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Board Influence on a Firm's Internationalization
Author(s) -
Barroso Carmen,
Villegas Ma Mar,
PérezCalero Leticia
Publication year - 2011
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/j.1467-8683.2011.00859.x
Subject(s) - internationalization , business , diversification (marketing strategy) , resource based view , competence (human resources) , empirical research , competitive advantage , accounting , industrial organization , empirical evidence , marketing , management , economics , philosophy , epistemology , international trade
Manuscript Tytpe: Empirical Research Question/Issues: The resource‐based view of the firm may provide the theoretical explanation as to how boards can be a source of firm competitive advantage. Directors' experience, knowledge, expertise are valuable, rare, inimitable and non‐substitutable resources that make up the board potential. These resources must be integrated with other firm resources in strategic processes through dynamics of relations. Research Findings/Insights: Given the preliminary nature of this work, the empirical section is an exclusive analysis of the board's potential. Our specific aim is to establish whether resources that directors bring to board are sources of board competence and ability with consequences for international strategic decisions. To do this, we use a sample of 562 board members of 45 listed Spanish companies. Our results show that average board tenure is negatively related to the firm's degree of international diversification. Directors with long tenures may operate from the basis of routines that are built up over time and their knowledge of the firm could eventually become a less valuable resource. The empirical findings also indicate that the directors' managerial experience within the specific industry to which the firm belongs and a high level of academic achievement affects the firm's degree of international diversification. Theoretical/Academic Implications: The contribution of this article is three‐fold. First, it emphasizes the role of directors in board effectiveness, investigating why and how relevant elements of directors' human capital can enhance board ability to perform their roles making up the board potential. Secondly, it refines and extends the concept of “board capability” as an adequate configuration of potential and relationship dynamics that allow boards to undertake their task competently over time. Third, this article stresses the active participation of a board in firm internationalization. Practitioner/Policy Implications: One of the important practical implications of these results refers to the selection of board members. In order to increase board effectiveness, in the context of firm internationalization, the selection process must be guided by the search of intangibles, inimitable and unique resources, that the board can capitalize on in order to differentiate its potential over competitors.