Drawing on the firm–director interdependence perspective, we predict that director candidates’ social capital and human capital have inverted U-shaped effects on their likelihood of joining a declining firm. We apply this perspective to address a puzzle regarding director appointment in declining firms: Declining firms are often motivated to bring in director candidates with high resource endowments to help enact turnarounds, but these candidates may not join a declining firm’s board due to the potential uncertainties and reputational loss of doing so. We develop a firm–director interdependence perspective to theorize director appointments as the outcome of a mutual selection process in which firms and director candidates select each other based on their organizational and personal dependencies.
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