ABSTRACT
An organization’s board of directors is the highest authority in the firm entrusted with safeguarding its strategy and has been shown to be crucial for infusing the firm with knowledge from its environment. Strategic renewal is important, as changing environmental conditions and competition pressure companies to balance efficiency and flexibility at the same time. The “board of directors is an important mechanism in determining a firm’s strategies and aligning the interests of insiders, controlling shareholders and minority shareholders”. Relational capital concerns the networks of ties that board members possess, often captured by outside directorships, which refers to “a situation in which a person affiliated with an organization has a position on the board of directors of another firm”. Directors face a turning point in their tenure, where commitment to existing paradigms as well as the status quo and slower decision-making hampers their ability to provide the firm with knowledge.
