How Independent,Competent and Incentivized Should Non‐executive Directors Be? An Empirical Investigation of Good Governance Codes

There is a commonly held conviction among governance scholars and practitioners that increasing the number of non‐executive directors may have beneficial effects on board practices. This view has gained momentum after each wave of scandals. Given the relevance of the issue in governance studies and practices, the aim of this paper is to investigate how independent, competent and incentivized non‐executive directors should be according to governance scholars and board best practices. To answer this question, we conducted a review of the literature on non‐executive directors. We then collected corporate governance codes developed worldwide at the end of 2005, and made a comparative analysis of their recommendations about the independence, the competencies and the incentives of non‐executive directors. Our results show that (i) non‐executive directors' independence is a commonly recommended governance practice, the meaning of which differs widely among countries; (ii) non‐executive directors' competencies and incentives are not considered a governance issue to be regulated in detail; (iii) agency theory and the search for appropriate board demography tend to dominate the recommendations of governance literature and codes. Our findings have implications for both research and practice.     

Boardroom Operational and Financial Control: an Insider View*

This study examines the control processes and their dynamics at the board level of two non‐profit organizations with a view to penetrating and exploring directors' control orientations, discourse and decisions in their holistic context. In comparison with the predominantly survey‐ and interview‐based prior research on board‐level control, this study offers a distinctly processual view through its employment of a longitudinal complete member researcher participant observer methodology. Three primary themes of boardroom control focus are identified and analysed. These are control reporting, director's control orientation and the board's budgetary control approach. Directors' strategic orientation is found to be the primary driver of their exercise of control, with reporting systems and routine monitoring emerging as adjuncts to their primary strategic control focus. Strategy‐triggered control activity exhibits itself largely via directors' cost–benefit and risk management analyses communally developed in the course of board meeting exchanges.     

Improving the Progress of Research & Development (R&D) Projects by Selecting an Optimal Alliance Structure and Partner Type

This paper extends the study of alliance governance structure by examining what alliance structure, coordination mechanisms and partner type best enhance the likelihood of Research and Development (R&D) progress or performance. We specially focus on the coordination and interaction mechanism of alliances, through which we classify the alliance governance structures in order to reflect the more complex alliance types and contracts used in today's R&D. Using data from 255 biopharmaceuticals between the years 2000 and 2004, we found that, ceteris paribus, a moderate degree of inter‐partner interaction and a moderately complex (non‐equity‐based) alliance contract contributes more to a better R&D alliance performance than those structures that are too simple or too organizationally embedded (e.g. equity joint ventures), which possibly increase the risk of misalignment and miscommunication between allies. In addition, due to the reduced opportunism and the diverse resource (e.g. technology) pooled in the alliance, allying with diverse organizational partners such as non‐profit research institutes and universities is more likely to enhance the R&D performance. Our findings provide insightful strategic implications to practitioners in designing an appropriate alliance governance structure and choosing the right partner type for a successful R&D collaboration.     

Audit Within the Corporate Governance Paradigm: A Cornerstone Built on Shifting Sand?

This paper is a case study‐based investigation of aspects of the current paradigmatic approach to ‘good’ corporate governance, with its focus on the interlinked roles of internal control and risk management procedures, internal audit and external audit, overseen and coordinated by a formal structure of board committees, in particular the audit committee. The evidence that we adduce from the study of four high‐profile cases of perceived accounting and governance failure provides limited assurance that this approach will in fact be cost‐effective or efficient in preventing further such cases of accounting and governance failure. Specifically, issues as to remuneration and fee dependence, lack of relevant knowledge and expertise, social and psychological dependence upon executive management appear to have significantly and negatively affected the quality of decision‐making of governance gatekeepers. This suggests that further consideration of relevant economic, institutional and cognitive/behavioural factors beyond the rational choice model of traditional economics should underpin future developments in required modes and structures of governance.     

Der Einfluss von Mehrfachmandatstr?gern auf die Unternehmensperformance

Although interlocking directorates are regularly associated with a negative connotation, empirical evidence is as yet insufficient to offer convincing answers about their impact on performance. Contradicting results can mostly be explained both by the use of different theoretical frameworks and value creation measures. In order to shed more light as to what effect busy directors have on shareholder??s wealth, we have developed a two-pillar model explaining the potential contributions of directorship interlocks to value creation within an enlarged corporate governance perspective. The validity of the model has been tested through a panel data analysis of director networks within German Blue Chip corporations over a 5 year period from 2001 to 2005. Empirical tests indicate that the performance effects of interlocks depend on the nature of the board positions occupied. Moreover, statistical modelling confirms the existence of cognitive contributions of interlocked directors and partially shows positive effects on value creation. Finally the study argues in favour of board composition without external executive directors and suggests that a simple reduction of the number of external board positions legally authorized, does not within itself enhance corporate performance.     

