Board versus TMT international experience: a study of their joint effects

Abstract

PurposeThe purpose of this paper is to test the relationship between board and top management team (TMT) members' international experience and CEO multinationality, with their firm's degree of internationalization. Through the lenses of upper echelon theory, on a sample of 108 European and US firms, the author tests the variables “international experience” and “CEO multinationality”, at the board and at the TMT levels.Design/methodology/approachA longitudinal research design is used to examine director's individual attributes in 2001 and firm's degree of internationalization in 2003‐2008. The sample comprised directors of the 108 largest European and US service and industrial firms by market capitalization, as listed in the Financial Times (FT) Global index of 2007.FindingsA positive effect is found on internationalization for international experience of both boards and TMTs; also a positive relationship is found between CEO multinationality of TMTs and internationalization.Research limitations/implicationsIt is acknowledged that the use of a diversified set of large US and European public firms could add unnecessary variance due to the different contexts involved in a sample of just 108 firms. Most of the sampled firms are already international so the study does not argue for board and TMT composition as a triggering mechanism for firm internationalization but, instead, as a tool that can enhance an international expansion process. The fact that international experience is a binary variable also limits the validity of the results. Either a direct survey of directors or a continuous variable that measures the amount in years of international experience would have yielded richer data. Data availability constraints limited the scope of this variable. The chosen operationalization just measures the presence and not the depth of executive's international experience. Additionally, it is acknowledge that just eliminating supervisory board members that represent unions/workers does not completely homogenize boards from the different countries in the sample.Practical implicationsPractitioners could use these findings to improve their selection and training processes of both top managers and board members.Originality/valueThe paper extends upper echelons theory to the board of directors. The comparison of boards and TMTs will facilitate the differentiation of corporate elites. It also introduces a new study variable: CEO multinationality and finally, it uses a mixed geographical sample of large European and US firms.

Improving the likelihood of SME survival during financial and economic crises: The importance of TMTs and family ownership for ambidexterity

“…In SMEs, TMT members have numerous and close ties to other upper-echelon members in contrast to the typical situation in larger firms. Consequently, owners and executives will influence the strategic orientation of the firm (Rivas, 2012) and may have specific effects on SMEs’ capabilities (Chen, 2011; Simsek et al, 2015). Additionally, we argue that managers and owners should have a different role in sensing, seizing and transforming.…”

The Role of the Personnel Committee in Largest Internationalized Brazilian Companies

“…Thus, since corporate governance is important to protect shareholder interests, and because a good governance structure is one that selects the most skilled members and makes them responsible for investors, the influence of the top-management is relevant, especially in the Board's strategy regarding the company's performance and internationalization (Rivas, 2012;Tirole, 2001).…”

Strategic use of corporate and scientific boards in the internationalisation of biotech firms

“…In addition, researchers have been examining how particular board characteristics have an impact on specific strategic outcomes (Pugliese et al, 2009), such as acquisitions, innovation, diversification, and more germane to our study, internationalisation (Barroso et al 2011;Bjørnåli and Aspelund, 2012;Rivas, 2012;Sanders and Carpenter, 1998). However, these studies provide mixed evidence of relationships between board characteristics and specific outcomes (Daily et al, 2003;Pugliese et al, 2009).…”

“…Two studies are particularly relevant when examining our research questions. Rivas (2012) recently reported a positive association between the level of international experience of corporate directors and the likelihood of internationalisation of large listed companies. In addition, when examining academic spin-offs, Bjørnåli and Aspelund (2012) found that heterogeneity in the composition of corporate boards increased the likelihood of international sales.…”

“…Whereas they used to focus primarily on monitoring management, they are now increasingly expected to assume an advisory role as well and to actively participate in the strategic process (Pugliese et al, 2009). Some researchers have started to examine these issues by investigating the possible role of corporate directors in specific strategic decisions such as internationalisation (Barroso et al, 2011;Bjørnåli and Aspelund, 2012;Rivas, 2012). However, the results of these studies have been inconclusive in terms of identifying what particular role and what particular set of skills and competencies are associated with a higher level of internationalisation.…”