Board Influence on a Firm's Internationalization

Abstract

Manuscript Type: Empirical Research Question/Issues: The resource-based view of the firm may provide the theoretical explanation as to how boards can be a source of firm competitive advantage. Directors' experience, knowledge, expertise are valuable, rare, inimitable and non-substitutable resources that making up the potential. These resources must be integrated with others firm resources in strategic processes through dynamics of relations. Research Findings/Insights: Given the preliminary nature of this work, the empirical section is an exclusive analysis of the board's potential. Our specific aim is to establish whether resources that directors bring to are sources of competence and ability with consequences for international strategic decisions. To do this, we use a sample of 562 members of 45 listed Spanish companies. Our results show that the average tenure is negatively related to the firm's degree of international diversification. Directors with long tenures may operate from the basis of routines that are built up over time and their knowledge of the firm could eventually become a less valuable resource. The empirical findings also indicate that the directors' managerial experience within the specific industry to which the firm belongs and a high level of academic achievement, affects the firm's degree of international diversification. Theoretical/Academic Implications: The contribution of this article is three-fold; it emphasizes the role of directors in the effectiveness, investigating why and how relevant elements of directors' human capital can enhance ability to perform their roles making up the potential. Secondly, it refines and extends the concept of board capability as an adequate configuration of potential and relationship dynamics that allow to undertake their task competently over the time. Third, this article stresses the active participation of in firm internationalization. Practitioner/Policy Implications: One of the important practical implications of these results refers to the selection of members. In order to increase effectiveness, in the context of firm internationalization, the selection process must be guided by the search of intangibles, inimitable and unique resources, which the can capitalize on in order to differentiate its potential over competitors. Keywords: Corporate Governance, Directors' Resources, Board Capability, Board Potential, Internationalization.