SUMMARY
The purpose of this study is to examine the empirical relationship between insider ownership and firm performance. Based on resource dependence theory, this study argues that the positive convergence-of-interests effect and the negative entrenchment effect can coexist in various industrial settings. Fixed-effect panel data regression models are applied to a sample of 1,156 effective observations. To reflect the contextual role of resources, we defined industrial settings along with industrial complexity and firm scale dimensions. The empirical results supported our research hypotheses, showing that insider ownership exerts a positive effect on firm performance in a high-complexity and large-scale setting, but a negative effect in a low-complexity and small-scale setting. The results of this study imply that contextual fitness must be deliberately considered to determine effective regulations of corporate governance. In addition, this study contributes a new aspect to related discussion, which synthesizes conflicting theoretical arguments by introducing the contextual role of resources.