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Investigating the Development of the Internal and External Service Tasks of Non-Executive Directors

Investigating the Development of the Internal and External Service Tasks of Non-Executive Directors

Bezemer. P., Maassen, G.F., Van den Bosch, F.A.J., Volberda, H.W. (2007) Investigating the Development of the Internal and External Service Tasks of Non-Executive Directors: The Case of the Netherlands (1997-2005). Corporate Governance, 15 (6), 1119 - 1129.

During the last decade, globalization and liberalization of financial markets, changing societal expectations and corporate governance scandals have increased the attention for the fiduciary duties of non-executive directors. In this context, recent corporate governance reform initiatives have emphasized the control task and independence of non-executive directors. However, little attention has been paid to their impact on the external and internal service tasks of non-executive directors.

This paper investigates how the service tasks of non-executive directors have evolved in the Netherlands. Data on corporate governance at the top-100 listed companies in the Netherlands between 1997 and 2005 show that the emphasis on non-executive directors’ external service task has shifted to their internal service task, i.e. from non-executive directors acting as boundary spanners to non-executive directors providing advice and counseling to executive directors.

This shift in board responsibilities affects non-executive directors’ ability to generate network benefits through board relationships and has implications for non-executive directors’ functional requirements.

Keywords: Corporate governance codes, non-executive directors, The Netherlands

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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.