The impact of board processes on board role performance and effectiveness: An empirical study of UK listed companies
Abstract
In this research the impact of board governance orientation and board processes on board role performance and board effectiveness is examined. Building on existing literature, a model that relates board governance orientation (agency, stakeholder, stewardship and resource dependency) and board processes (cohesiveness, cognitive conflict, affective conflict, communication quality, effort norms, trust and the use of knowledge & skills) to board effectiveness via three mediating variables, board control role, board service role, and board strategy role is developed. The model was tested through a survey of listed companies in the UK. The results are based on 74 companies. The findings show (a) the board undertakes two distinct roles, control and service; (b) process variables, most notably cognitive conflict and the use of knowledge & skills, significantly influence board effectiveness mediated by the board’s control and/or service role; (c) structural variables, specifically the proportion of outsiders on the board, impacts on the board control role; (d) understanding board effectiveness requires a multitheoretic perspective.Publisher
University of WolverhamptonType
Thesis or dissertationLanguage
enCollections
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The impact of board processes on board role performance and effectiveness: An empirical study of UK listed companiesIn this research the impact of board governance orientation and board processes on board role performance and board effectiveness is examined. Building on existing literature, a model that relates board governance orientation (agency, stakeholder, stewardship and resource dependency) and board processes (cohesiveness, cognitive conflict, affective conflict, communication quality, effort norms, trust and the use of knowledge & skills) to board effectiveness via three mediating variables, board control role, board service role, and board strategy role is developed. The model was tested through a survey of listed companies in the UK. The results are based on 74 companies. The findings show (a) the board undertakes two distinct roles, control and service; (b) process variables, most notably cognitive conflict and the use of knowledge & skills, significantly influence board effectiveness mediated by the board’s control and/or service role; (c) structural variables, specifically the proportion of outsiders on the board, impacts on the board control role; (d) understanding board effectiveness requires a multitheoretic perspective.
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Learning in boards: a grounded theory study of UK boards of directorsBoards of directors have been described as an integral part of corporate governance research, being at "the apex of the internal control system" (Jensen, 1993, p.862). Early corporate governance research has examined whether, and to what extent, board characteristics impact on performance. However, the results of studies that focused on board structure/composition and performance produced mixed outcomes. Consequently, we saw the emergence of research on board processes and their impact on board task performance. Research on board processes is still ongoing, and scholars have been interested in, among other processes, how knowledge and skills by board members are being used (Gabrielsson and Huse, 2004; Kor and Sundaramurthy, 2009). At the same time, there is a gap within educational research on how knowledge is being created within teams that are episodic in nature, such as boards (Forbes and Milliken, 1999). As such, the concept of learning has to date been under-researched in a board context. In this thesis, board processes are studied by exploring the processes involved in the acquisition and sharing of knowledge and skills in boards. Further, as a response to calls for the adoption of alternative research approaches to the study of boards (Pettigrew, 1992; Johnson et al., 1996), this research is conducted using a qualitative method based on a grounded theory approach. The study is conducted based on evidence from semi-structured interviews with UK board members. The findings show that the creation of knowledge in boards depends on two dialectical processes of learning (acquisition of knowledge and skills from the external environment and sharing of knowledge and skills in the internal environment). The qualitative findings show that 1) directors possess certain levels of knowledge related to specific boards task – which is also known as directors’ knowledge base; 2) the gap between the level of knowledge and skills needed to perform specific board tasks and the directors knowledge base is regarded as a gap in directors’ knowledge; 3) that there are two processes of filling the gap(s) in directors’ knowledge – the process of acquiring knowledge and skills (from the external environment), and the process of sharing knowledge and skills within the board; 4) that there are factors which are impacting on the processes of acquiring and sharing knowledge in boards; and 5) the processes of learning in boards are circular and board members must continually update their knowledge to enhance their capabilities. The thesis contributes to knowledge by revealing new insights into how board members acquire knowledge and skills (processes of learning) and factors that are impacting on learning in boards, underpinning former conceptual models. Qualitative analysis itemised different types of processes for both acquiring and sharing knowledge and skills in boards. Additionally, the qualitative analysis revealed various forms of learning styles that are being employed by board members either to acquire or share knowledge and skills. Finally, this thesis contributes to qualitative research in boards and its findings have implications for board practice, especially boards’ tasks performance and processes of learning.
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The effects of directors' exploratory, transformative and exploitative learning on boards' strategic involvement: An absorptive capacity perspectiveWhile directors’ knowledge represents a crucial resource for strategizing on boards, little is known how knowledge of individual directors becomes deployed behind the doors of the boardroom. Drawing on the concept of absorptive capacity, we develop a model that explores how directors’ explorative, transformative and exploitative learning affects boards’ strategic involvement. Using large-scale survey data, our findings indicate that learning helps to ex-plain how directors’ knowledge leads to higher levels of strategic involvement. Moreover, we find that learning processes mutually reinforce each other and have complementary effects on boards’ strategic involvement. Our study contributes to the board and absorptive capacity lit-eratures by demonstrating that learning processes are interconnected with each other and rep-resent an intermediate way to put directors’ knowledge into effective use.
