The influence of organizational factors on board roles

Abstract

Purpose Using a contingency approach, the purpose of this paper is to study how organizational factors (such as the organizational life cycle, firm size, firm ownership concentration and firm technology) determine the relative importance of the monitoring and provision of resources roles provided by board members. Design/methodology/approach This paper highlights the importance of contingency factors in carrying out board’s roles using a sample of 579 European firms registered in the STOXX Europe 600 index. The authors used a longitudinal analysis for the period from 2002 through to 2011. Findings The results show that the monitoring role is more relevant for companies that are large, are operating at the mature and stagnant stages, have a dispersed ownership and are low-technology. However, the provision of resources role is more relevant for companies that are in the growth and stagnant stages, and have a concentrated ownership. Originality/value The traditional analysis that relates the board’s structure and composition to the board’s roles focuses on determining what board should be the best. It plays little attention to analyzing which organizational factors affect the importance and presence of monitoring or resource dependence roles. In this regard, this work adds significant insights to agency theory and resource dependence theory as, with a contingency framework, the research aims to find what functions the board needs to develop in order to get better firm performance.

The Board Value Protection Function in Young, Mature and Family Firms

“…Nevertheless, it is rarely used to its full extent in differentiating between BVC (idea creation and implementation) and BVP (idea ratification and monitoring) for the apparent lack of available proxies in secondary IPO data. A notable exception is the recent investigation by Sánchez, Guerrero‐Villegas and Hurtado González (), who employ a factor‐analytic approximation of BVP based on such secondary data. This shows the possibilities of enriching this research field beyond our approach of utilizing a specific governance context.…”

“…In this study, we take advantage of the German two‐tier board, which allows us to isolate the BVP as a function and thereby overcome methodological issues of prior studies. Although the logic of the two‐tier board is not immediately generalizable to other contexts, a shift in how BVP vs BVC is measured and observed (see also Sánchez, Guerrero‐Villegas and Hurtado González, ) can advance our understanding of how boards contribute to performance.…”

“…Second, we use this disentangled view to shed light on the varying role of BVP over the firm's lifecycle and ownership configurations. The few existing studies in this field showing similar effects have not been able to disentangle the BVC and BVP roles of independent directors, have not considered firm maturity over time, or utilized ownership types to explain different effects of ownership concentration (Bertoni, Meoli and Vismara, ; Sánchez, Guerrero‐Villegas and Hurtado González, ). This has implications for the empirical analysis of the relationship between corporate governance mechanisms and firm value.…”

Social Sustainability on Corporate Boards: The Effects of Female Family Members on R&D

“…In regards to diversity, board capital theory argues that board diversity implies a bundle of knowledge, skills, experiences and information that reflect the breadth of the resources that directors bring to the board [33]. These resources represent the human capital of the board, referring to the knowledge and expertise of directors at an individual level; and also include the social capital that emerges from the board members' networks and relationships [33,34].…”

If It Were Only That Easy: The Use of Meta-Analytic Research by Organizational Scholars

“…We found several cases in our analysis where citing authors miscited an MA to justify exploring a relationship that the original MA never addressed (e.g., Alabede, 2016; Potosky, 2016). Several papers cited Dalton et al’s (1998) MA as providing evidence for a significant and meaningful relationship between board of director composition or board leadership structure and firm financial performance despite the fact that Dalton et al found exactly the opposite (i.e., no relationship) (e.g., Matthew, Ibrahim, & Archbold, 2016; Sanchez, Guerrero-Villegas, & Gonzalez, 2017). This has resulted in a thriving stream of research on this relationship that often results in the citing authors “surprisingly” finding no relationship between these variables in their own data.…”