Entrepreneurial orientation, board tenure and the financial performance of hospitality firms

Abstract

This study examines how internal governance influences the relationship between strategic posture and firm performance in large, publicly listed U.S. hospitality firms. Drawing on Agency Theory, we argue that the board of directors plays a crucial role in determining whether firms can capitalize on the top management team’s entrepreneurial orientation (EO). We investigate board tenure as a key characteristic representing the balance between accumulated expertise and potential entrenchment. Using two-way fixed effects regressions on longitudinal data, we find a significant positive association between EO and firm performance. However, board tenure moderates this relationship, with a dampening effect that increasingly restricts returns to EO as tenure lengthens. Our results suggest that governance risks become more salient with extended board tenure. These findings offer important insights for optimizing board configurations in the dynamic hospitality industry.