Coral Ingley

Board Dynamics and the Influence of Professional Background, Gender and Ethnic Diversity of Directors

Exploring the appointment of directors of different professional backgrounds, levels of independence, age, gender and ethnicity, this paper develops a taxonomy describing what is meant by diversity on the board and its implications for decision-making. Board configuration is considered in terms of empirical evidence highlighting the criteria used in appointing directors and the associated implications of social capital for board dynamics. Issues raised include the influence of these on board performance and the ability of individual directors to make an effective contribution as board members. The conclusions highlight the various mythologies associated with the value of board diversity.

The Strategic Board: the changing role of directors in developing and maintaining corporate capability

Faced with major shifts in public opinion and societal change on an international scale, together with the strategic requirements of newly emergent forms of business structure, new technologies, globalisation and new forms of competition, modern companies are facing a crisis in their boardrooms. Traditional forms of governance architecture are being challenged and boards are under pressure to develop a broader mindset and new skills to deal with the uncertainty of higher-level issues such as direction-giving and implementation of strategy. The paper proposes a framework developed from research which examines the selection, evaluation and performance of boards of directors in New Zealand. From this research a need for strategic vision and leadership has clearly emerged as a key requirement in director capability, but in practice there is an acknowledged variation among individual directors in terms of their competence in this regard. Implications for further research suggest the need to explore the strategic role of the modern board in value creation, the extent to which directors perceive a link between strategy and corporate governance and their level of participation in this process.

Board configuration: building better boards

Board configuration is discussed in the context of the perceived needs of the board as a strategic resource of the organization. This is highlighted in the context of the differing governance, performance and social requirements of organizations pertaining to private sector, state and local government ownership structures. Examined is the view that in bringing particular perspectives resulting from their professional, ethnic or gender backgrounds, directors contribute to board effectiveness. This notion is evaluated in terms of directors’ coping devices and their perceptions of their ability to be heard on the board. Initiatives that boards may use to ensure the success of such appointments are highlighted. Consideration is also given to enhancing the dynamics of established but dysfunctional appointments. In concluding, the paper develops criteria for success in making board appointments where the prospective appointee is a minority in terms of professional discipline or other forms of diversity.

Evaluating board effectiveness: The changing context of strategic governance

Researchers have highlighted various components and measures of board effectiveness. Ranging from their role in the selection of the Chief Executive to their role in protecting the interests of shareholders, many of the elements of board effectiveness have been the subject of extensive investigation. The context within which governance takes place is changing rapidly, however, requiring a re-evaluation of the methodologies by which boards, and their advisors, evaluate such effectiveness. Driven by the strategic requirements of newly emergent forms of business structure, new technologies, globalisation, international harmonisation of reporting standards and new forms of competition, traditional forms of governance architecture are being challenged, with implications for the measurement of effectiveness. This paper utilises an integrated model of board effectiveness to consider how such capability is determined by controllable factors related to the internal dynamics of the board, its composition, the constituency concentration and individual factors related to the directors themselves. The influence of such uncontrollable factors as the industry ethos, industry complexity, legislative environment and economic conditions are also highlighted. The findings of a major study of governance, reflecting the changing dynamics of director selection, board evaluation and performance and their implications for strategic governance, governance architecture and board effectiveness are reported. The implications of the findings are reported in the context of the results of extensive consultation with professional directors as to the implications of the results for their perceptions of the framework and the changes facing boards.

Corporate governance: Implications of ownership, performance requirements and strategy

Discussion in the emerging literature on corporate governance ranges from the effectiveness of codes of conduct to the role of the non-executive director nd how to evaluate the performance of both individual directors and boards. An emphasis is placed on compliance issues in professional publications with strong comment on the failure of governance practice in highly publicised cases. There is an evolving literature on board architecture and strategic approaches to governance in the light of the new technologies and implications for intellectual property as a form of competitive advantage. This paper proposes a framework for the evaluation of the governance requirements of different types of organisation. In particular, it focuses on the different types of structure, including publicly listed companies, privately owned companies, state-owned enterprises, local government enterprises, cooperatives and charitable trusts. The model assists in the evaluation of the different governance requirements of each of these, based on their widely different definitions of required performance and the associated reporting of this. It also examines the different governance needs of each of these forms of organisation, as reflected in the differing cultures of the respective shareholders, owners or primary stakeholders and the semantics of the reporting requirements. As part of its development, the ideas relating to the framework were presented to meetings of directors of public and private-sector organisations in each of the principal New Zealand cities. Their responses are included to provide a context for the further evolution of the model.

