When do board chairs have their personal imprints on firm strategies?

Abstract

Inspired by recent research revealing significant board chair effect on firm performance, we explore whether and when board chairs have their personal imprints on firm strategies by investigating the relationship between board chairs’ career variety and firm R&D intensity. We theorize that board chairs’ career variety is positively related to R&D intensity in a country where they generally have high latitude of objectives. We further theorize this positive relationship to be moderated by board chairs’ latitude of objectives at the firm level, and identify three firm-specific factors that either enhance or diminish board chairs’ latitude of objectives. Specifically, board chairs’ founder status and ownership are enhancers, whereas ownership by other large shareholders is a diminisher. Using data from a sample of Chinese firms, we find empirical support for the above predictions. Our study has important implications for research on strategic leadership and corporate governance.