A configurational perspective of boards' attention structures

• Published date: 01 September 2023
• Author: Eduardo Schiehll,Krista Lewellyn,Wenxi Yan
• Date: 01 September 2023
• DOI: http://doi.org/10.1111/corg.12493

ORIGINAL ARTICLE

A configurational perspective of boards' attention structures

Eduardo Schiehll

1,2

| Krista Lewellyn

3

| Wenxi Yan

1

1

HEC Montréal, Montréal, QC, Canada

2

Aalto University School of Business, Espoo,

Finland

3

Florida Southern College, Florida, Lakeland,

USA

Correspondence

Eduardo Schiehll, HEC Montréal, 3000,

Chemin de la Côte-Sainte-Catherine, Montréal,

QC H3T 2A7, Canada.

Email: eduardo.schiehll@hec.ca

Funding information

Social Sciences and Humanities Research

Council (SSHRC), Canada, Grant/Award

Number: 435-2-18-1522

Abstract

Research Question/Issue: What combinations of board attributes and contextual

factors explain boards' selective distribution of attention between their dual role of

resource provisioning and monitoring? At the board level, we consider board struc-

ture and breadth of knowledge, while the context in which boards operate is cap-

tured by the degree of external scrutiny, operational complexity, performance, and

ownership structure.

Research Findings/Insights: Our study demonstrates that there are multiple ways

board attributes bundle and combine with important elements of the context to pro-

mote similar board attention structures. Our findings provide evidence of the causal

complexity underlying this phenomenon and corroborate the notions of equifinality

and asymmetric causality among board-, firm-, and institution-level conditions condu-

cive to boards allocating more attention to either their resource provisioning or moni-

toring roles.

Theoretical/Academic Implications: Our findings support the attention-based view

(ABV), suggesting that boards' selective distribution of attention is regulated by the

combination of skills and knowledge directors bring to the firm and the stimuli pro-

vided by contextual factors. In doing so, we underscore the need for an extended

theory on board effectiveness, as resource dependence- and agency-based prescrip-

tions about boards' behavior may be incomplete, since there is limited consideration

by these theories of the bounded rationality of directors and the complex relation-

ships between the factors that can frame boards' selective distribution of attention.

Practitioner/Policy Implications: Our study informs efforts to disentangle the condi-

tions under which different attributes combine and regulate boards' distribution of

attention, which has implications for nomination committees and powerful actors

who have influence on board appointments. Because our results reveal several causal

paths that can promote similar board attention structures, decision makers may wish

to recruit directors with specific attributes that will be the best fit for the firm's con-

textual conditions.

KEYWORDS

attention-based view, board of directors, China, configurational perspective, corporate

governance, structural distribution of attention

Received: 24 January 2021 Revised: 27 September 2022 Accepted: 30 September 2022

DOI: 10.1111/corg.12493

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,

provided the original work is properly cited.

© 2022 The Authors. Corporate Governance: An International Review published by John Wiley & Sons Ltd.

676 Corp Govern Int Rev. 2023;31:676–696.

wileyonlinelibrary.com/journal/corg

1|INTRODUCTION

“The time that directors devote to their tasks can differ

considerably across boards, and these differences can

significantly determine the degree to which boards are

able to represent shareholders' interests successfully

[monitoring role] and to make contribution to strategy

[resource provision role].”(Forbes & Milliken, 1999,

p. 493)

Prior research on boards of directors has substantially advanced

our understanding of how specific board and contextual factors can

explain a board's role (e.g., Desender et al., 2013; Mooney

et al., 2021), engagement (e.g., Bezemer et al., 2018), and effective-

ness (e.g., Misangyi & Acharya, 2014) when it comes to fulfilling their

various decision-making responsibilities. However, as suggested by

the seminal work of Simon (1955), bounded rationality constrains and

shapes board decision making. Accordingly, decision-making by

boards is also the result of both limited attentional capacity of direc-

tors (Khanna et al., 2014) and the structural stimuli provided by the

organization and its environment (Tuggle, Schnatterly, &

Johnson, 2010). We argue that overlooking the interdependent nature

of factors known to influence boards' attention structures has limited

our understanding of board behavior. Taking a configurational

approach to address this important issue, we examine how board

structural and human capital attributes bundle and combine with

important elements of the context to explain boards' selective distri-

bution of attention between their dual roles of resource provision and

monitoring.

