Amedeo Pugliese

Boards of Directors' Contribution to Strategy: A Literature Review and Research Agenda

Research Question/Issue: Over the last four decades, research on the relationship between boards of directors and strategy has proliferated. Yet to date there is little theoretical and empirical agreement regarding the question of how boards of directors contribute to strategy. This review assesses the extant literature by highlighting emerging trends and identifying several avenues for future research. Research Findings/Results: Using a content-analysis of 150 articles published in 23 management journals up to 2007, we describe and analyze how research on boards of directors and strategy has evolved over time. We illustrate how topics, theories, settings, and sources of data interact and influence insights about board–strategy relationships during three specific periods. Theoretical Implications: Our study illustrates that research on boards of directors and strategy evolved from normative and structural approaches to behavioral and cognitive approaches. Our results encourage future studies to examine the impact of institutional and context-specific factors on the (expected) contribution of boards to strategy, and to apply alternative methods to fully capture the impact of board processes and dynamics on strategy making. Practical Implications: The increasing interest in boards of directors’ contribution to strategy echoes a movement towards more strategic involvement of boards of directors. However, best governance practices and the emphasis on board independence and control may hinder the board contribution to the strategic decision making. Our study invites investors and policy-makers to consider the requirements for an effective strategic task when they nominate board members and develop new regulations.

The Influence of Family Ownership on the Quality of Accounting Information

This article explores the quality of accounting information in listed family firms. The authors exploit the features of the Italian equity market characterized by high ownership concentration across all types of firms to disentangle the effects of family ownership from other major block holders on the quality of accounting information. The findings document that family firms convey financial information of higher quality compared to their nonfamily peers. Furthermore, the authors provide evidence that the determinants of accounting quality differ across family and nonfamily firms.

Board members’ contribution to strategic decision-making in small firms

This article explores how the boards of small firms actually undertake to perform strategic tasks. Board strategic involvement has seldom been investigated in the context of small firms. We seek to make a contribution by investigating antecedents of board strategic involvement. The antecedents are “board working style” and “board quality attributes”, which go beyond the board composition features of board size, CEO duality, the ratio of non-executive to executive directors and ownership. Hypotheses were tested on a sample of 497 Norwegian firms (from 5 to 30 employees). Our results show that board working style and board quality attributes rather than board composition features enhance board strategic involvement. Moreover, board quality attributes outperform board working style in fostering board strategic involvement.

An Observational Analysis of the Impact of Board Dynamics and Directors' Participation on Perceived Board Effectiveness

This study addresses calls for closer examination of board dynamics by offering an inside view of director interactions. Video-observations of three board meetings at each of two Australian corporations matched with director interviews and secondary data reveal distinct patterns of director interactions, their sources of variation and impact on perceived board effectiveness. Our data reveal that director interactions are multi-dimensional and dynamic: while group interactions across agenda items are similar, with a few directors leading the discussion, the contributing directors change across items. Moreover, directors’ inclusiveness and evenness of participation are associated with higher perceptions of board effectiveness. Last, we find that director interactions change with the nature of the items, board climate and board meeting arrangements. The study contributes to the literature by moving beyond the individual-level analysis of directors’ skills or independence, and offering a detailed view of how the joint group and individual dimensions of board dynamics affect board functioning.

Inside the boardroom: exploring board member interactions

This study aims to open-up the black box of the boardroom by directly observing directors’ interactions during meetings to better understand board processes. Design/methodology/approach: We analyse videotaped observations of board meetings at two Australian companies to develop insights into what directors do in meetings and how they participate in decision-making processes. The direct observations are triangulated with semi-structured interviews, mini-surveys and document reviews. Findings: Our analyses lead to two key findings: (i) while board meetings appear similar at a surface-level, boardroom interactions vary significantly at a deeper level (i.e. board members participate differently during different stages of discussions) and (ii) factors at multiple levels of analysis explain differences in interaction patterns, revealing the complex and nested nature of boardroom discussions. Research implications: By documenting significant intra- and inter-board meeting differences our study (i) challenges the widespread notion of board meetings as rather homogeneous and monolithic, (ii) points towards agenda items as a new unit of analysis (iii) highlights the need for more multi-level analyses in a board setting. Practical implications: While policy makers have been largely occupied with the “right” board composition, our findings suggest that decision outcomes or roles’ execution could be potentially affected by interactions at a board level. Differences in board meeting styles might explain prior ambiguous board structure-performance results, enhancing the need for greater normative consideration of how boards do their work. Originality/value: Our study complements existing research on boardroom dynamics and provides a systematic account of director interactions during board meetings.

