Context, Behavior, and Evolution: Challenges in Research on Boards and Governance

Edging Toward ‘Reasonably’ Good Corporate Governance

“…Scholarship in corporate governance then added another layer of concern, opening a stream of work called Bbehavioral governance^ (Gabrielsson and Huse 2004;Pye 2004;Charreaux 2005;Marnet 2005;van Ees et al 2008). This literature studies the actions of directors and boards, cognizant of the limitations of a rationalist approach and drawing upon the concept of bounded rationality (Simon 1955) that informs behavioral economics.…”

Improving corporate performance by enhancing team dynamics at the board level

“…Hundreds of articles have been written to try to capture the 'mystery' of the boardroom, directors and their impact on the successful management of the firm (Zahra and Pearce, 1989;Gabrielsson and Huse, 2004;Finegold et al, 2007;Hambrick et al, 2008;Huse et al, 2011). When considering the perspectives employed in these inquiries, it is useful to review the different streams of literature on this topic -economic, behavioral, individual-based and team-based frameworksfrom which to observe and consider board characteristics and outcomes.…”

“…This is reflected in the surge of recent work on teamwork in contexts as an empirical inquiry of the sparsely-researched link between board dynamics and governance (Huse et al, 2011). Confounding the lack of clarity on board-level antecedent relationships to firm-level outcomes is the recognition that most research conducted employs secondarysource data or 'easily available data and the use of standardized methods' (Gabrielsson and Huse, 2004), preempting efforts to gather primary data on the subject. Of the hundreds of articles written about board governance since 1990, only 8 per cent address director performance from a behavioral perspective (Huse et al, 2011), and of these only a few have produced original survey data for their quantitative analyses (Minichilli et al, 2012).…”

“…F&M's (1999) fundamental theory articulates that board processes should be explored for three reasons: 'influence of board demography on firm performance … [is] complex and indirect', 'beliefs and behaviors [cannot] be inferred reliably from demographic variables alone' and the 'study of process constructs has the potential to expand and refine our understanding of group dynamics' (F&M, 1999). Their work ushered in a new era of research -to consider boards in an economicbehavioral context (Gabrielsson and Huse, 2004;Hambrick et al, 2008;Huse et al, 2011).…”

“…Another point of view on the importance of dynamics in the boardroom comes from Letendre (2004): '… the quality of the interactions among the participants -or "boardroom dynamics" -is a crucial variable in effective decision-making and achieving other desired meeting outcomes'. The question of board team dynamics and board task performance was examined in our study to try to reveal the contents of the 'black box' (Gabrielsson and Huse, 2004;Leblanc and Schwartz, 2007) and the direct and indirect impact this has on corporate profitability. In our study, task performance was operationalized through collecting information on the skills directors believe the board applies in generating cognitive outcomes, the freedom directors have to express innovation, and directors' attention to compliance and risk management issues.…”