Pre-market entry experience and post-market entry learning of the board of directors: implications for post-entry performance
In this paper, we examine how board of directors’ expertise influences post-entry performance of startups and diversifying entrants that compete in an emerging market. Using a sample of firms in the U.S. wireless communications service industry from 1983 to 1998, we find that firms’ post-entry growth increases with the post-entry firm-specific board experience of directors, but decreases with the inherited pre-entry firm-specific board experience of directors. To balance firm-specific board expertise, firms also need externally-developed director expertise. Here we find that outside directors’ intra-industry managerial experience stimulates post-entry growth while their intra-industry directorial experience reduces it. Firms also benefit from having true industry outsiders who are experienced in other industry domains (but have no experience in the current industry domain). Thus, boards with a mix of directors with post-entry firm-specific board expertise and complementary other industry expertise are most fitting for the governance of post-entry venture growth.