Too busy to balance? A longitudinal analysis of board of director busyness and firms’ ambidextrous orientation

Mariano L. M Heyden, Sebastian P. L Fourné, Lane Matthews, Ralf Wilden and Valentina Tarkovska

Industrial and Corporate Change, 2024, vol. 33, issue 6, 1532-1561

Abstract: Studies commonly highlight the informational upside of a board of directors’ connections to its external environment. Through their seats on multiple outside boards, directors are positioned to bring valuable informational resources to complex internal tasks on a focal firm. Crafting an ambidextrous strategic orientation is such a task, requiring great informational resourcing from a board to reconcile contradictions of exploration and exploitation. Yet, we assign an important boundary condition to this expectation by unpacking the idea of “busyness” as an important consideration in a board’s (in)ability to apply their informational resources. We complement Resource Dependence Theory with insights from bounded rationality and bounded reliability, to challenge the “more is better” assumption of the benefits of outside board seats. We develop corresponding hypotheses on the extent to which busyness of different director types (exemplified here via the busyness of non-executives, executives, and women directors) is related to the ambidextrous strategic orientation of a firm. Our results from a robust longitudinal panel analysis of publicly listed UK firms uncover complex patterns and provide evidence that boards with busy non-executives have a negative influence on the ambidextrous strategic orientation of firms, whereas boards with busy executive directors do not seem to exert an influence. We further find that boards with busy women directors show an inverted U-shaped relation with ambidextrous strategic orientation. We discuss implications for theory and practice.

Date: 2024
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