Manuscript Type: Empirical
Research Question/Issue: Examining how corporate boards can create a sustainable competitive advantage is an understudied area of research in corporate governance. This area of research is advanced in this study, which examines: How can boards improve the performance of their strategic tasks by using their information advantages?
Research Findings/Insights: The study examines 318 responses of CEOs from survey data collected in the years 2003 and 2005 from Norway. We found differences between using diverse information and possessing diverse information. Using diverse information has a higher impact on the board's current strategic tasks performance than possessing diverse information. However, possessing diverse information is more likely to improve both the board's current and future strategic tasks performance than using diverse information.
Theoretical/Academic Implications: First, this study has extended the analysis of board capital by including a dynamic dimension of using diverse information. Second, this study links a resource-based view with a perspective of information biases in a diverse group. Diverse information is valuable for improving the quality of group decision-making; however, improper use of diverse information due to information biases could reduce the quality. We thus suggest examining possible behavioral biases in using information in a diverse board, specifically through each of the three practices of open discussion, effective leadership, and active search.
Practitioner/Policy Implications: Controlling sampling, repetition, and evaluation biases is necessary in a diverse board. It helps to reduce behavioral biases, and therefore ensure the quality of using diverse information. Consequently, it improves the board's current strategic tasks performance that may not necessarily be achieved by merely having a diverse board.