This paper provides a systematic analysis of how hometown ties, the most common and distinct bases for interpersonal ties to build upon in China, could influence corporate governance in Chinese corporations by focusing on its impact on CEO dismissals and corporate social responsibility. We find that hometown ties between CEOs and board chairs reduce the likelihood of CEO dismissals and that the negative relationship between firm performance and CEO dismissals is weaker for hometown-connected CEOs in locally administered state-owned enterprises, for (...) inside CEOs, for firms located outside board chairs’ hometowns, and for firms operating in regions with low social trust. Moreover, we find consistent evidence that hometown ties affect Chinese firms’ engagement in corporate social responsibility. Our study highlights the important role of hometown ties in Chinese relationship-based corporate governance. It also advances a normative ethical assessment of hometown-based favoritism by highlighting its distinct dynamics and impacts on focal actors and the third parties in specific contexts of actions. (shrink)

Although corporate governance researchers have devoted considerable attention to the role of boards of directors in monitoring management and providing resources, less attention has been paid to whether and how they affect the strategic actions of firms in response to changing environments. Taking a process-based perspective, we examine how several prevalent board processes affect the involvement of boards in strategic decision-making and how such involvement shapes organizational performance. Moreover, we offer an initial attempt to compare the strategic role of boards (...) in for-profit and non-profit organizations. An investigation of 217 for-profit and 156 non-profit organizations in Canada indicates that different processes lead boards to different levels of strategic involvement, and that such effects are contingent on the types of organizations concerned. Moreover, boards that are active in strategic decision-making enhance the performance of their organizations. Our findings have implications for board research and practice. (shrink)