Board Task Evolution: A Longitudinal Field Study in the UK

• DOI: http://doi.org/10.1111/corg.12017
• Published date: 01 March 2013
• Author: Silke Machold,Stuart Farquhar
• Date: 01 March 2013

Board Task Evolution: A Longitudinal Field

Study in the UK

Silke Machold* and Stuart Farquhar

ABSTRACT

Manuscript Type: Empirical

Research Question/Issue: Several studies have investigated the antecedents of board tasks but there are disagreements

about the number of tasks, their content and how they are operationalized. Moreover, the question of how board tasks

evolve is under-researched. This study seeks to map the patterns of board tasks over time and the contingent conditions

under which they evolve.

Research Findings/Insights: By means of a longitudinal observation study of six UK boards, this study shows how board

task prof‌iles can be categorized according to (1) the range of tasks boards engage with, (2) the degree and mode of

adaptability of board tasks to changing strategic contexts, and (c) the extent to which boards are passive.

Theoretical/Academic Implications: Traditional governance theories such as agency and resource-dependency perspec-

tives provide insights to the content of board tasks, but do not explain how and why these tasks change. Combining

traditional conceptualizations of board tasks with a process-based theoretical lens offers new insights into board tasks and

how effectively they are performed.

Practitioner/Policy Implications: The results show how boards can better structure their activities to make effective use of

scarce meeting time. Activitiessuch as dissemination of information should be curtailed to leave more room for board debate

on strategic issues. The study also highlights how board evaluations may benef‌it from having a “f‌ly-on-the-wall” observer.

Keywords: Corporate Governance, Board Tasks, Longitudinal Observation Study

INTRODUCTION

Early research on boards was primarily concerned with

how, and to what extent, board structure and composi-

tion affected corporate performance (Dalton & Dalton, 2005;

Dalton, Daily, Ellstrand, & Johnson, 1998). Yet this focus on

the “usual suspects” failed to provide meaningful insights

into what is actually happening in the boardroom and, more

importantly, the ways in which boards can contribute to

organizational value creation (Finkelstein & Mooney, 2003;

Lawrence, 1997). In relation to the latter, scholars have theo-

retically and empirically investigated board tasks, theoreti-

cally derived constructs denoting the cognitive outcomes of

boards’ work (Forbes & Milliken, 1999; Hillman & Dalziel,

2003), the performance of which directly impacts on organi-

zational performance (Forbes & Milliken, 1999; Gabrielsson

& Winlund, 2000; Huse, 2007; Ingley & van der Walt, 2005;

Minichilli, Zattoni, & Zona, 2009; Payne,Benson, & Finegold,

2009; van den Heuvel, van Gils & Voordeckers, 2006; Zona &

Zattoni, 2007).

Whilst this research stream on board tasks has undoubt-

edly added to our understanding of what makes boards

effective, there nevertheless remain gaps in our knowledge.

First, there are disagreements amongst scholars about the

number of board tasks (Forbes & Milliken, 1999; Hillman &

Dalziel, 2003; Hung, 1998; Zahra & Pearce, 1989), the content

of these tasks (Minichilli, Zattoni, Nielsen, & Huse, 2012;

Stiles & Taylor, 2002; van den Heuvel et al., 2006; van Ees,

van der Laan, & Postma, 2008), and the precise def‌inition or

delineation of roles and tasks (Huse, 2007; Petrovic, 2008).

This has resulted in scholars theoretically selecting and mea-

suring either a single board task (Zhang, 2010) or a set of

board tasks (Minichilli et al., 2009), at the cost of neglecting

a more holistic understanding of the gestalt of board tasks.

Put differently, we haveassembled and labeled the parts of a

jigsaw on board tasks but have yet to see a complete picture

of board task constellations. Second, there has been a

welcome shift toward generating primary data on board

tasks, their antecedents, and board task performance, with

*Address for correspondence: Silke Machold, Reader in Governance and Ethics,

Management Research Centre, University of Wolverhampton Business School, MN

Building, Nursery Street, Wolverhampton WV1 1AD, UK. Tel: +44 1902 323970;

Fax: +44 1902 321724; E-mail: s.machold@wlv.ac.uk

147

Corporate Governance: An International Review, 2013, 21(2): 147–164

© 2013 Blackwell Publishing Ltd

doi:10.1111/corg.12017

surveys becoming the main data collection instrument

(Payne et al., 2009). However, board task performance is

captured using multi-item perception measures by often a

single respondent from the board (Minichilli et al., 2009;

Zhang, 2010). As Peck (1995) notes, research based on actors’

accounts of their own performance often lacks independent

verif‌ication, and may be inf‌luenced by directors giving

responses that they see as socially desirable. Third, with

some notable exceptions (Huse, 2007; Huse & Zattoni, 2008;

Maitlis, 2004; Pye, 2000), most studies have utilized a cross-

sectional research design that limits our insights and under-

standing of contextual and dynamic aspects of board tasks

(Gabrielsson & Huse, 2004). The question of how boardtasks

unfold and evolve is as yet unanswered. In sum, the lid of

the black box has been lifted but there remain many dark

corners.

