The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change

Most research on corporate directors has focused on two roles: agency and r esource dependence. While these two roles are theoretically and practically distinct, previous research has used the same classification scheme for me asuring board composition regardless of role examined. Our paper examines t he resource dependence role of directors and posits that the widely used in sider/outsider categorizations do not adequately capture this role of direc tors. A taxonomy of directors is presented specifically for studying the re source dependence role. We then apply the taxonomy to a sample of US airlin e firms undergoing deregulation, and examine how board composition changes parallel the changing resource dependence needs of the firms. We conclude t hat the board's function as a link to the external environment is an import ant one, and that firms respond to significant changes in their external en vironment by altering board composition.