A ‘No Blame’ Approach to Organizational Learning

In high‐reliability organizations (HROs) even minor errors can seriously hinder the very existence of the firm and the safety of employees and customers. Field studies have shown that HROs encourage the reporting of errors and near misses, exploiting these incidents to improve their operative processes. In this paper, we describe this practice as a ‘no blame’ approach to error management, and link it to learning theory, showing how no blame practices can enhance organizational learning. By taking a cognitive perspective of organizations, we draw on existing contributions and on a set of empirical case studies to discuss the characteristics of no blame practices, and their applicability in traditional, non‐HROs. Our findings show that, in exploiting information from error‐reporting, no blame practices are beneficial in environments where learning and reliability issues are particularly relevant. Empirical evidence suggests that a no blame approach can be extremely constructive for organizations that want to enhance their learning processes. We conclude that a no blame approach is a valuable way to achieve an organization that has flexibility and variability. However, no blame practices imply a set of organizational issues and costs that pose significant challenges to firms operating in non‐high‐reliability settings. The findings from our study contribute to the literature on HROs and organizational learning.     

Effects of Executive Characteristics and Venture Capital Involvement on Board Composition and Share Ownership in IPO Firms*

Combining the agency perspective, resource‐based view and upper echelon research, this paper examines factors affecting board selection and share ownership in initial public offerings (IPOs). In line with socio‐cognitive and behavioural research, it shows that board independence, cognitive capacity and the incentives of non‐executive directors are negatively associated with the experience and power of executive directors, and that large‐block share ownership is positively associated with the intensity and diversity of non‐executives' experience. However, the retained equity by venture capitalists negatively affects board independence and non‐executive directors' interests. The paper suggests a number of avenues for a future contextual analysis of the board development process in ‘threshold’ firms.     

Leveraging Big Data Analytics to Improve Quality of Care in Healthcare Organizations: A Configurational Perspective

Big data analytics (BDA) is beneficial for organizations, yet implementing BDA to leverage profitability is fundamental challenge confronting practitioners. Although prior research has explored the impact that BDA has on business growth, there is a lack of research that explains the full complexity of BDA implementations. Examination of how and under what conditions BDA achieves organizational performance from a holistic perspective is absent from the existing literature. Extending the theoretical perspective from the traditional views (e.g. resource‐based theory) to configuration theory, the authors have developed a conceptual model of BDA success that aims to investigate how BDA capabilities interact with complementary organizational resources and organizational capabilities in multiple configuration solutions leading to higher quality of care in healthcare organizations. To test this model, the authors use fuzzy‐set qualitative comparative analysis to analyse multi‐source data acquired from a survey and databases maintained by the Centres for Medicare & Medicaid Services. The findings suggest that BDA, when given alone, is not sufficient in achieving the outcome, but is a synergy effect in which BDA capabilities and analytical personnel's skills together with organizational resources and capabilities as supportive role can improve average excess readmission rates and patient satisfaction in healthcare organizations.     

Competition and The Operational Performance of Hospitals: The Role of Hospital Objectives

We examine the effect of a hospital's objective (i.e., non‐profit vs. for‐profit) in hospital markets for elective care. Using game‐theoretic analysis and queueing models to capture the operational performance of hospitals, we compare the equilibrium behavior of three market settings in terms of such criteria as waiting times and patient costs from waiting and hospital payments. In the first setting, a monopoly, patients are served exclusively by a single non‐profit hospital; in the second, a homogeneous duopoly, patients are served by two competing non‐profit hospitals. In our third setting, a heterogeneous duopoly, the market is served by one non‐profit hospital and one for‐profit hospital. A non‐profit hospital provides free care to patients, although they may have to wait; for‐profit hospitals charge a fee to provide care with minimal waiting. A comparison between the monopolistic and each of the duopolistic settings reveals that the introduction of competition can hamper a hospital's ability to attain economies of scale and can also increase waiting times. Moreover, the presence of a for‐profit sector may be desirable only when the hospital market is sufficiently competitive. A comparison across the duopolistic settings indicates that the choice between homogeneous and heterogeneous competition depends on the patients' willingness to wait before receiving care and the reimbursement level of the non‐profit sector. When the public funder is not financially constrained, the presence of a for‐profit sector may allow the funder to lower both the financial costs of providing coverage and the total costs to patients. Finally, our analysis suggests that the public funder should exercise caution when using policy tools that support the for‐profit sector—for example, patient subsidies—because such tools may increase patient costs in the long run; it might be preferable to raise the non‐profit sector's level of reimbursement.     