The importance of group-fit in new director selection

Purpose Director selection is an important yet under-researched topic. The purpose of this paper is to contribute to extant literature by gaining a greater understanding into how and why new board members are recruited. Design/methodology/approach This exploratory study uses in-depth interviews with Australian non-executive directors to identify what selection criteria are deemed most important when selecting new director candidates and how selection practices vary between organisations. Findings The findings indicate that appointments to the board are based on two key attributes: first, the candidates’ ability to contribute complementary skills and second, the candidates’ ability to work well with the existing board. Despite commonality in these broad criteria, board selection approaches vary considerably between organisations. As a result, some boards do not adequately assess both criteria when appointing a new director hence increasing the chance of a mis-fit between the position and the appointed director. Research limitations/implications The study highlights the importance of both individual technical capabilities and social compatibility in director selections. The authors introduce a new perspective through which future research may consider director selection: fit. Originality/value The in-depth analysis of the director selection process highlights some less obvious and more nuanced issues surrounding directors’ appointment to the board. Recurrent patterns indicate the need for both technical and social considerations. Hence the study is a first step in synthesising the current literature and illustrates the need for a multi-theoretical approach in future director selection research.

Habitual accountability routines in the boardroom: how boards balance control and collaboration

Purpose - Corporate accountability is a complex chain of reporting that reaches from external stakeholders into the organization’s management structure. The transition from external to internal accountability mechanisms primarily occurs at the board of directors. Yet outside of incentive mechanisms, we know surprisingly little about how internal actors (management) are held to account by the representatives of external shareholders (the board). The purpose of this paper is to explore the process of accountability at this transition point by documenting the routines used by boards to hold the firm’s management to account. In doing so, we develop the understanding of the important transition between internal and external firm accountability. Design/methodology/approach - An inductive, case-based approach identifies recurrent behaviour patterns in two matched boards over three video-taped meetings. Sequential analysis of coded group and individual behaviours provides insight into boards’ accountability routines. Findings - The boards engaged in clear, recurrent accountability routines. Individuals on the boards play different roles in these routines depending on the issue before the board, allowing both directors and managers to hold each other to account. The outsiders (directors) both challenge and support the insiders (managers) during board discussions, switching their behaviours with different agenda items but maintaining a consistent group level of support and scepticism across the meeting. This allows for the simultaneous development of trust and verification at the group level, a necessary condition for effective accountability. Research limitations/implications - As board relationships and organisational context are highly variable, future research should concentrate on testing the generalizability of the results across different board and shareholder structures. Practical implications - The results call into question the current governance focus on the independence of the individual director, as the authors identify that all directors appear to act as agents at one time or another in a meeting. Accountability at the boardroom level requires an effective group process not usually addressed in governance recommendations or regulation. Originality/value - This study provides unique insights into board dynamics, documenting the accountability implications of group behaviours. By focussing on the group process, the authors highlight the potential mismatch of monotonic, individual-level approaches to governance and accountability prevalent in current agency approaches.

The influence of board chairs on director engagement: A case‐based exploration of boardroom decision‐making

Research Question/Issue This study seeks to better understand how board chairs, as leaders and equals, shape the context for other directors to engage in their governance roles. Research Findings/Insights Using a combination of video-taped board meetings and semi-structured interviews with directors at three corporations, we found a generalized and negative association between chair involvement and directors’ engagement during board meetings. Theoretical/Academic Implications Our empirical results suggest that the chair’s role can be viewed as a paradox requiring both (i) strong leadership to counter managerial power, and (ii) a more subtle orientation as peer to fellow directors that enables other board members to contribute to boardroom decision-making. Moreover, our study revealed the transitory nature of both chair contributions and directors’ engagement during meetings, highlighting the potential and need for further unpacking of the temporal dimensions of boardroom decision-making processes. Practitioner/Policy Implications Our analysis suggests a revision of the implicit prescription in the literature for board chairs to be active leaders who lead from the front. Given that chair involvement appears to reduce director engagement during meetings, our research hints at the need for a more supportive role of the chair during boardroom decision-making that is in line with non-traditional leadership models.

How to Start Analyzing, Test Assumptions and Deal with that Pesky p-Value

This chapter discusses the steps to take before any of the analyses discussed in earlier chapters. Although it may seem counterintuitive to put this information in the last chapter, experience teaches us that these are things people do not want to read first when they embark on their analysis journey. We all start out with a big idea and full of courage, but all too often our courage is blown to bits because words and terms like “homoscedasticity,” “skewness,” and “multivariate normality” make our heads spin and our plans seem impossible. However, we hope that, after you have gotten a kick from seeing first results with the method of your choice, you are now ready to learn about all the things you should have done first—the things that make your results credible.

Models with Latent Concepts and Multiple Relationships: Structural Equation Modeling

One of the best-known models in Information Systems research is the Technology Acceptance Model (TAM), which postulates that users will intend to use a system if they find it useful and easy to use, and that they will find a system useful if they find it is easy to use. This model has been studied over and over again, typically by surveying users (or even non-users) of some system with questions about the degree to which they find the system useful and/or easy to use and whether they intend to use it in the future.