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Directors: geographical and industry specialization?

Directors: geographical and industry specialization? Purpose – The early literature on specific networks of non‐executive directors has shown that directors are both information sources and have specific competences. The focus of this paper is to study the specialization of directors with multiple mandates. Is the information held by directors specific in terms of geographical areas or industrial sectors? Design/methodology/approach – The Dafsalien database is used for the year 2003 on the 500 largest French groups. For each member of a sub‐group referred to as the “inner circle”, it was determined whether their mandates were held in French or foreign entities, and in which business sector. Findings – Geographical specialization could not be validated, but industrial specialization is proven. Boards are made up of industry specialists and those groups benefit from a clear experience curve. Practical implications – This paper brings a new approach to the analysis of directors' networks. Originality/value – The paper questions the relevance of the quest for independent directors and the limitation of mandates. On one hand directors with multiple mandates do bring an added value to boards; on the other hand their presence is limited by law and regulation. Should regulation on corporate governance lay down unrealistic rules or combine with business reality? http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png EuroMed Journal of Business Emerald Publishing

Directors: geographical and industry specialization?

EuroMed Journal of Business , Volume 3 (1): 16 – May 16, 2008

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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1450-2194
DOI
10.1108/14502190810873830
Publisher site
See Article on Publisher Site

Abstract

Purpose – The early literature on specific networks of non‐executive directors has shown that directors are both information sources and have specific competences. The focus of this paper is to study the specialization of directors with multiple mandates. Is the information held by directors specific in terms of geographical areas or industrial sectors? Design/methodology/approach – The Dafsalien database is used for the year 2003 on the 500 largest French groups. For each member of a sub‐group referred to as the “inner circle”, it was determined whether their mandates were held in French or foreign entities, and in which business sector. Findings – Geographical specialization could not be validated, but industrial specialization is proven. Boards are made up of industry specialists and those groups benefit from a clear experience curve. Practical implications – This paper brings a new approach to the analysis of directors' networks. Originality/value – The paper questions the relevance of the quest for independent directors and the limitation of mandates. On one hand directors with multiple mandates do bring an added value to boards; on the other hand their presence is limited by law and regulation. Should regulation on corporate governance lay down unrealistic rules or combine with business reality?

Journal

EuroMed Journal of BusinessEmerald Publishing

Published: May 16, 2008

Keywords: Boards of Directors; Task specialization; Networking

References