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Director network resources and firm performance: Evidence from Indian corporate governance reforms

Tara Shankar Shaw (), James J. Cordeiro () and Palanisamy Saravanan ()
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Tara Shankar Shaw: Indian Institute of Technology Bombay
James J. Cordeiro: SUNY Brockport
Palanisamy Saravanan: Rajiv Gandhi Indian Institute of Management Shillong

Asian Business & Management, 2016, vol. 15, issue 3, 165-200

Abstract: Abstract Drawing on resource-dependence theory, we hypothesized that in an emerging economy characterized by weak underdeveloped institutions, director interlocks would be a conduit of resources external to the firm. Using data from 651 large Indian firms for the years 2006–2012, we found that directors’, especially independent directors’, social capital and industry-level expertise enhanced firm performance. Our findings contribute by providing evidence of the beneficial role of directors in providing resources through their interlocks, contrary to the basic tenet of corporate governance that independent directors are chosen for their monitoring role to reduce agency costs.

Keywords: corporate governance; resource-dependence theory; social capital theory; director’s industry expertise (search for similar items in EconPapers)
Date: 2016
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