The board as a team and its contribution to corporate innovation
Additional info: Paper presented at the 27th Annual International Conference of the Strategic Management Society, San Diego, October 2007.
In this paper we present a study of the value creating contribution of boards of directors by examining the association between the boardroom culture, boards’ strategic involvement and corporate innovation. We embed our study in theoretical arguments from modern team production theory and contrast this perspective against the dominating agency theoretic view on boards and governance. Based on our team production framework, we conjecture that an open and generous process-oriented boardroom culture is associated with boards’ involvement in the whole strategy process. In contrast, we believe that the agency theoretic notion of a critical and questioning decision-oriented boardroom culture is associated with arms-length strategy ratification and control. Moreover, we expect boards to contribute to corporate innovation when they are involved in the whole strategic decision making process and not only in arms-length strategy ratification and control. We test our hypotheses on a sample of Norwegian medium-sized corporations. In short, our empirical findings give ample support for our theoretical predictions. The article ends with a discussion of our results.
- Business and Economics