External identities of directors, board functions and firm performance

Abstract

Using identity theory, this paper focuses on examining the relationship between the external and internal identities of directors and how these identities can shape their monitoring and resource provision behaviors. The monitoring and resource provision behaviors will eventually affect the firm performance. The external identity of a director can be defined as the professional position that the director is concurrently holding in another organization. The internal identity is defined as being a board director in a focal firm. Building on identity theory, I argue that when the external identity conflicts with the internal identity, this conflict will assuage the motivation of a director to monitor and provide resources. However, when the external identity is consistent with the internal identity, this consistency will motivate the director to engage in monitoring and resource providing behaviors. These behaviors will eventually have a positive impact on firm performance.