Determinants of selection of ex-bureaucrats as board members: A study of firms in India
Description
Emerging economies, often characterized by relatively weak institutional environments, provide opportunities for firms to exploit institutional voids. In such contexts, firms may benefit from the “influence capital” of their board members, enabling them to extract “influence rents” (Ahuja and Yayavaram, 2011). While prior literature has extensively examined firms’ connections to politicians through board membership, the role of former bureaucrats has received comparatively little attention, despite a notable rise in their appointment to corporate boards in recent years. Addressing this gap, we analyze the determinants and implications of appointing former bureaucrats as board members. Our findings indicate that industry regulation, foreign corporate ownership, and board size are key factors influencing the selection of ex-bureaucrats. We also find that “generalist” bureaucrats are more in demand than “specialists,” often serving as independent directors due to their higher influence capital and their ability to bridge networks across multiple government agencies. Overall, this study provides an important initial contribution to understanding the role of bureaucratic experience in corporate governance, highlighting how ex-bureaucrats can serve as valuable sources of influence capital in emerging market contexts.
Copyright Date
January 2017
Publication Date
1-1-2017
DOI
10.5465/AMBPP.2017.194
Keywords
Emerging economies, Industry regulation, Corporate ownership
Conference
Annual Meeting of the Academy of Management, Atlanta, 4-8 August, 2017, USA
