Under the radar: How firms manage competitive uncertainty by appointing friends of other chief executive officers to their boards

• 成果类型: Article
• 署名作者: Westphal, James D.; Zhu, David H.
• 署名单位: University of Michigan System; University of Michigan; University of Michigan System; University of Michigan; Arizona State University; Arizona State University-Tempe
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.2966
• 发表日期: 2019
• 页码: 79-107
• 关键词: Boards; CEOS; COMPETITION; consultants; social networks

摘要

Research Summary In this study, we reveal a previously unstudied type of board tie that may help firms manage competitive uncertainty. While firms face regulatory barriers to the use of board interlock ties as a strategy for reducing competition, we suggest that firms can circumvent these barriers by appointing the friends of competitors' chief executive officers (CEOs) to their boards. Our theoretical framework addresses the antecedents, maintenance, and performance consequences of such board-friendship ties to rivals. Our theory explains (a) why firms form and maintain board-friendship ties, where maintenance involves the reconstitution of broken ties and (b) how firms form and maintain these ties, by revealing the role of search firms in identifying the friends of rivals' CEOs. Empirical analyses of large-sample, longitudinal survey and archival data provide substantial support for our theory. Managerial Summary Firms can and do reduce competition and increase performance by appointing the friends of competitors' CEOs to their boards, and search firms (headhunters) play a key role in forming and maintaining these board-friendship ties to competitors. While board interlock ties between close competitors are illegal and direct friendship ties between CEOs of competitors are relatively rare, board-friendship ties are common, and yet largely unknown to antitrust regulators and external stakeholders.