In a world where global supply chains can be disrupted by the political winds of any nation, U.S. companies are constantly seeking new ways to build resilience. A recent study led by researchers from NEOMA Business School, 糖心破解版鈥檚 Sy Syms School of Business, and the University of Maryland offers a powerful insight: foreign national directors (FNDs) on U.S. corporate boards can serve as a critical buffer against economic policy shocks from abroad. The study鈥檚 researchers are Dr. Ariel Rava, Assistant Professor of Accounting at Syms; Dr. Rohan D鈥橪ima, NEOMA Business School, Mont-Saint-Aignan, France; and Dr. Musa Subasi, Robert H. Smith School of Business, University of Maryland, College Park, MD.
Published in Contemporary Accounting Research, the study explores how companies are affected when a supplier鈥檚 home country experiences a spike in Economic Policy Uncertainty (EPU)鈥攖hink of sudden political unrest, shifting trade laws, or surprise elections. These shocks often lead to reduced exports, which can ripple through the supply chain, lowering inventory, sales, and even stock value for U.S. buyers.
But there鈥檚 a twist.
When firms had a board member from the country in turmoil, the negative effects were significantly softened鈥攐r even reversed. FNDs brought insider knowledge, cultural fluency, and trusted networks that allowed companies to adapt quickly, source alternatives, or maintain crucial relationships under stress.
The authors used data from 1,200 U.S. manufacturing firms between 2003 and 2019, connecting board composition with detailed supply chain and trade activity. They found that:
- EPU spikes in supplier countries reduced U.S. imports by up to 8% the following year.
- Firms without FNDs saw drops in inventory purchases and sales, along with lower market valuation.
- Firms with FNDs from the affected country not only avoided these downturns, but in some cases, maintained or increased performance metrics.
Importantly, the benefits were most visible in firms with:
- Little operational slack (i.e., tighter resource margins)
- Higher complexity in their international supply base
- Greater financial constraints.
The paper also tackles an ongoing debate: do foreign directors bring value, or are they too disconnected from the U.S. context? While prior research raised concerns about coordination issues and cultural gaps, this study shows that in times of geopolitical uncertainty, foreign directors offer a unique strategic advantage鈥攅specially when they鈥檙e connected to critical supply regions.
This research informs two vital conversations: how to build resilient global supply chains, and how to structure diverse, effective corporate boards. As firms navigate an increasingly unpredictable world, the findings highlight that diversity isn鈥檛 just about representation鈥攊t can be about risk mitigation and strategic foresight.
The full paper can be accessed at
