| Similarity-Attraction vs. Similarity-Competition: How Board Chairs Select Independent Directors with Background Similarity? |
Received:October 10, 2017 Revised:October 10, 2017 |
Key Words: director selection, chair-director relations, similarity-attraction, similarity-competition, resource dependence theory |
| Author Name | Affiliation | | Renfei Gao* | The University of Melbourne | | Helen Hu0 | The University of Melbourne | | Toru Yoshikawa0 | Singapore Management University |
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Abstract: |
| Director selection is a critical topic of corporate governance. Extant research in the socialized tradition emphasizes key decision makers’ personal preferences as a key determinant of director selection and has established the similarity-attraction principle in this context. However, this research focuses overwhelmingly on positive effects of the chair-director similarity, while potential negative effects remain underexplored. Incorporating similarity-attraction principle and the relational view of competition, we propose that either similarity-attraction or similarity-competition effect may dominate chairs’ attitudes towards similar directors, contingent on the nature of their shared background. Using longitudinal data on 1,180 Chinese listed firms, we find that chairs with political backgrounds are less inclined to select similar directors in this regard – supporting the similarity-competition logic, while chairs with technological backgrounds are more inclined to select directors with technological backgrounds – maintaining the similarity-attraction logic. Additionally, we show positive moderating effects of firms’ resource dependence in political and technological domains, respectively. Highlighting the dual roles of directors as both collaborators and competitors for chairs, this study refines our understanding of chair-director relations and provides a framework to reconcile the tension between similarity-attraction and similarity-competition effects. Moreover, our theory integrates socialized and rational perspectives of director selection by illustrating interactive effects between psychological and functional mechanisms. |
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