Knowledge, influence, and firm-level change: A geographic analysis of board membership associated with Canada's growing and declining businesses

Clarification of the factors that drive business expansion and contraction is among the most important topics that can be addressed by research in economic geography and related disciplines. This study analyzes the development of Canadian business by examining the connection between firm-level growth and decline and elite knowledge and influence connections that Canadian businesses use to link themselves to other corporations and cities nationally and globally. The research focuses on the inter-firm and inter-city linkages embodied in the boards of directors of Canada's leading corporations. Corporate directorships have an important geographic dimension, as firms invite people from a variety of places and backgrounds to serve on their boards. This study finds that board member selection practices among Canadian firms can be linked directly to business growth and decline. Benchmarking board composition against firm expansion and decline in terms of inflation-adjusted annual revenue change over the 1991-2006 period, this study shows that growing Canadian firms are associated with directors from a much broader range of national and international cities than firms that experienced decline over the same period. Firm growth in Canada thus appears to be related to boards encompassing diverse members from national and international locations, while firm decline appears to be associated with boards including more local and regional members. The conclusion interprets the implications of board member diversity and suggests that broadly-based boards can play a role in encouraging firm growth through access to elite knowledge and influence networks.

► This study investigates the development of Canadian business. ► The focus is on inter-urban linkages embodied in boards of directors. ► The analysis finds board member selection practices relate to firm growth and decline. ► Growing firms have extremely broad director geographies overall. ► Declining firms generally select directors from cities near the firm headquarters.