WHEN EXPERTS BECOME LIABILITIES: DOMAIN EXPERTS ON BOARDS AND ORGANIZATIONAL FAILURE

• 成果类型: Article
• 署名作者: Almandoz, Juan; Tilcsik, Andras
• 署名单位: University of Navarra; IESE Business School; University of Toronto
• 刊物名称: ACADEMY OF MANAGEMENT JOURNAL
• ISSN/ISSBN: 0001-4273
• DOI: 10.5465/amj.2013.1211
• 发表日期: 2016
• 页码: 1124-1149
• 关键词: MARGINAL STRUCTURAL MODELS; corporate governance; group polarization; MANAGEMENT TEAMS; DIRECTORS; uncertainty; rationality; performance; diversity; survival

摘要

How does the presence of domain experts on a corporate board-directors whose primary professional experience is within the focal firm's industry-affect organizational outcomes? We argue that under conditions of significant decision uncertainty, a higher proportion of domain experts on a board may detract from effective decision making and thus increase the probability of organizational failure. Building on exploratory interviews with board members and CEOs, we derive hypotheses from this argument in the context of local banks in the United States. We predict that the greater the level of decision uncertainty-due to rapid asset growth or operation in less predictable markets-the stronger the relationship between the proportion of banking expert directors and the probability of bank failure. Longitudinal analyses of 1,307 banks between 1996 and 2012 support this prediction, even after accounting for both the overall level of professional diversity among directors and banks' different propensities to have an expert-heavy board. We discuss implications for the key dimensions of board composition, the conditions under which:the professional background of directors is more or less consequential, and the mechanisms whereby board composition affects organizational outcomes.