Blooming Through the Cracks: The Effects of Fault Lines in Corporate Boards on Information-Technology Value

Corporate boards can significantly affect the value generated from information technology (IT) investments. An implicit assumption in the scarce research exploring this relationship is that boards operate as cohesive groups. Departing from the assumption, this study draws upon the literature on fault lines, which suggests that individual director attributes align or misalign, creating hypothetical dividing lines that split the board into multiple subgroups and influence their effectiveness. Based on extensive analyses of a panel of 2,463 firms over 2010-2020, we find that knowledge-based fault lines, which enhance knowledge diversity, enable IT value generation, and this effect is amplified in munificent environments, which motivate and enable the board subgroups to seek and share diverse knowledge. However, identity- and resource-based fault lines do not affect IT value generation. Thus, knowledge diversity on boards should be encouraged, but diversity based on social identities and resources might not matter when seeking IT value.