The effects of top management team external ties and board composition on the strategic choice of late movers

Within the context of the monitoring and control function of the board, we extend previous work on the agency view of governance. We examine how the top managers' external ties and board composition directly and interactively influence the strategic choices of firms. Our results indicate that top managers with intra-industry knowledge and experience tend to adopt a resource-imitation strategy whereas those with knowledge and experience from other industries tend to adopt a resource-substitution strategy. The separation of CEO and board chairperson duties also affects strategy selection. In terms of interaction effects, we find that boards with a high ratio of outsiders reduce the tendencies of managers to opt for the safe strategy solutions with which they are familiar.