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Board competence and the top management team's external ties for performance

Published online by Cambridge University Press:  02 February 2015

Jae Wook Yoo  and
Kwangsoo Kim
Jae Wook Yoo
Affiliation:
College of Business Administration, Konkuk University, Seoul, Korea
Kwangsoo Kim
Affiliation:
College of Business Administration, Konkuk University, Seoul, Korea
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Abstract

This study explains the inconsistent findings of previous research on board management by examining the direct and interaction effects of board independence and the top management team's external ties on firm performance. The results obtained using a multiyear sample of firms indicate that outsider-rich boards improved firm performance when they worked with top managers imported from outside the focal industry. On the other hand, a high proportion of outsiders on the board and top managers imported from the focal industry were not a desirable combination for firm performance. The findings imply that researchers and practitioners should pay more attention to identifying the conditions under which board competence aligns with top management.

Keywords

boards of directorsboard competencetop management team's external ties

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Type
Research Article
Information
Journal of Management & Organization , Volume 18 , Issue 2 , March 2012 , pp. 142 - 158
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2012

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