U. of Texas at Dallas - Jindal School of Management, United States
The extant literature investigates the resolutions to strategy uniqueness paradox from the market efficiency perspective, our study incorporates socio-political perspective into discussion and particularly examines the dual role of board co-optation on firms’ engagement in strategy uniqueness. Specifically, we argue that board co-optation attenuates the heterogeneity of information environment, thereby insulating CEOs from unique and diverse foresights to adopt distinctive strategies. Concurrently, co-optation engenders norms of reciprocity, fostering loyalty and security for CEOs, which in turn promotes the pursuit of novel strategies over common ones. Based on this trade-off, we posit an inverted U-shaped relationship between board co-optation and strategic distinctiveness. Furthermore, we contend that CEO conservatism amplifies this inverted U-shaped pattern. Our investigation contributes a nuanced perspective on the potential advantages of co-optation in board composition and underscores the necessity for firms to contemplate the broader ramifications of board independence.
