Yours Versus Ours: Different Performance Implications of Executive Networks and Director Networks

Abstract

From a network pluralism perspective, we shed light on the distinct implications of managerial networks respectively developed by executives and outside directors (hereinafter referred to as directors) for firm performance. We posit that because of the different roles and responsibilities of executives and directors assumed in their firms, the embeddedness benefits and incur commensurate costs derived from executive networks and director networks tend to loom in the focal firms’ operation in distinct ways. Using a sample of Chinese listed firms, we find that the two managerial networks have different implications for their firms’ performance. Moreover, our results show that the firms’ strategic instability and environmental volatility, which may shift the job demands of the executives and directors, tend to alter the effects of executive network and director network on firm performance. These findings shed light on the issue of administrator busyness in the strategic leadership literature.