The Wisdom and Madness of Crowds: How Information Networks and Board Cognition Help or Hinder Firm Performance Across the Business Cycle

Kerry Hudson*, Robert E. Morgan

*Corresponding author af dette arbejde

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review


We know little of why a minority of firms pursue counter-cyclical strategies and consequently outperform competitors during recessions. Based on the theory of institutional isomorphism, we hypothesize that these firms avoid the mimetic and normative pressures that promote strategic convergence during uncertainty. We demonstrate these effects at the board-level in a sample of 1,615 U.S. firms. Mimetic processes are evident, with firms' connectedness in board interlock networks attenuating profitability and decreasing firm value during recessions—a reversal of the positive effects during expansions. Normative pressures arise from homogeneity in directors’ educational and professional experience, with greater consequences for long-term performance. Overall, recessionary performance is improved when firms occupy relatively isolated positions in informational networks and appoint directors from a range of backgrounds.
TidsskriftLong Range Planning
Udgave nummer6
Antal sider20
StatusUdgivet - dec. 2022

Bibliografisk note

Published online: 21 December 2021.


  • Strategic leadership
  • Corporate governance
  • Board interlocks
  • Board composition
  • Recession