The impact of board heterogeneity on corporate internationalization strategy

• Main Author: QIANG, Yi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Board heterogeneity; Internationalization strategy; Risk-taking; Chinese company; Business Administration, Management, and Operations; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/etd_coll/473; https://ink.library.smu.edu.sg/context/etd_coll/article/1471/viewcontent/GPBA_AY2018_CKGSB_SMU_DBA_Qiang_Yi.pdf
• Institution: Singapore Management University

This study analyzes the relationship between board heterogeneity and the company’s internationalization strategy to determine the internal mechanism through which board heterogeneity affects the company’s internationalization strategy. Based on the analysis of the primary effect, the moderating effects of contextual factors at various levels, such as individual, organization, and environment, are introduced. Subsequently, this study empirically tests the proposed research hypothesis using the data of Chinese listed companies from 2011 to 2020. The empirical results indicate that board heterogeneity has a positive impact on the company’s internationalization strategy. When the board chairman is female or has a longer tenure, board heterogeneity plays a more crucial role in promoting the company’s internationalization strategy. Board heterogeneity has a greater impact on the internationalization strategy of companies that have more abundant resources and are owned by the state. The higher the dynamics of the external environment and the higher the degree of marketization, the more significant the role of the heterogeneity of the board of directors in promoting the company’s internationalization strategy. Even after modifying the variables’ measurement methods and the regression technique, the conclusions of this research remain robust. Further tests show that board heterogeneity enhances the company’s internationalization strategy by improving its risk-taking level. The heterogeneity of the board of directors enhances company value by promoting the implementation of the company’s internationalization strategy. Relationship heterogeneity and task heterogeneity within the board have diverse effects on the company’s internationalization strategy. Compared with relationship heterogeneity, task heterogeneity is the main reason for the company’s implementation of the internationalization strategy. The study findings have several theoretical contributions. First, this study contributes to the literature on economic consequences of board heterogeneity by deeply analyzing the impact of board heterogeneity on the company’s internationalization strategy. Second, this study identifies board heterogeneity as an important factor influencing internationalization strategy from the perspective of business practice, thereby enriching related research on the factors influencing internationalization strategy. Third, this study deepens the understanding of the role of the board of directors through theoretical analysis and empirical tests regarding how different levels of factors moderate the relationship between board heterogeneity and the company’s internationalization strategy. In addition, the research findings have some practical implications. First, companies that plan to or have already begun implementing internationalization strategies can avoid the risks associated with international competition. They can do so by building a heterogeneous board of directors and utilizing the information and resources provided by the differences among board members in terms of gender, age, education level, professional background, tenure, and so on. Second, while improving the structure of the board of directors, we must also consider the impact of individual, organizational, and environmental factors. Third, companies that intend to develop international markets and implement internationalization strategies should maximize the positive role of board heterogeneity, which will help enhance the company’s value.