Abstract
Drawing on the notion of“fault lines” and the upper echelons perspective, we argue that the gender fault line strength of a board of directors is negatively related to strategic change. More interestingly, while gender fault line strength negatively relates to strategic change under low levels of environmental complexity, environmental dynamism, and environmental munificence, it is positively related to strategic change when environmental complexity, environmental dynamism, and environmental munificence are at high levels. The analysis of panel data of 5781firm-year observations of 1171 Chinesefirmsprovide support for the hypotheses.
Highlights
Drawing on the notion of “faultlines” and the upper echelons perspective, we argue that the gender faultline strength of a board of directors is negatively related to strategic change
While gender faultline strength negatively relates to strategic change under low levels of environmental complexity, environmental dynamism, and environmental munificence, it is positively related to strategic change when environmental complexity, environmental dynamism, and environmental munificence are at high levels
We focus on gender faultline strength (FLS) within the board of directors (BODs) and its influence on strategic change (Finkelstein, Hambrick, & Cannella, 2009), while accounting for other relevant demographic attributes consistent with previous scholarship (Lau & Murnighan, 1998; Shaw, 2004) because of the following: (a) gender represents a clearly cut attribute which can be observed from group members; (b) a group is split into several subgroups based on one characteristic, whether there will be a high level of similarity to other attributes for the subgroups or not; and (c) the number of potential subgroups based on gender alignment within the group
Summary
Drawing on the notion of “faultlines” and the upper echelons perspective, we argue that the gender faultline strength of a board of directors is negatively related to strategic change. Concentrating on strategic change provides us the opportunity to craft a parsimonious and tight theoretical model around a critical element of upper echelons’ strategic choice and action (Andrevski, Richard, Shaw, & Ferrier, 2014; Nakauchi & Wiersema, 2015; Oehmichen, Schrapp, & Wolff, 2017; Stewart & Amason, 2017). For this reason, given how much boards of directors vary in demography across firms, a board’s demographic composition. We employ the FLS construct as a fine-grained measure that simultaneously measures the degree of similarity within subgroups (subgroup similarity) and the degree of dissimilarity across gender subgroups (team diversity)
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