Board Advisory Tasks: The Importance to Differentiate between Functional and Firm‐Specific Advice

In small and medium‐sized organizations, boards of directors often spend most of their time providing advice to the management. As the content of advice provided has seldom been the focus of previous studies, we differentiate between functional and firm‐specific advisory tasks. We examine antecedents of the two types to explain why this differentiation is important. Applying group effectiveness arguments, we study the effects board members' different knowledge bases and diversity have on the two advisory tasks, considering the mediating effects of board processes. Our results suggest that it is important to distinguish between different types of board members' knowledge and different board advisory tasks. Our findings have direct implications for research and practice. First, there is a need to go beyond the surface level understanding of what boards are doing. Second, our results emphasize the importance of organizational knowledge, and hence question the call for independent board members for advice provision.