The Wind of Shock: How Unexpected Independent Director Death Shapes Firm Competitive Action

How does unexpected independent director death affect firm competitive actions? In this study, we propose that unexpected independent director death–as an internal and sudden event–will alter firm competitive strategies. Drawing on the upper echelons and terror management theories, we contend that firms experiencing unexpected independent director deaths will be less aggressive in combating rivals–as manifested in fewer actions, with less novel and complex moves. On the other hand, independent director deaths would also prompt managers to emphasize more on positive-sum instead of zero-sum competitive actions. Building on these arguments, we also examine the contextual factors that may moderate the effects. Results based on a sample of U.S. public firms provide support these arguments. Overall, the findings suggest that unexpected independent director deaths are critical events that affect firm competitive actions and managerial perspectives.