Determinants of Board processes: Trust in the Boardroom

Abstract

As a response to recent calls for further insights into the factors that trigger board processes, this research investigated the determinants of trust in the boardroom. Following a review of existing literature on boards, a model explicating the hypothesised relationships between trust and its determinants (cognitive conflict, communication efficacy, the perception of board members’ competence, affective conflict, and familiarity), and the moderating effects of board meeting frequency and board tenure, was developed. This model was tested using responses from 97 UK companies. There were two significant findings: the perception of board members’ competence was positively related to trust, whereas affective conflict was negatively related to trust. Previous research has suggested that trust is an important determinant of board effectiveness, and this study contributes to the further understanding of what conditions in the boardroom facilitate or hinder the presence of trust. Thus, this research presents further knowledge on board processes and how they relate to each other. In terms of implications for practice, the research showed why boards of directors should engage in activities such as training and development that increase directors’ perception of each others’ competencies and why emotional conflict in the boardroom should be managed.