Board political experience and firm internationalization strategy

Abstract

PurposeThe purpose of this paper is to empirically examine the link between board of director composition and firm performance. Specifically, the paper argues that board political experience influences the firm’s internationalization strategy as directors with significant political experience provide guidance, resources, and network access that enhance the firm’s international presence. The authors also posit that board political connections would be more helpful for firms operating in high-regulation industries.Design/methodology/approachThe authors tested the predictions using data from 156 large US firms. Data on directors’ background were gathered from SEC proxy filings, while data pertaining to internationalization were obtained from Compustat and Mergent Online databases. Hierarchical moderated regression analysis was employed to empirically test the hypothesized relationships.FindingsThe findings provide strong support for the positive relationship between board political experience and the degree of firm internationalization. Contrary to the authors’ predictions, the level of industry regulation does not seem to significantly affect this relationship.Research limitations/implicationsFirms aggressively pursuing international strategy could benefit from having directors on their board with robust political experience. One of the limitations of the study is that the types of international activities for firms is not specified in the study as it might be in the form of joint-venture capacity, strategic alliances or for firms that might be born-global.Originality/valueThis study makes original contribution to the on-going research on board political activity and firm performance through internationalization strategy. The findings suggest that having directors’ with political experience is an important asset in influencing firm’s corporate strategy.