International Top Managers on Corporate Boards: Dissimilarity and Tenure

Stefan Schmid,Simon Mitterreiter

doi:10.1007/s11575-020-00430-x

Abstract

The number of top managers with foreign nationality and of top managers with international work experience on corporate boards has increased over the last decades. In business and management literature, the common understanding is that board diversity and international work experience for board members go hand in hand with numerous positive consequences for MNCs. But how does dissimilarity in nationality and in international work experience affect a top manager and his or her tenure on the board? Drawing on interpersonal attraction research and analyzing 149 management board members from German DAX-30 firms, we find empirical evidence that dissimilarity in nationality and in international work experience have a negative association with tenure. Based on social capital theory, we also suggest that the nexus between a top manager with an international background and his or her tenure is moderated by ‘firm insidership’. Our data confirm that having work experience in a firm before being appointed to its board is indeed linked to longer tenure but does not alleviate the disadvantages of being international. In sum, the resulting implication of our research is that, contrary to widely accepted scholarly opinions, a top manager’s international background may also have detrimental effects—in our case negative effects on tenure.

Highlights

Top management research has expanded considerably over the last decades (e.g., Cannella et al 2008; Carpenter et al 2001; Koch et al 2017; Lovelace et al 2018; Menz 2012)
Based on the social capital perspective, we reveal that in-house work experience prior to being appointed to the management board is positively related to tenure
Drawing on interpersonal attraction research and the similarity-attraction paradigm, we suggest that high dissimilarity in nationality and international work experience is negatively related to top managers’ board tenure

Summary

Introduction

Top management research has expanded considerably over the last decades (e.g., Cannella et al 2008; Carpenter et al 2001; Koch et al 2017; Lovelace et al 2018; Menz 2012). International Business (IB) and International Management (IM) literature, along with upper echelons and corporate governance literature, has already investigated positive outcomes of board internationalization, such as higher innovation, better strategic choices, and stronger MNC performance. In this context, literature often called for further increasing board internationalization, so as to reinforce the positive effects of diversity at the firm-level (e.g., Cannella et al 2008; Chanland and Murphy 2018; Nielsen and Nielsen 2013; Thams et al 2018)

Results

Discussion

Conclusion