Managing Maturing Government‐Supported Networks: The Shift from Monitoring to Embeddedness Controls

In formal inter‐firm networks backed with significant financial support by policy‐makers, network boards are typically established to monitor network activities and to manage the tension between organizational and collective interests. This approach to network governance, however, builds mainly upon agency logic. We integrate agency with embeddedness theory to offer insights into the effectiveness of monitoring as a governance mechanism as networks mature and member firms become embedded. The analyses focus on two issues: (1) how network board characteristics typically associated with monitoring – board independence, board size and board compensation – influence network performance; and (2) how these effects are moderated by network age. The model is tested with longitudinal data on 53 government‐supported networks. In addition to the direct effects of board characteristics, network board size and board compensation have a stronger positive impact on network performance in younger networks than in more mature networks. This study provides insight into why the instituting of boards may prove successful for network‐level performance in newly formed government‐supported networks, but also explains why the positive effects from network board monitoring may diminish as networks grow older.     

What Makes Better Boards? A Closer Look at Diversity and Ownership

This study investigates the joint effect of corporate ownership and board of directors' diversity configurations on the success of strategic merger and acquisition (M&A) decisions. Board diversity is defined as the extent to which its demographic diversity as measured by the culture, nationality, gender and experience of its directors complements its statutory diversity. A theoretical framework linking ownership, board diversity and M&A strategic decision making is proposed and tested. Based on a sample of 289 M&A decisions undertaken by Canadian firms over the period 2000–2007, demographic diversity is found to have a clear and non‐linear effect on M&A performance while statutory diversity is of limited influence. Ownership is found to influence the effect of diversity, making the relation finer and more precise. This has practical implications. First, statutory diversity is not sufficient for well‐performing boards. Also, ownership is an important factor. The most advocated board diversity aimed at insuring the board's independence is not valid across all ownership configurations. From a public policy perspective, results provide support for the principles‐based approach in governance. Governance regimes should encourage the search for a balance between board diversity and the need for cohesion that best serves the firm's purpose and obligations.     

Family Status and Work Attitudes: An Investigation in a Professional Services Firm

To help employees better balance work and family responsibilities, organizations are increasingly offering a variety of work–family programmes. However, anecdotal reports suggest that employees without spouses or children perceive that they receive fewer organizational benefits and bear greater burdens than their married or parent counterparts. By providing a more ‘family‐friendly’ work environment, organizations may foster perceptions of inequity in people without families (single adults without dependent children, SAWDCs), possibly resulting in lower job satisfaction and other work‐related outcomes. Using a sample of 454 employees of a professional services firm, we examined attitudinal differences between individuals with and without families. Findings suggest that SAWDCs and non‐SAWDCS differed in terms of age, organizational level, use of flexible work arrangements and firm tenure. However, we found no differences in hours worked, job involvement, job satisfaction or organizational commitment. Interestingly, SAWDCs had more favourable perceptions of the organization's work–family culture than non‐SAWDCs, suggesting that those who do not utilize family‐friendly benefits view them more favourably than those who actually need or use the benefits. In addition to identifying directions for future research, we offer suggestions for organizations, including taking a more universal approach to benefits to the advantage of all employees.     

Ex-post governance in joint ventures: Determinants of monitoring by JV boards of directors

Considerable advances have been made in corporate governance research in recent years and opportunities exist to consider these developments within alliances. We extend the “scope of operations” hypothesis to the domain of joint ventures. This proposition suggests that the monitoring carried out by boards increases when organizations become more complex. The inherent characteristics of JVs generate unique sources of complexity that are currently unexplored in the corporate governance literature. First, we seek to determine their influence on monitoring by using primary data on JV board monitoring. Second, we adopt the size of JV boards as a proxy for monitoring in order to examine whether the determinants of board size and monitoring in fact coincide and to reveal if certain effects are masked by using board size as a simple proxy for monitoring. Doing so enables us to investigate the black-box of what boards actually do as well as extend governance research to other organizational forms. Our findings confirm that the unique characteristics of JVs influence the information needs by the boards resulting in more monitoring by JV directors. Our findings show there is value in bridging alliance theory and the literature on corporate governance research. We also advance practitioner's understanding by providing suggestions on how to structure JV boards in relation to their complexity.     

