Organizational performance and adaptation: effects of environment and performance on changes in board composition.

Abstract

This study examined performance as a moderator of organizational adaptation to environmental change. Change in the composition of boards of directors was examined as a dependent variable reflecting organizational attempts to deal with changing external contingencies. We tested specific hypotheses in an analysis of 290 California hospitals over a seven-year period. Results indicate that hospitals change the composition of their boards to adapt to changing environmental contingencies but that the hospitals' performance moderates the rate of their response, with poorer performers being more willing to initiate changes in board composition than strong performers.