2.1 Theory
To address our main research question, we build on interpersonal attraction research and the similarity-attraction paradigm. Top managers who sit on a management board are part of a group, namely, the management board, and as with any other group, individuals inside of the board relate to each other (Fitness et al.
2007; Thomsen and Conyon
2012). Within a management board, individuals can feel more or less attracted towards others. Attraction has been a subject of investigation in interpersonal attraction research for many decades (Blau
1960; Lott and Lott
1965). In this vein of research, ‘attractiveness’ refers to the possession of desirable qualities by an individual that evoke positive affective evaluations in others (Byrne and Griffitt
1973; Klohnen and Luo
2003). Similarity indicates a conceptual proposition in which increased resemblance between individuals results in increased attraction, which is also due to homophily (Holgersson
2013; Lazarsfeld and Merton
1954; McPherson et al.
2001). Individuals who display specific characteristics or behaviors (e.g., values, beliefs, skills and practices) deemed similar or valuable by an observer usually evoke positive perceptions. Hence, these individuals become attractive in the observer’s eyes (Berscheid and Walster
1969; Montoya and Horton
2012). According to interpersonal attraction theory, interaction with similar people is usually considered more effective and enjoyable, because congruence in characteristics produces credibility, reliability, and trustworthiness (Zhu and Westphal
2014). The similarity-attraction effect has turned out to be evident in numerous settings, populations, contexts, and cultures (e.g., Byrne
1997; Lydon et al.
1988; McPherson et al.
2001; Murnieks et al.
2011).
Prior literature in the top management field has already made use of the similarity-attraction paradigm. For instance, Zajac and Westphal (
1996) suggest that board members and CEOs tend to select successors similar to them. By relying on US samples of Fortune/Forbes 500 firms, Westphal and Milton (
2000) and Westphal and Zajac (
1995) demonstrate that homophilous preferences are important criteria in the appointment of board members. Kaczmarek et al. (
2012) find that the strong presence of females and non-British nationals on nomination committees of British boards has an impact on board diversity and nationality diversity. Focusing on Chief Human Resource Officers (CHROs) in France, Germany, and the UK, Doms and zu Knyphausen-Aufseß (
2014) show that similarity in incumbent top management team (TMT) demographics holds significant explanatory power for new appointees’ origins. Drawing on an Indian sample, Damaraju and Makhija (
2018) reveal that social proximity in terms of caste and religion influences CEO selection. Investigating executive appointments at large European firms, Georgakakis et al. (
2018) conclude that firms are more likely to appoint socio-demographically dissimilar executives through internal promotion; in contrast, external hires are more likely to resemble incumbent top managers. By relying on similarity-attraction theory, McDonald et al. (
2018) demonstrate how the appointment of a female or a racial minority CEO affects helping behavior of white male top managers.
While the aforementioned studies argue that similarity in demographic characteristics has an effect on appointments to boards or specific top management positions, other studies investigate the importance of similarity with regard to behavioral integration within top management teams. Simsek et al. (
2005), for instance, reveal that similarities in personal characteristics, e.g., education or functional background, favor behavioral integration within TMTs. Similarity also affects compensation; Fiss (
2006), for instance, provides evidence that social similarity (e.g., levels of education) between the CEO and the board chair is positively associated with CEOs’ compensation. Hwang and Kim (
2009) suggest that directors of Fortune 100 firms who share the same qualities or experiences as the CEO receive higher compensation than their dissimilar peers. Hilger et al. (
2013) find that similarities between the CEO and other TMT members with respect to age or field of study, inter alia, decrease the likelihood of top manager turnover.
In this paper, we argue that similarity not only influences appointment to a board, integration, compensation, the helping behavior of top managers and the probability of turnover, but also top managers’ tenure on a board. We propose that similarity in personal characteristics can act as a predictor of an individual’s longer tenure on a board, whereas dissimilarity in personal characteristics is a predictor of shorter board tenure.
2 In doing so, we provide novel insights and show that similarity and dissimilarity also have an impact during subsequent stages of a top manager’s career.
2.2 Hypotheses
Despite some recent developments in board internationalization, boards in most countries are still mainly staffed by board members with the same nationality as the firm (see, for instance, Katmon et al.
2017; Schmid and Dauth
2012; Schmid et al.
2015; Van Veen and Marsman
2008). Consequently, international top managers are often still in the minority in this setting. Based on interpersonal attraction research and the similarity-attraction paradigm, we claim that top managers with a foreign nationality are dissimilar from their (non-international) peers on a board. Growing up in another country shapes fundamental values, beliefs, attitudes, and cognitions of top managers in such a unique way that they have an enduring influence on behavior (Carpenter et al.
