The Social Organization of Boards of Directors

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. This content downloaded from 128.235. ABSTRACTThe analysis of the British corporate elite has been concerned with three issues. One is the relationship of ownership and control, a second is the cohesion of the upper or capitalist class, the third is the linkage between the corporate and political elites. The practical difficulties of investigating elites has restricted the information that can be collected and thus the range of researchable issues. This paper derives from an interview-based investigation among directors of major British companies and concentrates on a fourth set of issues, namely how a board of directors works as a social institution. The central activity of the corporate elite is its boardroom role and the organizational sociology of boards is a major missing link in existing analyses. The paper describes what directors do, the patterns of influence and the checks and balances within the boardroom, and the responsiveness of boards to shareholders. It discusses relevant features of directors' ideologies and world views. The analysis highlights the influence of the executive, notably the chief executive. Major shareholders are publicly committed to a more effective use of their powers of ownership and one mechanism is the reform of corporate governance, in particular an enhanced role for independent non-executive directors, in order to safeguard their interests and prevent undue executive domination of boards. This research suggests that an established boardroom culture may limit the effectiveness of the checks and balances that non-executive directors can provide. Nevertheless, against the managerialist view that executives pursue their own objectives with little regard to the interests of owners, there is evidence of much more ownership constraint than has been recognized to date. Moreover, this constraint is growing.The analysis of the British corporate elite -the boards of directors of major companies -has been concerned mainly with three issues. One is the relationship of ownership and control, in particular, where the effective control of large joint-stock companies resides, whose interests the top managers on boards of directors promote and the relationship between major shareholders and these managers. A second is the cohesion of the upper or capitalist class, which includes the corporate elite of directors. The third is the linkage between the corporate and political elites. The practical difficulties of researching elites severely restrict the sort of information that can be collected and thus the range of researchable issues, and most studies have relied on material already in the public domain, such as the published listings of company shareholdings and...

Identifying Key Determinants of Effective Boards of Directors

“…The results from the written questionnaire suggest that in order for the board to be effective it is not important that a chairman seeks consensus. As such, this finding does not support the study of Hill (1995) who found that maintaining boardroom consensus was a fundamental value among all directors he surveyed and which was definitely the norm within the executive grouping. A possible explanation relates to the interpretation of the notion of consensus.…”

Beyond Agency Conceptions of the Work of the Non‐Executive Director: Creating Accountability in the Boardroom

“…Problems of access to boards and directors are well recognized (Daily, Dalton and Cannella, 2003) but are not insurmountable, and there is already a considerable body of empirical primary board research. Such research has had a number of strong advocates and exponents (Demb and Neubauer, 1992;Hill, 1995;Lorsch and MacIver, 1989;Mace, 1971;O'Neal and Thomas, 1995;Pahl and Winkler, 1974;Pettigrew, 1992;Pettigrew and McNulty, 1995;Pye, 2001). This work has sought to open-up the 'black box' of the boardroom by examining perceptions of roles and tasks and exploring the dynamics of power and influence, collaboration and control.…”

“…Demb and Neubauer (1992, p. 82) claimed that non-executive directors 'need to be invited into the decision-making process'. Hill's (1995) study of UK boards found non-executives involved in reviewing and refining the strategic decisions of their organizations, and concludes that evidence for the divergence between the interests of shareholders and managers was scant, with managers wanting to be seen as good professionals running the company. Pye's (2002) analysis of sense-making among directors also points to the importance of nonexecutives in 'corporate directing' activity that involves strategizing, governing and leading.…”

Driving Strategy or Just Going through the Motions: An Empirical Study of Boardrooms in the UK

“…Hill (1995) sees that the role of board members and the organizational sociology of boards are an important, missing link in the analyses of corporate boards and board members. Our lack of knowledge about the work and conduct of boards and board members has been largely attributed to inadequate access to the corporate elite (Pettigrew and McNulty (1995).…”