Thinking broad and deep: Why some directors exert an outsized influence on strategic change

Razvan Lungeanu, Edward J. Zajac

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This study addresses the oft-debated questions of whether, when, and how corporate board members help shape firm strategy by advancing a new perspective on heterogeneous director influence that introduces the notion of the deep/broad director. Specifically, we take a sociocognitive and sociopolitical perspective on governance to suggest that deep/broad new outside directors, whose expertise results from a blend of depth and breadth of experience, will have an outsized influence in shaping firm strategy. We test our theory using an extensive multiyear data set that tracks all firms that went through an initial public offering in the United States across multiple business cycles (1997, 2001, and 2004) until 2011. Focusing on new outside directors in their first year of service (and controlling for selection issues), our results support our main prediction that those directors whose prior experiences are both deep and broad are the most influential directors for strategic change. We find this result to be robust for multiple indicators of strategic change. We also explore whether the outsized influence of the deep/broad director on strategic change may vary by differences in a board's openness to strategic change. We conclude by highlighting the relevance of our approach and findings for future research and debates on director selection and director expertise.

Original languageEnglish (US)
Pages (from-to)489-508
Number of pages20
JournalOrganization Science
Volume30
Issue number3
DOIs
StatePublished - May 1 2019

Fingerprint

Industry
Strategic change
Firm strategy
Expertise
Outside directors
Prediction
Initial public offerings
Openness
Blends
Corporate boards
Governance
Business cycles
Director selection

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

Cite this

Lungeanu, Razvan ; Zajac, Edward J. / Thinking broad and deep : Why some directors exert an outsized influence on strategic change. In: Organization Science. 2019 ; Vol. 30, No. 3. pp. 489-508.
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Thinking broad and deep : Why some directors exert an outsized influence on strategic change. / Lungeanu, Razvan; Zajac, Edward J.

In: Organization Science, Vol. 30, No. 3, 01.05.2019, p. 489-508.

Research output: Contribution to journalArticle

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