2001; Nielsen and Nielsen
2010). It has already been shown that nationality is an important part of a top manager’s international background (Hambrick et al.
1998; Nielsen
2010). Having been raised abroad affects a person in terms of values, norms, attitudes, cognitive schemata, and demeanor, inter alia (Hambrick et al.
1998; Hofstede et al.
2010; House et al.
2004). By integrating Byrne’s (
1971) reinforcement model of the similarity effect, we suggest that, during their work on a board, top managers, like any other individuals, favor stimuli that reinforce their logic and consistency. This assumption is rooted in cognitive dissonance theory, which stresses that individuals possess a fundamental need for a logical and consistent view of the world (Boone et al.
2006; Festinger
1957; Montoya and Horton
2012). The reinforcement model suggests that individuals who are similar in their values, norms, beliefs, and attitudes strengthen each other when it comes to interpreting situations in the same way, interacting, or making decisions, since they share the same view of the world (Byrne et al.
1973; Clore and Gormly
1974; Montoya and Horton
2012). By contrast, top managers who are dissimilar in terms of values, norms, beliefs, and attitudes provoke inconsistency, which may be associated with anxiety or confusion. Ultimately, this may lead to a lack of attraction, or even repulsion (Abt and zu Knyphausen-Aufseß
2017; McCroskey et al.
1974).
We argue not only that international board members differ from non-international ones, but also that dissimilarity in personal characteristics has consequences. Due to a lack of reinforcing logic and consistency, board interaction between top managers with differences in terms of values, norms, beliefs and attitudes may be considered less effective because of decreased credibility, reliability and trustworthiness (Li et al.
2017; Lott and Lott
1965). For instance, interpersonal dissimilarity makes knowledge-sharing more difficult (Mäkelä et al.
2007). Previous research has shown that another consequence of intergroup dissimilarity is social disintegration (Guillaume et al.
2012; O’Reilly et al.
1989; Zajac and Westphal
1995). Therefore, we conclude that, during the course of their board mandate, disagreement and friction may arise between foreign top managers and their non-foreign peers. Differences may be so strong, in fact, that collaboration between top managers is hindered and that those top managers who are dissimilar, i.e., those with a foreign nationality, may feel confused, unsettled or in some cases even anxious (Montoya and Horton
2012). In the end, this may result in social disintegration of those board members who are dissimilar to their peers (O’Reilly et al.
1989). It can be assumed that, under such conditions, tenures of board mandates decrease for dissimilar board members. Hence, we claim that individuals who are dissimilar may quit their position prematurely, or their board mandate may either be shortened or not be extended. Consequently, we hypothesize the following:
Hypothesis 1a: There is a negative relationship between a top manager’s dissimilarity in nationality and his or her tenure on the board.
In addition to a top manager’s nationality, we also argue that a top manager’s international work experience has an influence on board tenure. In other words, if there is high dissimilarity with respect to international work experience, this may also lead to a short tenure for those top managers who deviate from the average norm on the board. This notion is based on findings that attest dissimilarities in individuals’ experiences to negatively impact on behavioral integration and interaction among board members (Milliken and Martins
1996).
We suggest that for most members on a management board, past job-related experiences denote similarities during their professional life (Hwang and Kim
2009). Similar experiences, sometimes even complemented by some personal interaction, may contribute to interpersonal attraction (Collins and Clark
2003). Carpenter et al. (
2001) and Rousseau and Parks (
1993) state that common experiences of top managers facilitate communication on the board and encourage the building of trust among each other. Simsek et al. (
2005) claim that in case of similar experiences collaborative work in top management teams is more likely. Davidson et al. (
2006) argue that shared experiences of board members are a basis for a sound relationship on the board. Hence, board members with similar experience in the home country acquire deeper information about doing business in the home country, i.e., country-specific skills, routines and practices. In contrast, top managers with long and many international assignments have gained experiences different from those of their peers’ experiences. As Knight et al. (
1999) claim, dissimilarities in terms of top managers’ experiences favor interpersonal conflicts in the board room. This is also underlined by Torchia et al. (
2015) who find that dissimilar backgrounds in terms of board members’ experiences and skills lead to cognitive conflicts in the board room. Therefore, we expect that the lack of mutual experiences may cause disagreement and friction, as top managers equipped with international work experience (and often very diverse experiences) lack shared skills, routines and practices. In other words, top managers with high levels of international work experience who deviate strongly from the average norm on the board are (highly) dissimilar to their counterparts with low(er) levels of international work experience. Likewise, top managers with no international work experience or with levels of international work experience far lower than the average on the board, cannot benefit from the same context of shared international knowledge and skills, for instance about how to do business abroad. Again dissimilarity may end in fragmented understanding and disharmony, which in turn may even result in social disintegration. As such, it can be assumed that this may shorten the tenure of those board members who are dissimilar to the rest of the board. Hence, we claim that individuals who are dissimilar may quit their position prematurely, or their board mandate may either be shortened or may not be extended. Consequently, we hypothesize the following:
Hypothesis 1b: There is a negative relationship between a top manager’s dissimilarity in international work experience and his or her tenure on the board.
