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

Author

Listed:
  • Tara Shankar Shaw

    (Indian Institute of Technology Bombay)

  • James J. Cordeiro

    (SUNY Brockport)

  • Palanisamy Saravanan

    (Rajiv Gandhi Indian Institute of Management Shillong)

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.

Suggested Citation

  • Tara Shankar Shaw & James J. Cordeiro & Palanisamy Saravanan, 2016. "Director network resources and firm performance: Evidence from Indian corporate governance reforms," Asian Business & Management, Palgrave Macmillan, vol. 15(3), pages 165-200, July.
    • Handle: RePEc:pal:abaman:v:15:y:2016:i:3:d:10.1057_s41291-016-0003-1
    DOI: 10.1057/s41291-016-0003-1
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    3. Bibek Bhattacharya & Ipsu Khadka & Dalhia Mani, 2022. "Shaking Up (and Keeping Intact) the Old Boys’ Network: The Impact of the Mandatory Gender Quota on the Board of Directors in India," Journal of Business Ethics, Springer, vol. 177(4), pages 763-778, May.
    4. Young Zik Shin & Jeung-Yoon Chang & Kyeongmin Jeon & Hyunpyo Kim, 2020. "Female directors on the board and investment efficiency: evidence from Korea," Asian Business & Management, Palgrave Macmillan, vol. 19(4), pages 438-479, September.
    5. GuoHua Cao & WenJun Geng & Jing Zhang & Qi Li, 2023. "Social network, financial constraint, and corporate innovation," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 667-692, September.
    6. Qiang Qiu & Jinyue Yu, 2023. "Impact of independent director network on corporate green innovation: Evidence from Chinese listed companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3271-3293, November.
    7. Biswas, Shreya & Kumar, Rajnish, 2022. "Bank board network and financial stability in emerging markets," Emerging Markets Review, Elsevier, vol. 51(PB).
    8. Shankar Shaw, Tara & Raithatha, Mehul & Krishnan, Gopal V. & Cordeiro, James J., 2021. "Did mandatory CSR compliance impact accounting Conservatism? Evidence from the Indian Companies Act 2013," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(3).
    9. Faozi A. Almaqtari & Hamood Mohd. Al-Hattami & Khalid M. E. Al-Nuzaili & Mohammed A. Al-Bukhrani, 2020. "Corporate governance in India: A systematic review and synthesis for future research," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1803579-180, January.
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