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BOARD COMPOSITION FROM A STRATEGIC CONTINGENCY PERSPECTIVE
Author(s) -
Pearce John A.,
Zahra Shaker A.
Publication year - 1992
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/j.1467-6486.1992.tb00672.x
Subject(s) - leverage (statistics) , contingency , diversification (marketing strategy) , composition (language) , business , accounting , perspective (graphical) , representation (politics) , on board , corporate governance , contingency theory , marketing , industrial organization , finance , management , economics , computer science , engineering , political science , philosophy , linguistics , machine learning , artificial intelligence , politics , law , aerospace engineering
This study examined the association between corporations’environments, strategies, and past performance and the composition of their boards of directors as measured by size and outside director representation. The environment, strategy and past performance were viewed as posing a strategic contingency; each of these sets could determine the success or failure of the company. Data on 119 Fortune 500 industrial companies for the 1983‐9 period were used. Canonical analysis showed that increased uncertainty of a firm's environment, use of external growth and diversification; reliance on leverage as a means of finance, and poor past financial performance were associated with large board size and increased outside representation in subsequent years. Most important, board composition was positively associated with future measurements of corporate financial performance.