“What determines the scope of the firm? ” is one of the most fundamental questions in strategic management. We argue that, in addition to product relatedness, a focus on institutional relatedness—defined as an organization’s informal linkages with dominant institutions that confer resources and legitimacy—helps answer this question. We address this question both longitudinally (firms in developed and emerging economies over time) and cross-sectionally (developed versus emerging economies), thus contributing to an institution-based theory of corporate diversification. As part of the broader intellectual movement centered on new institutionalism throughout the social sciences in recent decades (North, 1990; Powell & DiMaggio, 1991; Scott, 1995; Williamson, 2000), strategic approaches to organization are considering institutional forces much more explicitly than before (Henisz, 2003; Oliver, 1997; Peng, 2003, 2006). Researchers increasingly realize that institutions are more than background conditions and that “institutions directly determine what arrows a firm has in its quiver as it struggles to formulate and implement strategy” (Ingram & Silverman, 2002: 20; emphasis added). Positioned to deepen our understanding of how an institutional perspective adds to strategy re-

Do outside directors on corporate boards make a difference in firm performance during institutional transitions? What leads to the practice of appointing outside directors in the absence of legal mandate? This article addresses these two important questions by drawing not only on agency theory, but also resource dependence and institutional theories. Taking advantage of China’s institutional transitions, our findings, based on an archival database covering 405 publicly listed firms and 1211 company–years, suggest that outsider directors do make a difference in firm performance, if such performance is measured by sales growth, and that they have little impact on financial performance such as return on equity (ROE). The results also document a bandwagon effect behind the diffusion of the practice of appointing outsiders to corporate boards. The article not only highlights the need to incorporate multiple theories beyond agency theory in corporate governance research, but also generates policy implications in light of the recent trend toward having more outside directors on corporate boards in emerging economies. Copyright © 2004 John Wiley & Sons, Ltd. Do outside directors on corporate boards make a difference in firm performance? Agency theory suggests that a board comprised of a greater proportion of outside directors, due to their presumed independence, may theoretically lead to better firm performance (Jensen and Meckling, 1976; Shleifer and Vishny, 1997). However, empirical researchers report that overall, there is little significant relationship between outside directors and firm performance (Dalton et al., 1998; Finkelstein and Hambrick, 1996). Consequently, Dalton et al. (1998: 285) argue that ‘consideration of multiple theories [beyond agency theory]... may lead to a more complete understanding. ’ We agree, and add that Key words: outside directors; firm performance; institutional transitions; China

Abstract. This article focuses on a key question: Why do strategies of firms from different countries differ? Drawing from recent research on business strategies in Asian organizations, this article outlines the emergence of an institution-based view of business strategy which sheds light on why firms differ, reviews four streams of research in a broad range of countries, and critiques and extends some of the current work by suggesting a number of future research directions. Keywords: institution, business strategy, Asia This article focuses on a key question: Why do strategies of firms from different countries and regions differ? This is the very first question among the five most fundamental questions in strategic management raised by Rumelt, Schendel and Teece (1994:564). 1 Since the diversity of firm strategies around the world can arise as the result of many possible forces internal or external to the organization, this question engenders a wide variety of disparate answers from economists (Nelson, 1991) and sociologists (Carroll, 1993). Thus far, strategy researchers have primarily focused on industry conditions (Porter, 1980) and firm resources (Barney, 1991) as drivers of firm differences, leading to competition- and resource-based

Abstract. Given the paucity of corporate governance research on Third World multinational enterprises (MNEs), we provide an exploratory description of the patterns of interlocking directorates as corporate governance in Thailand-based MNEs in this study. Specifically, we raise a key question: Do the interlocks network attributes and individual board directors of MNEs differ systematically from those of non-MNEs? Drawing upon resource dependence theory, we hypothesize that, compared with non-MNEs, MNEs in Thailand (1) have more densely connected interlocks, (2) occupy more central locations in the interlocks network, (3) have more ethnic Chinese directors, and (4) appoint more military directors. Data from the top 200 listed firms in Thailand support three of the four hypotheses, and suggest a number of implications and future research directions. 1.

Abstract. This article argues that starting with substantial divergence, China strategy research and global strategy research are now converging. This scholarly transformation is largely driven by the recent rise of the Chinese economy, which has emerged from being a peripheral member of the global economy to a core contributor. I trace some of the early roots of China research in our field, outline the beginning of my own China research, and discuss my more recent research which has become more global incorporating substantial China and non-China elements. In addition, I use the emergence of the institution-based view of strategy, which has been largely propelled by China research, to shed light on how China research may make more global theoretical contributions beyond the immediate context of this research. Finally, to further push China research to the center stage of global strategy research, I recommend that scholars “act local, think global.”

Abstract “What determines the scope of the firm? ” is a fundamental question in strategy research. We argue that a new generation of diversification research needs to address the extended question: What determines the scope of the firm—both product and geographic— over time and around the world? This article has three goals: (1) to increase awareness among researchers on the necessity to add the much needed but often neglected time and geographic dimensions by introducing a new typology in diversification research, (2) to review how Asia Pacific research, including articles in this Special Issue, has contributed to our global understanding along both dimensions, and (3) to advance an institution-based view on diversification strategies that has largely been propelled by Asia Pacific research. Keywords Scope of the firm. Product diversification. Geographic diversification. Institution-based view What determines the scope of the firm? This is one of the most fundamental questions in strategy research (Rumelt, Schendel, & Teece, 1994). After more than 30 years of research

ABSTRACT Does CEO duality – the practice of one person serving both as a firm’s CEO and board chair – contribute to or inhibit firm performance? Agency theory suggests that CEO duality is bad for performance because it compromises the monitoring and control of the CEO. Stewardship theory, in contrast, argues that CEO duality may be good for performance due to the unity of command it presents. The empirical evidence, largely from developed economies, is largely inconclusive. This article joins the debate by extending empirical work to the largely unexplored context of institutional transitions. Our findings, based on an archival database covering 403 publicly listed firms and 1,202 company-years in China, offer stronger support for stewardship theory and relatively little support for agency theory. Finally, we also call for a contingency perspective to specify the nature of conditions such as resource scarcity and environmental dynamism under which CEO duality may be especially valuable.

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