Board of director performance: a group dynamics perspective

Abstract

PurposeThis paper proposes mainly that boards of directors (BOD) are teams that share characteristics with many other kinds of teams. As a consequence, some of the factors that lead to board effectiveness are the same factors that lead to team effectiveness in general. By integrating the organizational behaviour literature on teams with the governance literature, a comprehensive model of BOD performance is proposed.Design/methodology/approachThis conceptual paper proposes a model to assess the performance of a board and situates board performance as one input into firm performance.FindingsThis paper outlines the dynamic interplay between board characteristics, functionality and performance and proposes a comprehensive model, based largely on the group dynamics literature.Research limitations/implicationsSuggests that future research attempt to empirically address some (or all) of the items in the conceptual model. Acknowledges that operationalizing certain variables will prove challenging, but suggests that ethnographic accounts of how these variables (and potentially others) interact may be a valuable first step in more fully understanding board composition, functioning and performance.Practical implicationsIt is argued that by extending traditional passive agency roles, BOD may be able to provide a wider range of contributions to enhance shareholder value.Originality/valueThis interdisciplinary paper integrates the group dynamics literature with the governance literature to propose a comprehensive model of BOD performance.

Does the Team Leverage the Board's Decisions?

“…On the other hand, strategic change has strong repercussions within the firm, which fundamentally affect its performance. By studying this variable we can take an initial step towards seeing the board's effectiveness reflected in the firm's performance (Murphy & McIntyre, 2007).…”

The Corporate Governance of Australian Listed Construction Companies

“…The size of the board should be large enough to provide required skills and experience, yet small enough to ensure effi cient interaction and director participation (Murphy and McIntyre, 2007).…”

“…Another issue of debate is the level of independence among directors that relates primarily to the ratio of inside (executive), versus outside (non-executive and independent non-executive) directors and the separation of the CEO and chairman roles (Murphy and McIntyre, 2007). Non-executive directors play two important roles for the board (Mallin, 2007): to control and balance the executive directors power, making sure that no one individual has too much infl uence over board decisions, and to provide important external contribution to the general leadership and development of the organisation.…”

Where Are All the Women? Institutional Context and the Prevalence of Women on the Corporate Board of Directors

“…Here, the focus will be on the board's average age, and the role the age of the board's directors play in enabling or preventing women from acquiring corporate board directorships. Corporate boards with high average directorial age have been associated with homosocial reproduction, where men recruit other men similar to them rather than search for talent amongst alternative qualified groups of potential candidates, such as women (Murphy and McIntyre, 2007;Kanter, 1977), which reinforces the gender homogeneous nature of the board. Age may confer membership in networks of corporate board directors, be it through 'old-boys' connections, interlocking directorships or shared organisational experiences such as attending the same university (Westphal and Zajac, 1995;Wagner et al, 1984), which binds the, predominantly male, directors together around a common set of shared values and norms, which they transpose to their individual boards (Koenig and Gogel, 1981).…”