Governance literature that has focused on boards has mainly

examined how structural and human capital differences across boards

(e.g., independence, expertise, diversity, and interlocks) affect board

effectiveness (Johnson et al., 2013). The dominant assumption is that

differences in board structure and composition capture variations in

board behavior, and consequently its contribution to firm outcomes.

The findings however have been far from conclusive (Dalton &

Dalton, 2011) and scholars argue that this is due to a lack of informa-

tion on what boards are actually doing in boardrooms (Johnson

et al., 2013; Tuggle, Sirmon, et al., 2010). Because attention precedes

action, some scholars underscore the need to understand at the out-

set boards' allocation of time and efforts to their dual roles, when

investigating a board's ability to affect firm outcomes (e.g., Forbes &

Milliken, 1999; Tricker, 2015). Thus, our study is in alignment with the

prescriptions of the attention-based view (ABV), and more specifically,

the principle of Structural Distribution of Attention, which proposes

that the context decision-makers find themselves in, and how they

attend to it, depends on how the organization's “rules, resources, and

social relationships regulate and control the distribution and allocation

of attention within specific activities”(Ocasio, 1997, p. 188).

Much of the prior research tends to overlook that board members

have limited capacity to effectively process information and solve

complex problems (Simon, 1945). Such bounded rationality combined

with other environmental stimuli may lead board members to

selectively distribute their attention, whereby they pay more attention

to certain issues relative to others (Ocasio, 1997). In addition, previ-

ous research tends to view board and contextual attributes as having

separate or “net-effects”on board outcomes. Such an approach has

been criticized for ignoring how these attributes may have interde-

pendent effects, such that rather than separate isolated effects, they

operate in a bundling fashion (Aguilera et al., 2008). These bundles of

board attributes and contextual factors may include complementary

interactions such that they mutually reinforce one another, or they

may have substitutive effects, whereby the absence of one is replaced

by the presence of another (García-Castro et al., 2013; Misangyi &

Acharya, 2014). Because these attributes may interact in a variety of

ways, there may be multiple configurations that produce a given out-

come (Fiss, 2011). Accordingly, we build on open systems logic and

maintain that the complex ways in which board attributes and contex-

tual factors combine drive boards' discretion to selectively distribute

attention between their dual roles of resource provisioning and moni-

toring. These arguments provide the main motivation for our study,

which is guided by the following overarching research question: What

combinations of board attributes and contextual factors explain a

board's distribution of attention between resource provisioning and

monitoring?

To investigate our research question, we use a process of config-

urational theorizing (Furnari et al., 2021), whereby we first rely on

governance theory and prior research to identify salient board-, firm-,

and institution-level attributes that in combination may interact and

influence boards' attention structures (i.e., scoping), which in turn

leads to selectively distributing attention to either resource provision-

ing or monitoring. As part of this process, we draw from our guiding

theoretical framework, which integrates resource dependence and

agency theories along with the ABV. Consistent with the studies by

Tricker (2015) and Hillman and Dalziel (2003), we apply a theoretically

grounded classification of boardroom activity in which we consider

the distribution of time and effort between resource provisioning and

monitoring tasks as a proxy for how boards selectively distribute

attention between their dual roles. In developing our configurational

framework, we link the various attributes together by considering

how and why board attributes along with contextual factors combine

simultaneously and interdependently in ways which promote boards'

selective distribution of attention to either resource provisioning or

monitoring.

Our study is made possible by our unique sample of Chinese

listed firms that are mandated to publicly disclose their board meeting

reports that includes the decisions made by the board in each meeting

(e.g., Ma & Khanna, 2015). Thus, to specifically address our research

question, we retrieved board meeting reports from 1054 Chinese

listed firms and using content analysis techniques (Stemler, 2001), we

identified and coded a total of 36,217 board decisions. China is con-

sidered the largest emerging and the second largest economy in the

world (World Bank, 2017). In addition, China's economic reforms over

the past decades have led to significant changes in board of directors'

responsibilities (Liu et al., 2016), making it a particularly rich and inter-

esting setting for our study. Further, by explicitly investigating specific

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