The presumption that corporate boards do matter can be approached from multiple theoretical perspectives. The resource dependence theory and stakeholder theory emphasize board involvement in decision management through boards’ service roles. The agency theory and the legalistic perspective accentuate the involvement of boards of directors in decision control through the execution of control roles. The stewardship theory recognizes the involvement of corporate boards in both decision management and decision control through boards’ strategic roles. These theoretical schools can be defined in terms of conflict and consensus perspectives of board involvement. Proponents of a conflict perspective seek to apply board model design strategies that clearly separate decision management from decision control.
Proponents of a consensus perspective seek to apply board model design strategies that integrate boards’ decision management with boards’ decision control tasks. Clearly, no theoretical perspective and research methodology can fully capture, describe and explain board involvement in decision making and the way directors organize their corporate boards (Judge and Zeithaml, 1992). As suggested by Zahra and Pearce (1989), the web of associations between the components that can influence the involvement of directors and the organization of their boards is so complex that it is impossible to study all possible and relevant relationships in the context of a single research project. Moreover, seen from a theoretical point of view, it has been suggested that there is a need to first synthesize the literature on corporate governance and to understand more about the actual behavior of directors and their involvement in decision making (Judge, 1989; Pettigrew, 1992a).
An Integrative Model of Board Involvement in Decision Making
Interestingly, general models of board involvement recognize the need to synthesize the complex and contingent nature of associations between the context, board attributes, board roles and the effects of board behavior on firm performance. The integration of multiple perspectives of board involvement and the recognition of contingencies, board attributes, and the effects of board behavior make the general models helpful tools to explore the complexity of board involvement in decision making. The general integrative models are also helpful to organize and to classify fragmented research on board involvement.
For the purposes of this research, the model presented in figure 2.3 guides the description of one-tier and two-tier board models. In chapters three and four of this research, the attributes of these board models are further associated with the formal independence of corporate boards of directors. Seen from a conflict perspective of board organization, chapter three elaborates on board model design strategies that focus on the separation of decision management from decision control. Chapter four presents a consensus perspective of board organization to associate board model design strategies with the integration of the steps in decision making. Chapter five investigates the organization of corporate boards and pressures from boardroom reformers and regulators. Part II of this research explores the legal context in which corporate boards of directors operate in the US, the UK and the Netherlands.
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