finds that board capital positively impacts firm performance in its dimensions of human and social capital. This study also highlights the two important ownership contexts, namely, institutional investors and state-ownership, that shape the board capital-firm performance association in the Chinese tourism industry. Practical implications The findings suggest that board capital plays a significant role in corporate decisions. The results illustrate that higher board capital improves both governance mechanisms and resource provision roles of the board, resulting in higher firm value. The results further offer implications for managers and shareholders of tourism firms when electing directors as shareholders’ representatives. Originality/value The study has two important contributions. First, it extends the prior literature of firm value by considering the board’s human and social dimensions in the tourism sector. Second, contrary to prior research on board, this study takes three facets of board capital, education, expertise and interlocks that improve governance mechanisms and bring new resources in the shape of skills, knowledge and expertise.

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What does board capital really bring to the table?

Cited by 4 publications

References 54 publications

Boards' relevant experience and international strategy: A recipe for success or a case of too many cooks?

Boards' relevant experience and international strategy: A recipe for success or a case of too many cooks?

Should a firm bring a supplier into the boardroom?

Does board capital increase firm performance in the Chinese tourism industry?

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