Effective governance for start-up companies: regarding the board as a strategic resource

Start-up organisations are small companies that experience a high level of growth and considerable risk to their very survival until they evolve into stable, established companies. This situation presents a particular set of challenges in terms of corporate governance, yet research on the governance of start-ups is limited. This research paper examines and comments on the governance of start-up organisations in New Zealand. The study replicates and extends previous New Zealand-based research of boards of established companies. From the data gathered from the two surveys, conclusions can be drawn as to the role and focus of boards in start-ups versus established companies. The results are consistent with a model of active ownership which identifies key differences from established companies that could improve the governance of start-ups. The results also highlight the dependence of what might constitute effective corporate governance for a start-up on the strategic context of the company and its life cycle stage.

Family contingencies and board composition: evidence from Tunisia

Abstract Despite the widespread attention given to succession and generational issues by family business researchers, little systematic interest has been given to the relationship between these issues and the firms’ governance system. This paper analyses family-related contingency factors as determinants of board composition in family-controlled firms. Results from a sample of Tunisian family firms show that the composition of board members is determined primarily by variables relating to family complexity and family involvement. Among these firms the appointment of outside directors to their boards tends to begin from the third generation of family ownership. The findings support the argument that board composition in family firms is a reflection of family characteristics. The study contributes a more nuanced understanding of the influence of ownership structure and board composition on the succession process in family firms.

Handbook on emerging issues in corporate governance

The book highlights emerging topics in key areas of corporate governance with special emphasis on traditionally unexplored issues. It also aims to stimulate thinking and debate on vital aspects of practice and approaches to corporate governance. The topics covered in this book deal with timely subjects, written by eminent academics and renowned professionals with outstanding expertise in their respective fields, who bring to fore the latest theories and provide an up-to-date overview of the extant literature on each topic. More importantly, they draw readers attention to implications for future research and developments. The book not only contributes to the academic literature but also improves the decision making of regulators and investors.

SME heterogeneity and board configurations: an empirical typology

Purpose The purpose of this paper is to model SME board configurations and then to examine empirically their diversity. Polarity in corporate board research around two primary tasks (control and service/strategy), neither captures comprehensively the range of SME board types, based on what they actually do, nor elucidates how boards configure and why. SME heterogeneity is problematic for understanding how the triumvirate of power and control – owners, directors and executives – governs in such firms. Design/methodology/approach Survey research is used to examine 186 French private SMEs. Factorial and cluster analyses are used to classify board configurations according to board task performance. Findings Results reveal six different board types among small firms. The findings indicate that both organisational and board design need to be adjusted to align with the differentiation between the ownership and the management, and between the ownership and the directorship. The greater the differentiation between these power/control functions in response to increased internal and/or external contingencies, the more varied will be the board’s portfolio of tasks, with implications for the director capabilities and board competence. Research limitations/implications The research extends SME board governance theory and practice by bringing greater clarity to the field of board task performance in SMEs. It provides insights into explicit board task-related configurational behaviour through recognising the degree of differentiation between the triumvirate power/control functions at the apex of the small firm. SME boards in the sample show not just a single configuration but a combination from a portfolio of tasks with different emphases on each according to their circumstances. This finding implies that a particular type of board may select a task, or set of tasks, from the portfolio, depending on the nature of the SME in terms of its proximity – whether it is characterised more by specificity or by denaturation. Further research is needed to understand the variation in these configurations over time in response to internal and external contingencies and what board emphases and processes are involved in transitioning through these evolutions. Practical implications The findings are important because the extent of knowledge about what the configuration comprises will determine how effectively a board will execute its tasks. This knowledge is useful in helping boards place emphasis on how best to concentrate their efforts on creating value for the SME, by selecting an effective combination of tasks from a given board configuration depending on their circumstances. Originality/value The research extends SME board governance theory and practice by bringing greater clarity to the field of board task performance in SMEs. It provides insights into explicit board task-related configurational behaviour through recognising the degree of differentiation between the triumvirate power/control functions at the apex of the small firm.

SME growth trajectories, transitions and board role portfolios: A critical review and integrative model:

This article presents a novel framework integrating a dynamic states approach to firm growth and a portfolio perspective of board roles. In our framework, we highlight four typical firm growth states aligned with primary board roles to guide firms effectively through the transitions associated with each state to reach a new equilibrium. The particular contribution of our framework is that it takes small and medium firm (SME) heterogeneity into account while capturing the dynamic nature of these states which are reached along non-linear, non-sequential and non-deterministic transitional pathways, as well as incorporating reverse and counterintuitive trajectories between states.