The Relationship Between Tenure and Outside Director Task Involvement: A Social Identity Perspective

Abstract

Drawing from corporate governance research and social identity theory, the authors argue that the relationship between outside directors’ time in office and outside director task involvement is more complex than generally anticipated. By using a unique multisource data set composed of peer ratings provided by fellow outside directors rating a focal director’s task involvement, this study analyzes director task involvement at the individual director level of analysis. The authors propose and empirically demonstrate that outside director tenure has an inverted U-shaped relationship with outside director task involvement that is moderated by a director’s social identification with the organization. As such, the authors demonstrate that social identification with the organization provides a critical contingency for the curvilinear relationship between outside director tenure and outside director task involvement. Findings suggest that outside directors who socially identify with the organization are more likely to grow “stale in the saddle” at lower levels of tenure. These findings provide support for the merit of analyzing outside directors at the individual level of analysis and suggest that a “one-size-fits-all” approach may not be most appropriate in assessing the effects of tenure on outside director functioning.