臺大管理論叢 NTU Management Review VOL.28 NO.3

153 NTU Management Review Vol. 28 No. 3 Dec. 2018 Zattoni, and Zona, 2009). The upper echelon literature also indicate that functional backgrounds of board members provide a significant lens for the effectiveness of corporate governance (Nicholson and Kiel, 2004; Petrovic, 2008; Westphal and Milton, 2000) because decision makers with diverse functional backgrounds help reduce the threat of organizational inertia and groupthink (Kakabadse and Myers, 1996). In line with these arguments, the study suggests that functional diversity of a board should be more critical than other forms of diversity to the effectiveness of board governance. Functional diversity means that board members have heterogeneous business skills, experience, expertise and knowledge. A board with higher levels of functional diversity can provide the corporation with more resources, including legitimacy, advice and counsel, which can create channels for communication with external organizations and help address business challenges (Arfken, Bellar, and Helms, 2004; Zona, 2014). Nevertheless, when it comes to subjects or topics with uncertainty and inherent complexity such as innovation or high-tech contexts, the importance of functional diversity has been extensively supported by the literature (Haynes and Hillman, 2010; Hsieh, Chung, and Huang, 2013; Minichilli et al., 2009). The experimental studies also prove that board members with diversified functional backgrounds can bring firms a competitive advantage (Zona, 2014). In addition, a company’s success and long-term survival is also dependent on the board’s monitoring and supervision capability. Board members with different functional backgrounds are more likely to perceive things differently and confront the board about issues (Petrovic, 2008). As Datta and Rajagopalan (1998) suggest, “the more specialized the knowledge base, the greater the likelihood that individual will view problem situations from a narrow, specialized perspective and make choices within their specialized knowledge”. Board members with homogeneous functional backgrounds may intend to deal with issues in a similar way. In addition, by applying the findings of Simons, Pelled, and Smith (1999), board members with diversified functional backgrounds should possess a diversity of thought that introduces more detailed and comprehensive assessments with regard to corporate managements decisions that come from top executives. Mishra and Jhunjhunwala (2013) thus posit that with the purpose of a firm’s lasting success, the board must possess a wide range of knowledge, expertise, skills, and perspectives to enhance its monitoring capabilities. Based on the above mentioned rationale, a board’s functional diversity is one of the foundations of monitoring capability. Considering the detrimental nature of corporate