Why embrace a double-edged sword? A behavioral theory of board political capital building
基于中国上市公司数据，研究发现业绩低于目标的企业更倾向于选聘有政治背景的独立董事，以构建董事会政治资本，但主要限于低层级政治资本。
Firm political connections are widely recognized to have both positive and negative implications, but why do firms build political connections in the first place? Distinct from prior research that typically views firm political connections as capital stock, we focus on board political capital building—selecting new directors with political backgrounds—as a strategic decision. Drawing on the behavioral theory of the firm, we examine how board political capital building is driven by performance shortfalls based on the logic of problemistic search—seeking the potential benefits of political connections while undertaking the potential downsides. Using director selection data on Chinese listed firms, we find that firms with higher performance shortfalls are more inclined to select new independent directors with political backgrounds. We further demonstrate that it is more feasible for firms with performance shortfalls to build lower-level board political capital but infeasible for them to build upper-level political capital.