Tenure on the board may also be contingent on additional characteristics of one’s career pattern before entering a board. Scholars suggest that work experience inside the firm (before serving on the board) may have effects other than work experience gained in other firms (Baruch et al.
2013; Grühn et al.
2017; Hamori and Koyuncu
2011). In academic literature on (top) managers’ careers, social capital theory has been used to explain outcomes of individual vocational behavior, such as in-house work experience (Hamori et al.
2009; Hamori and Koyuncu
2011; Mäkelä and Suutari
2009). Whereas prior studies have shown that social capital can have some detrimental consequences at board and firm-level, such as, insufficient transparency in decision-making in the board room or shortcomings in monitoring (e.g., Stevenson and Reddin
2009; Westphal
1999), most research stresses the benefits social capital can have. By investigating in-house work experience through a social capital lens, we suggest that such experience may have alleviating effects on the negative association between dissimilarity of top managers on the one hand and board tenure on the other hand. In other words: while we use interpersonal attraction research and the similarity-attraction paradigm to establish our main hypotheses, social capital theory helps us argue why in-house work experience acts as a moderator in our main relationships.
Prior research has shown that ‘insiders’, i.e., individuals who spent a considerable part of their career in the firm before being appointed as a member of the board, have already established social capital (Dickmann
2017; McEvoy and Buller
2013). Such capital, salient in relationships and ties, for instance, with peers, superiors or subordinates, provides them with information and support to perform well in their jobs (Bower
2007; Chung et al.
1987; Davoine and Ravasi
2013). Furthermore, internally appointed board members are more familiar with the firm’s decision-making processes and its specific routines and practices (Balsmeier and Buchwald
2015; Datta and Guthrie
1994; Gupta
1984). For instance, Hambrick and Fukutomi (
1991) argue that internally recruited top managers internalize corporate norms faster than outsiders. Moreover, Hamori and Kakarika (
2009) even state that insiders are more likely to be promoted to upper echelons, due to prior interaction with the board of directors or with senior executives. As board members with in-house work experience may have established social capital (both in foreign entities and/or in firm’s headquarters), we suggest that they are more capable to bridge dissimilarities compared to board members recruited externally (Crossland et al.
2014; Koch et al.
2017). By accumulating social capital, individuals homogenize while being involved in daily business, decision-making processes, and applying shared routines (Bidwell
2011; Lepak and Snell
1999; Shen and Cannella
2002). Furthermore, they are familiar with internal communication patterns and interaction styles and may also adapt the specific ‘habitus’ that is frequently shared by national corporate elites. Top managers with in-house work experience show behaviors and dispositions considered normative in these circles, corresponding to the expectations by their peers on the board (Hambrick et al.
1998; Nielsen and Nielsen
2013; Kish-Gephart and Campbell
2015). Thus, we propose that in-house work experience has a direct effect: in-house work experience which comes along the considerable accumulation of social capital gained prior to a board appointment positively influences top managers’ tenure on the board. Moreover, we advocate that in-house work experience and hence the possession of social capital, also has an interaction effect. It alleviates the negative association between dissimilarity in terms of nationality and international work experience and board tenure. Having established relationships and ties with peers and equipped with firm-specific practices and routines, dissimilar top managers with in-house work experience may be able to limit disagreement, disharmony and consequently conflicts and frictions during their board mandate (Balsmeier and Buchwald
2015; Dickmann
2017), since they have assimilated by integrating into networks with colleagues and by applying shared routines and practices. It can be assumed that shorter tenures are less prevalent under conditions of having worked in the focal firm prior to the board appointment – and thus having built up high levels of social capital. This results in the following hypotheses:
Hypothesis 2a: A top manager’s in-house work experience moderates the relationship between a top manager’s dissimilarity in nationality and his or her tenure on the board in such a way that the negative relationship will be attenuated in the case of higher in-house work experience prior to the board appointment.
Hypothesis 2b: A top manager’s in-house work experience moderates the relationship between a top manager’s dissimilarity in international work experience and his or her tenure on the board in such a way that the negative relationship will be attenuated in the case of higher in-house work experience prior to the board appointment.