Experience-Based Human Capital and Social Capital of Outside Directors

Abstract:     
In this paper, we develop and test a theoretical model of the effects of outside directors' human and social capital on firm growth. We posit that outside directors' board memberships and managerial experiences have additive and interactive effects. Using a longitudinal sample of high technology firms, we test our theory and find that outside directors' membership on multiple boards, industry-specific managerial experience, and firm-specific founding experience have strong additive effects on firm growth. We also find negative interaction effects, indicating the costs of acquiring and combining certain types of outside director human and social capital within the board.

Number of Pages in PDF File: 43

Keywords: Board of directors, outside directors, knowledge, human capital

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