External COO/presidents as expert directors: A new look at the service role of boards

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 expl...

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Bibliographic Details
Published in:Strategic management journal Vol. 34; no. 13; pp. 1628 - 1641
Main Authors: KRAUSE, RYAN, SEMADENI, MATTHEW, CANNELLA, ALBERT A.
Format: Journal Article
Language:English
Published: Chichester, UK John Wiley & Sons, Ltd 01.12.2013
John Wiley & Sons
Wiley Periodicals Inc
Subjects:
Board of directors
Boards of directors
Business management
Chief executive officers
Chief operating officers
COO/presidents
Corporate presidents
Corporate strategies
Cost efficiency
Directors
Economic efficiency
Environmental management
Executives
expertise
Experts
Externalities
Financial management
Financial performance
Industrial efficiency
Management theory
operational efficiency
Organizational effectiveness
Organizational performance
Presidents
Productive efficiency
Productivity
RESEARCH NOTES AND COMMENTARIES
Studies
top management
ISSN:0143-2095, 1097-0266
Online Access:Get full text
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Summary: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/presidents 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.
Bibliography:istex:E8C8E170B5195B9F3E8E978364F75BC662A334F5
ark:/67375/WNG-MSZNHZ1L-0
ArticleID:SMJ2081
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ObjectType-Article-2
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ISSN:0143-2095
1097-0266
DOI:10.1002/smj.2081