Abstract
We develop a firm-director interdependence perspective to theorize director appointments as the outcome of a mutual selection process in which firms and director candidates select each other based on their organizational and personal dependencies. We apply this perspective to address a puzzle regarding director appointment in declining firms: Declining firms are often motivated to bring in director candidates with high resource endowments to help enact turnarounds, but these candidates may not join a declining firm's board due to the potential uncertainties and reputational loss of doing so. Drawing on the firm-director interdependence perspective, we predict that director candidates' social capital and human capital have inverted U-shaped effects on their likelihood of joining a declining firm. Moreover, the declining firm's organizational social capital differently moderates the effects of candidates' social capital and human capital. Evidence from a sample of public firms under special treatment (*ST) in China supports our theoretical predictions.
Original language | English (US) |
---|---|
Pages (from-to) | 901-925 |
Number of pages | 25 |
Journal | Academy of Management Journal |
Volume | 64 |
Issue number | 3 |
DOIs | |
State | Published - Jun 2021 |
ASJC Scopus subject areas
- Business and International Management
- General Business, Management and Accounting
- Strategy and Management
- Management of Technology and Innovation