HomeChapter 9: Comparing Changing Board Attributes9.6 Suggestions for Future Research

9.6 Suggestions for Future Research

According to Judge (1989), Zahra and Pearce (1989) and Dalton et al. (1998), corporate governance research and the development of theories in the field of corporate governance have been troubled by the following limitations:

  • the literature is fragmented, stemming from different disciplining backgrounds, i.e., sociologists, financial economists, organization theorists and strategic management scholars. In general, however, these disciplines do not read or cite the ideas and/or findings of other disciplines;
  • the literature is fragmented within each discipline;
  • this fragmentation is manifested in different terminologies and operationalizations that are used for similar constructs. Researchers have failed to operationalize board variables in a consistent manner;
  • most empirical studies are not theory driven. There are also countless lists of what boards should do. Only a few theory-based studies exist;
  • most empirical studies focus on structural dimensions of the board, and, therefore authors can only speculate on actual board behavior. The nature of board processes over time has not been studied and evidence on what boards actually do is not well documented;
  • the few empirical studies of actual board processes which exist have not been very rigorous;
  • the impact of contextual forces on board involvement and board organization have been widely ignored in research;
  • there has been a tendency among researchers to prescribe desirable reforms without sufficient description of board attributes;
  • conflicting evidence exists on the extent and effects of board involvement.

Sources: Judge (1989:24-25); Zahra and Pearce (1989) and Dalton et al. (1998).

 

Although these limitations challenge the corporate governance research agenda, the possibilities for future research seem to be unlimited. The following suggestions can be made:

 

The Integration of Theoretical Perspectives

This study recognizes the need to incorporate compelling perspectives of board organization in its theoretical framework. Future research could also benefit from the recognition that multi-disciplinary approaches to the formal organization of corporate boards provide a richer, more comprehensive theoretical explanation and understanding of governance structures (Davis, 1991). This may not only stimulate sociologists, financial economists, organization theorists and strategic management scholars to read or to cite the ideas and/or findings of other disciplines. The exchange of concepts, theories and ideas may also eliminate the fragmentation of research and the application of different terminologies and operationalizations that are used for similar constructs (Judge, 1989; Zahra and Pearce, 1989);


The Emphasis on Corporate Governance in Other Countries

Rather than just observing developments in board organization in the US, the UK and the Netherlands, a challenge for future research on board convergence would also be to reveal developments over time in the composition and organization of corporate boards in other Anglo-Saxon and continental European countries. International comparisons of governance models may not only generate further evidence regarding the convergence of board models. It may also give scholars a better understanding of the relationship between board model attributes and board involvement in strategic decision making and the relevance of conflict and consensus perspectives of board organization. Moreover, it may also offer insights to practitioners as well as to public policy makers in their effort to reform current practices. (Judge, 1989; Boyd 1995);

 

The Relationship Between Boards and Other Monitoring Devices

Like most studies, this research has portrayed developments in the formal organization of corporate boards of directors in isolation from developments in other monitoring devices and mechanisms such as the market for corporate control and the competition in managerial labor markets that align the interests between shareholders and managers. As such, this research did not investigate the substitution hypothesis which states that the organization and composition of corporate boards of directors may be effected by the existence of other control mechanisms which may account for differences between the corporate governance structures in countries investigated. A suggestion for future research therefore would be to analyze these developments in relation to those in the organization of corporate boards;

 

The Emphasis on Process Studies

Ideally, a study on board independence also looks behind the door of the boardroom to observe the behavior of directors. Although some authors have managed to directly observe the behavior of directors in their boardrooms (Pettigrew, 1985a; Thurman, 1990), process studies are not easily to realize. This study did not have access to the group dynamics of boards of directors either. To measure the independence of corporate boards, this research indirectly measured the behavior of directors in the way they have altered their board structures. Future research projects could try to fill this gap in the literature by building up strategic alliances with directors and practitioners who recognize the need to understand more about board structures and board processes that contribute to the involvement of directors in decision making;

 

The Board as a “Instrument” for Influencing Strategy

Another suggestion for future research relates to the strategic impact of the changing international context on the strategic renewal processes of large European corporations. The scientific and managerial significance can be highlighted by positioning corporate governance as a strategic management “instrument” for influencing strategy and strategic renewal processes of corporations. The analysis, both in theory and practice of different corporate governance structures, and their impact on strategic renewal processes can contribute to a better scientific and societal assessment of the importance of corporate governance;

 

The Emphasis on the Diffusion and the Effectiveness of Self-regulation

Future research could also concentrate on the effectiveness of self-regulation that aims to set forth new (international) corporate governance standards. Most often, researches have focused on developments in the UK where the Cadbury Code and its successor Hampel have dominated the corporate governance debate. Much less is known about the way directors voluntarily comply with codes of best practices in continental European countries and other important financial regions and how Anglo-Saxon codes of best practices have influenced initiatives in other regions. This is also true for research on the contribution of shareholder activism to the improvement of the financial performances of corporations. The few studies have mostly concentrated on shareholder activism in the US. Research on the role of institutional investors in other countries is much less developed in the literature;

 

The Emphasis on Small Enterprises and Not-for-Profit Organizations

There are advantages of a research approach which concentrates on large listed corporations. Perhaps the most important advantage lies in the availability of data. Listed corporations are much more regulated than non-listed corporations and they have to disclose much more information on their governance structure than smaller corporations are legally enforced to. Another advantage that has stimulated this research to concentrate on large listed corporations relates to the relatively large body of research available on listed corporations. This study strongly emphasizes the corporate governance structure of large listed corporations and ignores the contribution of boards of directors in other types of firms and organizations (Wang, 1991). It did not - for example - include non-listed corporations, medium-sized and small enterprises and not-for-profit organizations. As such, another suggestion for future research is to reveal developments in the organization and the composition of boards of directors in small enterprises and not-for-profit organizations.


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Maassen, G.F. (2002). An International Comparison of Corporate Governance Models. A Study on the Formal Independence and Convergence of One-Tier and Two-Tier Corporate Boards of Directors in the United States of America, the United Kingdom and the Netherlands.

Maassen, G.F. (2002). An International Comparison of Corporate Governance Models. A Study on the Formal Independence and Convergence of One-Tier and Two-Tier Corporate Boards of Directors in the United States of America, the United Kingdom and the Netherlands. Amsterdam: Spencer Stuart Executive Search.