Total Board Compensation,Governance and Performance of Spanish Listed Companies

In this paper we present empirical evidence on the relationship between board remuneration of a sample of large Spanish companies and a set of explanatory variables such as performance and size of the company. The objective is to provide additional empirical evidence based on the agency theory for the Spanish institutional context, which differs from most ‘Anglo–Saxon’ model studies. We focus on the impact of a company's governance structure on the relationship between pay and performance. Specifically, we consider ownership concentration and firm leverage as key determinants of the board–shareholders relationship. Our results confirm the positive relationship between board remuneration and company performance, which is stronger for book values than for stock market measures. Industry performance also explains the remuneration and provides useful information for evaluating board behaviour. Company size is also related to board remuneration and affects the pay–performance relationship, although it is not relevant when we use an elasticity approach. Finally, the governance structure of companies is relevant when explaining the power of the compensation–performance relationship, and differences between the impact of ownership concentration and firm leverage on this relationship are found.     

Does task-related conflict mediate the board gender diversity–organizational performance relationship?

The board gender diversity–organizational performance relationship has been criticized for the absence of tests of the underlying mechanisms of this relationship. This study aims to empirically investigate whether task-related conflict – one of the prime theorized mechanisms of board diversity – indeed mediates this relationship. Consistent with the literature, we theorize how board gender diversity affects task-related conflict, and how task-related conflict in turn affects organizational performance. We test our hypotheses in the Dutch water authority sector 2009–2014, where we have access to the detailed board meeting minutes of 27 organizations. Our results find support for a partial mediating effect of task-related conflict in the board gender diversity–organizational performance relationship. We conclude by discussing the implications for the board gender diversity literature.     

Social movement spillover: Barriers to board gender diversity posed by contemporary governance reform

Managerial oversight is strengthened and firms' strategic performance improved when boards are gender-diverse. Yet the rate of women's appointment to corporate boards is decelerating. This study proposes an explanation for the unexpected attenuation rooted in social movement dynamics, particularly cross-movement influences originating from the contemporary governance reform movement. Seeking to alleviate managerialist tendencies, the governance reform movement has compelled major changes to board structure, composition, and activity, as well as the broader logic surrounding corporate boards. By definition, social movements' cognitive and structural advances manifest “spillover” effects – unintentional impacts affecting the opportunity structure, and ultimately progress, of neighboring campaigns. Drawing on social movement theory, a conceptual model is outlined explicating the mechanisms by which governance reform's broad enactments have incidentally impeded board gender diversity's advance. Theoretically-grounded strategies for reversing those effects are also outlined and the study closes with a discussion of implications for research, practice, and policy.     

Phases of the Adoption of Innovation in Organizations: Effects of Environment,Organization and Top Managers1

Multidimensional empirical examinations of the adoption of innovations in organizations, and the influence of factors within each dimension on the phases of adoption, are scarce. This study examines the effects of environmental, organizational and top managers' characteristics on the initiation, adoption decision and implementation of innovation. Using a sample of approximately 1200 public organizations in the United States, we found that while each dimension accounts for unique variance in the adoption of innovation, organizational characteristics and top managers' attitudes toward innovation have a stronger influence than environmental and top managers' demographic characteristics. We also found no difference in the direction of effects of any antecedent, but did find differences in the significance of effects of several antecedents, on the phases of innovation adoption. We discuss the implications of these findings and suggest ideas for future research.     

Zugänge eröffnen,Verstehen ermöglichen

Opening approaches and understanding. Reflections about parish counselling and organizational development in the parish communityAny process of changes within a church community or parish needs counselling and organizational development. People working in institutionalized parish guidance are biased by the system, therefore parish guidance is limited in its effects. Counselling by profit organizations often fail their task. Theses organizations provoke resistance by unreflected entering of hermeneutics strange to the cultural understanding. It is necessary to get acceptance and understanding concerning motivation and values of honorary members of the parish board. On this a trusting alliance of work is based on.     

A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead

This study aims to trace the conceptual evolutionary path of theories on corporate social responsibility (CSR) and to reflect on the implications of the development. The retrospection has revealed that the trend has been a progressive rationalization of the concept with a particular focus on tighter coupling with organizations’ financial goals. Rationalization involves two broad shifts in the conceptualization of CSR. First, in terms of the level of analysis, researchers have moved from the discussion of the macro‐social effects of CSR to organizational‐level analysis of CSR's effect on profit. Next, in terms of theoretical orientation, researchers have moved from explicitly normative and ethics‐oriented arguments to implicitly normative and performance‐oriented managerial studies. Based on the retrospection, the limitations of the current state of CSR research that places excessive emphasis on the business case for CSR are outlined, and it is suggested that future research needs to refocus on basic research in order to develop conceptual tools and theoretical mechanisms that explain changing organizational behavior from a broader societal perspective.