The political duality: On the advantages and disadvantages of ex-politicians and former government officials serving on boards of directors

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Abstract

In this study, we examine two key issues situated at the intersection of corporate governance and corporate political activity literature. The first is whether the presence of ex-politicians or former government officials on a corporate board provides a competitive advantage for the firm. A second, related question is whether the presence of these outside directors on the board of directors is perceived as desirable by their fellow directors. While some have characterized the study of board processes as a black box (Leblanc, 2003; Pugliese et al., 2009) due to the difficulty in acquiring data, we circumvented this challenge by directly surveying 82 Canadian board members, then delved deeper with ten directors using supplemental qualitative interviews. The results were examined via the lens of strategic positioning theory in contrast to the well-worn use of agency and resource dependency theories in the literature. Our findings suggest that heterogeneous benefits may accrue depending upon the industry involved, and the political experience of the director(s) in question. However, a majority of current directors expressed significant reservations concerning the appointment of a political director. These findings, combined with the understudied Canadian context and the use of qualitative research methods, contribute to the extant literature.

Keywords: Board Composition, Business-Government Relations, Politicians, Government Officials, Outside Directors, Strategic Positioning, Canada

Authors’ individual contributions: Conceptualization – M.A.F. and C.B.; Methodology – M.A.F.; Investigation – M.A.F.; Formal Analysis – M.A.F.; Resources – C.B.; Writing – M.A.F.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, D72, D73

Received: 25.05.2020
Accepted: 11.09.2020
Published online: 22.09.2020

How to cite this paper: Fuller, M. A., & Bart, C. (2020). The political duality: On the advantages and disadvantages of ex-politicians and former government officials serving on boards of directors. Corporate Board: Role, Duties and Composition, 16(3), 8-23. https://doi.org/10.22495/cbv16i3art1