Internal Governance in the Nonprofit Boardroom: a participant observer study

• Published date: 01 September 2007
• DOI: http://doi.org/10.1111/j.1467-8683.2007.00607.x
• Date: 01 September 2007
• Author: Lee David Parker

Internal Governance in the

Nonprof‌it Boardroom: a participant

observer study

Lee David Parker*

This paper presents the results of a longitudinal complete member researcher participant

observer study of two nonprof‌it association boards with particular reference to their internal

corporate governance processes. In doing so, it offers one of the very few available insider

observational studies of boardroom behaviour currently available in the management litera-

ture. Its inductive analysis reveals boards that proactively manage director recruitment and

selection, board member terms and rotation, with a strong emphasis on board membership

diversity and representation. A clear progression from informal to formal processes of board

and director performance evaluation are observed, and a variability in board–CEO relation-

ships is explored. Agenda structuring changes are observed to directly impact upon strategy

and policy focus, while informality and humour emerge as key weapons in the maintenance of

cohesion in an increasingly business-oriented environment. Boardroom culture emerges as a

potent ingredient in the governance process, thereby signalling its future importance for both

researchers and board chairs.

Keywords: Corporate governance, board, directors, boardroom process, boardroom culture,

board–CEO relationship

Introduction

While the issue of effective corporate gov-

ernance has become a matter of high

public prof‌ile internationally, particularly since

the major corporate failures such as Enron and

World.com, our knowledge of the internal

working processes within boardrooms is still

relatively limited. This is even more evident

with respect to the nonprof‌it sector, which is

responsible for a major and arguably increas-

ing proportion of community assets and ser-

vices. Much of the extant research in this area

is survey based, looking in from the outside,

as it were. This study contributes to a small

but growing pool of research which employs

qualitative methodologies directed at under-

standing the process and inf‌luences upon

corporate governance at the level of the board.

In particular, it employs a longitudinal com-

plete member researcher (CMR) participant

observer methodology, reporting on internal

governance processes within two nonprof‌it

boards.

The study’s objective is to inductively iden-

tify the key characteristics of nonprof‌it board-

room internal governance processes from two

observed cases. In particular, the study aims to

elucidate unique nonprof‌it patterns of board

prof‌ile and performance management, agenda

and discourse management, the board–CEO

relationship and boardroom culture. Through

longitudinal involvement and observation

within the boardrooms by the researcher, a

f‌irst hand account and interpretation of direc-

tors’ environments, behaviours and attitudes

is presented. This represents one of the very

few observational studies of internal board-

room process and behaviour presently avail-

able in the management research literature

internationally.

The paper f‌irst outlines the research meth-

odology employed, including data collection

and analysis. It then proceeds to summarise

*Address for correspondence:

University of Adelaide,

Commerce Security House,

233 North Terrace, Adelaide,

SouthAustralia 5000, Australia.

Tel: 61-8-83034236; Fax:

61-8-83034368; E-mail:

lee.parker@adelaide.edu.au

INTERNAL GOVERNANCE IN THE NONPROFIT BOARDROOM 923

Volume 15 Number 5 September 2007

© 2007 TheAuthor

Journal compilation © 2007 BlackwellPublishing Ltd, 9600 Garsington Road,

Oxford, OX4 2DQ, UK and 350 Main St,Malden, MA, 02148, USA