Antecedents of New Director Social Capital

22 Pages Posted: 20 Oct 2011

See all articles by Scott Johnson

Scott Johnson

Oklahoma State University - Stillwater - Department of Management

Karen Schnatterly

University of Missouri-Columbia; Virginia Tech

Joel F. Bolton

affiliation not provided to SSRN

Chris S. Tuggle

Independent

Date Written: December 2011

Abstract

Prior research shows that firms benefit from the social capital of their boards of directors but has not explored the antecedents of new director social capital. We argue that firms can attract directors with social capital by offering more compensation. We also argue that more complex firms (firms with a greater scale and scope of operations) are more attractive to such directors because of the greater experience and exposure that such directorships provide. Similarly, we argue that firms with high‐status directors on their current boards will be more attractive to directors with social capital. We analyse the social capital of new outside directors added to boards of semiconductor firms between 1993 and 2007. Surprisingly, we find no support for the hypothesis that higher compensation is associated with adding directors with high status or board ties. However, firm complexity is associated with the ability to add new directors who have social capital, and the status of current board members is associated with the ability to add new directors who also have high status.

Suggested Citation

Johnson, Scott and Schnatterly, Karen and Schnatterly, Karen and Bolton, Joel F. and Tuggle, Chris S., Antecedents of New Director Social Capital (December 2011). Journal of Management Studies, Vol. 48, Issue 8, pp. 1782-1803, 2011, Available at SSRN: https://ssrn.com/abstract=1946672 or http://dx.doi.org/10.1111/j.1467-6486.2011.01020.x

Scott Johnson

Oklahoma State University - Stillwater - Department of Management ( email )

394 Business Building
Stillwater, OK
United States

Karen Schnatterly

University of Missouri-Columbia ( email )

332 Cornell Hall
Columbia, MO Columbia 65211
United States

Virginia Tech ( email )

Blacksburg, VA 24061
United States

Joel F. Bolton

affiliation not provided to SSRN

No Address Available

Chris S. Tuggle

Independent ( email )

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