Lender representatives on board of directors and internationalization in firms: An institutionalized agency perspective

From an agency perspective, the Anglo-Saxon features of corporate governance are predominantly explored by various studies in extant literature. However, it has recently been established that diverse and unique institutional configurations exist in different economies across the world and hence, the attitude of different actors within a firm as shaped by institutional logics can vary. Our study applies the institutionalized agency perspective to understand how the behaviour of different actors within firms in the Indian institutional contexts are shaped, consequently determining their roles in the strategic decisions of firms. We examine the representation of lenders in the board of directors, which is a characteristic of corporate governance system in India. Our sample for this study consists of 985 unique Indian firms and 5513 firm year observations across the 2006-2017 time-period. We find a negative association between the proportion of lenders on board of directors and internationalization of firms. In addition, we also find that family ownership positively moderates this relation, whereas foreign institutional investors and domestic banks and financial institutions moderate this relationship negatively. In this manner, we explore the impact of institutional environment on a very specific actor (lenders) and their representatives towards internationalization.