Finalist for the Louis R. Pondy Best Paper Based on a Dissertation Award
Prior research in developed institutional contexts has predominantly examined board dynamics using directors’ demographic identities. We know little about board ideological dynamics, especially how ideological tension may represent a tussle between change and continuity during institutional transitions. By developing an institution-based faultline perspective, we study how board-level divergence between achieved and ascribed statuses of directors on Indian firms’ boards may split them into subgroups exhibiting opposing ideological pushes. This precipitates conflicts, behavioral disintegration, constrains CEOs’ functioning, and may even lead to their departure. Our analyses on 7,548 firm-year observations between 2010 and 2018 show that board divergence does lead to CEO dismissal and that this effect is subject to both internal (family ownership) and external (environmental complexity) contingencies. Our findings have important implications for corporate governance in emerging economies with social complexities.