Investigating the Development of the Internal and External Service Tasks of Non‐executive Directors: the case of the Netherlands (1997–2005)

• Author: Gregory F. Maassen,Henk W. Volberda,Pieter‐Jan Bezemer,Frans A. J. Van den Bosch
• DOI: http://doi.org/10.1111/j.1467-8683.2007.00635.x
• Date: 01 November 2007
• Published date: 01 November 2007

Investigating the Development of the

Internal and External Service Tasks of

Non-executive Directors: the case of

the Netherlands (1997–2005)

Pieter-Jan Bezemer*, Gregory F. Maassen,

Frans A. J. Van den Bosch and Henk W. Volberda

During the last decade, globalisation and liberalisation 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 initia-

tives have emphasised 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. Therefore, 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 counselling 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

Introduction

Over the last ten years, the globalisation

and liberalisation of f‌inancial markets

and stronger societal demands for accountabil-

ity and transparency of companieshave placed

the f‌iduciary duties of non-executive directors

in the centre of the corporate governance

debate. Recent corporate governance scandals

such as Enron and WorldCom in the United

States, Parmalat in Italyand Ahold in the Neth-

erlands have heated the international corpo-

rate governance debate (Ingley and Van der

Walt, 2005; Jonsson, 2005; Kiel and Nicholson,

2003) and they have triggered worldwide

corporate governance reforms (Aguilera and

Cuervo-Cazurra, 2004; Enrione et al., 2006;

Sheridan et al., 2006). This has resulted in the

Sarbanes-Oxley Act in the United States, cor-

porate governance directives in the European

Union and additional national corporate

legislation across the European Continent.

In addition, most European countries have

introduced new corporate governance codes

such as the Cromme Code in Germany (2002),

the Bouton Report in France (2002) and the

Combined Code in the United Kingdom

(2003).

Although the effectiveness of corporate gov-

ernance codes in disciplining corporations and

preventing corporate governance scandals has

been questioned (Cools, 2006; Enrione et al.,

2006), these codes are important ref‌lections of

corporate governance developments, societal

norms and values, and expectations of key

stakeholders. They highlight to society which

improvements are central for regaining the

trust in corporate governance systems and

*Address for correspondence:

Department of Strategic Man-

agement & Business En-

vironment, RSM Erasmus

University, P.O. Box 1738, 3000

DR Rotterdam, The Nether-

lands. Tel: +31 10 408 2205;

E-mail: pbezemer@rsm.nl

INVESTIGATING THE DEVELOPMENT OF THE INTERNAL AND EXTERNAL SERVICE TASKS 1119

Volume 15 Number 6 November 2007

© 2007 TheAuthors

Journal compilation © 2007 BlackwellPublishing Ltd, 9600 Garsington Road,

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