Internationalilzation of the Firm and its Board

In this paper we study the internationalization of corporate supervisory boards. We use Poisson random effects and negative binominal random effect estimators to analyze the determinants of foreign board membership in listed firms from four Nordic countries in 2001-2007. We find that financial competencies required by firm internationalization positively affect board internationalization, whereas the impact of the internationalization of a firm’s commercial operations is positive but not significant across all model specifications. We find that the higher the number of national board members with international experience, the higher is the number of foreign supervisory board members. A significantly positive impact is also found for foreign ownership; the greater foreign ownership of a firm, the higher is the number of foreigners we can expect on the firm’s supervisory board. For Norway and Sweden, the amount of foreigners on the nomination committee also positively relates to the number of foreigners on the board. Rather than age, the median board tenure negatively impacts the prevalence of foreigners on the supervisory board. This barrier to board internationalization may reflect conservatism, fear of potential communication difficulties due to language problems and an “old boys’ network” effect.