The purpose of this article is to address the gaps in our

understanding of board tasks and, inter alia, task perfor-

mance through a longitudinal observation study of six UK

boards. Taking a processual perspective, we show not only

the patterns and range of tasks that boards perform, but how

these tasks evolve, which provides new insights into how

they are performed. Our f‌indings identify a continuum of

board task prof‌iles based on boards’ balance of activity and

passivity, the range of tasks performed, and the adaptability

of the patterns of board tasks in response to changing stra-

tegic contexts. We argue that understanding how boards

change their emphasis on board tasks is as important as what

these tasks encompass, which calls for extensions to the

current theoretical frameworks underpinning board task

research (Hillman & Dalziel, 2003). Finally, by adopting a

research method different from the mainstream, the paper

seeks to contribute to the small but growing body of studies

that are grounded in the f‌ield and speak to both theory and

practice (Maitlis, 2004; Parker, 2007; Pye, 2000).

The paper is organized as follows. First, the theoretical

foundations of board tasks are reviewed and research ques-

tions articulated. This is followed by a description of the

research methods employed including a ref‌lection on obser-

vation methods in board contexts. The f‌indings from the

study are then presented and discussed in relation to the

extant literature. The article concludes with recommenda-

tions for research and practice.

THEORETICAL FOUNDATIONS TO

BOARD TASKS

What boards do and how that affects f‌irm performance have

been the subject of research for some time (Baysinger &

Butler, 1985; John & Senbet, 1998; Judge & Zeithaml, 1992;

Zahra & Pearce, 1989). Two drivers have motivated this

research agenda. First, ever since Mace (1971) concluded

that many boards are purely ornamental “rubber stamps,”

researchers have been interested in identifying the differ-

ences between active and passive boards, and how different

board types affect f‌irm performance (Pearce & Zahra, 1991).

This strand of research inevitable drew attention to what

boards do, both theoretically and empirically. The second

impetus for the study of board tasksderived from the unsat-

isfactory results of so-called input-output studies (Daily,

Dalton, & Cannella Jr, 2003; Finkelstein & Mooney, 2003).

Scholars including Pettigrew (1992b), Lawrence (1997), and

Forbes and Milliken (1999) urged us to go beyond parsimo-

nious board structure–f‌irm performance models and focus

instead on how processes in and around the boardroom

shape governance. Building on models of teams and team

effectiveness, Forbes and Milliken (1999) observed that

boards are involved in a range of activities that make up

different board tasks. Board task performance, as a construct

denoting board effectiveness, was def‌ined “as the board’s

ability to perform its control and service tasks effectively”

(Forbes & Milliken, 1999:492).

Subsequently, a host of theoretical and empirical studies

sought to identify and categorize board tasks as well as

measure board task performance (Hendry & Kiel, 2004;

Hillman & Dalziel, 2003; Hung, 1998; Minichilli et al., 2009,

2012; Ruigrok, Peck, & Keller, 2006; Stiles & Taylor, 2002; van

den Heuvel et al., 2006; Zahra & Pearce, 1989; Zona &

Zattoni, 2007). Zahra and Pearce (1989), in an early attempt

at integrating hitherto disparate theoretical streams, posited

three board tasks – control, service and strategy. Boards’

control task originates in agency theory (Fama & Jensen,

1983; Jensen & Meckling, 1976) and legalistic perspectives

(Johnson, Daily, & Ellstrand, 1996), whereas the service task

derives from resource-based approaches and resource

dependency theory (Hillman & Dalziel, 2003; Pfeffer, 1972).

The strategy task tends to be underpinned by a wider range

of theories, including strategic choice perspectives (Judge &

Zeithaml, 1992), stewardship theory (Hung, 1998), agency

theory (Stiles & Taylor, 2002), and a range of cognitive and

behavioral approaches (see Pugliese, Bezemer, Zattoni,

Huse, Van Den Bosch, & Volberda, 2009 for a summary).

Despite these advancesin conceptualizing board tasks that

contribute to organizational performance, there remain a

number of contentious and also unexplored areas. First,

there are disagreements in the literature about the number

of tasks that are theoretically derived, their labels and the

activities included within these tasks. Table 1 summarizes

the key theoretical contributions on board tasks.

Depending on the degree to which theoretical predictions

are grained and clustered, scholars have identif‌ied any

number of tasks ranging from two (Forbes & Milliken, 1999;

Hillman & Dalziel, 2003) to six (Hung, 1998). Strategic tasks,

in particular, are either treatedas a separate construct (Judge

& Zeithaml, 1992; Stiles & Taylor, 2002; Zahra & Pearce,

1989) or subsumed within control and service tasks (Forbes

& Milliken, 1999; Hillman & Dalziel, 2003; Johnson et al.,

1996). The task derived from resource-dependency and/or

resource-based theory has been labeled miscellaneously as

resource provision (Hillman & Dalziel, 2003), service (Forbes

& Milliken, 1999; Zahra & Pearce, 1989), resource-

dependency (Johnson et al., 1996), or institutional (Stiles

& Taylor, 2002).

There is also signif‌icant variance in how these tasks are

operationalized in empirical studies. For example, the strat-

egy items used by van Ees et al. (2008) are similar to the

advice items by Minichilli et al. (2009). Monitoring and

control tasks vary from fourteen items (Huse, 2007) to three

(Carpenter & Westphal,2001; van Ees et al., 2008). Only three

studies explicitly measured service tasks(Huse, 2007; Wan &

Ong, 2005; Zona & Zattoni, 2007). In sum, scholars have yet

148 CORPORATE GOVERNANCE

Volume 21 Number 2 March 2013 © 2013 Blackwell Publishing Ltd