Journal of Management Studies · 2000 · 1.8K citations · 0 references
ManagementCorporate GovernanceStrategic ManagementAgency TheoryCorporate StrategyResource-based ViewBoard CompositionBoard GovernanceBoard OversightBoard RolesBoard StructureBoard-executive RelationsBoard CharacteristicsBoard Composition EffectsResource Dependence AnalysisStrategic Adaptation To Rival Moves
Research on corporate directors has traditionally focused on agency and resource‑dependence roles, yet the same classification scheme is applied regardless of the role examined. The study investigates the resource‑dependence role of directors and argues that insider/outsider categories fail to capture it. The authors develop a resource‑dependence director taxonomy and apply it to deregulating US airline firms to observe board composition shifts that mirror changing resource needs. The study finds that boards serve as key links to the external environment and that firms adjust board composition in response to major environmental changes.
Most research on corporate directors has focused on two roles: agency and resource dependence. While these two roles are theoretically and practically distinct, previous research has used the same classification scheme for measuring board composition regardless of role examined. Our paper examines the resource dependence role of directors and posits that the widely used insider/outsider categorizations do not adequately capture this role of directors. A taxonomy of directors is presented specifically for studying the resource dependence role. We then apply the taxonomy to a sample of US airline firms undergoing deregulation, and examine how board composition changes parallel the changing resource dependence needs of the firms. We conclude that the board’s function as a link to the external environment is an important one, and that firms respond to significant changes in their external environment by altering board composition.