Similarity-Attraction or Similarity-Competition: Director Selection based on Background Similarity

Director selection is an important topic of corporate governance. Based on the similarity-attraction logic, extant research in the socialized tradition typically suggests that board chairs prefer to select similar directors with themselves. This logic mainly focuses on the collaborative side of chair-director relations, yet the potential competitive side is largely overlooked. Highlighting the dual roles of directors as both collaborators and competitors perceived by chairs, we incorporate both similarity-attraction and similarity-competition logics in the context of director selection, and propose a substitutive-complementary framework to reconcile their tension. Using longitudinal data on 1,180 Chinese listed firms, we find that chairs with political backgrounds are less inclined to select similar directors in this regard – supporting the similarity-competition logic, while chairs with technological backgrounds are more inclined to select directors with technological backgrounds – maintaining the simila...