Premium
External COO/presidents as expert directors: A new look at the service role of boards
Author(s) -
Krause Ryan,
Semadeni Matthew,
Cannella Albert A.
Publication year - 2013
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2081
Subject(s) - context (archaeology) , service (business) , business , scholarship , control (management) , work (physics) , corporate governance , accounting , value (mathematics) , resource (disambiguation) , resource dependence theory , management , marketing , public relations , economics , finance , political science , computer science , engineering , mechanical engineering , paleontology , computer network , machine learning , biology , economic growth
Much of the scholarship on boards of directors has examined either the control (i.e., monitoring) role or the resource dependence role that boards fill. Relatively little has examined the service role, wherein directors provide advice and guidance to management. This study builds on recent work exploring director expertise by asking how operational expertise on boards impacts firm performance. We find that having external COO / p residents on a board of directors positively impacts firm performance when the firm's operational efficiency is declining, but negatively impacts performance when the firm's operational efficiency is improving. We also find that other types of external executives serving as directors exhibit the opposite relationship, suggesting that the value of director expertise is context‐dependent. We discuss the implications of these findings for director selection. Copyright © 2013 John Wiley & Sons, Ltd.