Directors: geographical and industry specialization?

Abstract

Purpose

The early literature on specific networks of non‐executive directors has shown that directors are both information sources and have specific competences. The focus of this paper is to study the specialization of directors with multiple mandates. Is the information held by directors specific in terms of geographical areas or industrial sectors?

Design/methodology/approach

The Dafsalien database is used for the year 2003 on the 500 largest French groups. For each member of a sub‐group referred to as the “inner circle”, it was determined whether their mandates were held in French or foreign entities, and in which business sector.

Findings

Geographical specialization could not be validated, but industrial specialization is proven. Boards are made up of industry specialists and those groups benefit from a clear experience curve.

Practical implications

This paper brings a new approach to the analysis of directors' networks.

Originality/value

The paper questions the relevance of the quest for independent directors and the limitation of mandates. On one hand directors with multiple mandates do bring an added value to boards; on the other hand their presence is limited by law and regulation. Should regulation on corporate governance lay down unrealistic rules or combine with business reality?

Citation

Pignatel, I. (2008), "Directors: geographical and industry specialization?", EuroMed Journal of Business, Vol. 3 No. 1, pp. 83-98. https://doi.org/10.1108/14502190810873830