New member in the boardroom and subsequent strategic change in the product-market scope of the firm

Abstract

Purpose – The purpose of this paper is to explore the linkages between the appointment of a new management board member and the following strategic change in the product-market scope of the firm. Design/methodology/approach – The study is based on the whole population of Estonian firms, in total 16,941 observations, and the data is retrieved from Estonian Business Register. First, we focus on the association between the appointment of a new board member and the likelihood of different types of strategic change. Second, we focus on the association between the new board member’s previous export experience and the export related strategic change. Logistic regressions are applied for all models. Findings – The results indicate that there is a significant association between the appointment of a new board member and the subsequent start of exports and also continuing it, entrance into a new industry and making a strategic change in more broad terms, though the significance levels vary across the composed models. No significant relationship was found with the entrance into additional geographic market(s) for already exporting firms. There was also a significant association between previous export experience of a new board member and subsequent start of exporting. Originality/value – We look at strategic change in the product-market domain holistically by applying same data on both geographic and product portfolio expansion options. We also introduce the scale and stability contexts of strategic changes. These aspects are usually neglected from similar studies.