Exploring Critical Dialogue in the Boardroom: Getting Inside the Empirical Black Box of Board Dynamics

Abstract

Research on boards of directors is dominated by a largely context free methodological tradition that seeks to relate various structural and demographic characteristics of boards to firm performance. An alternative research agenda stresses the centrality of context and the necessity of gaining access to the real world of board processes, dynamics and interactions. We contribute to the latter here through the perceptual lens of the non-executive director or NED (~87 respondents from the FTSE-500, UK). Our point of departure is the apparently trivial insight that boards are groups of human beings who meet regularly on the basis of fulfilling a common purpose and that the quality of critically constructive dialogue among board members is an important component of board dynamics and probably a key antecedent of board meeting efficiency and effectiveness. The main purpose here is to gain some insight into what goes on "inside" the black box by exploring the association between the quality of such dialogue in board meetings and board leadership. We complement this processual, relational dynamics and social constructionist focus by incorporating three other variables in the exploratory analysis that are theorised to be associated with board effectiveness: (i) NED Human Capital based on the selection procedures in use; (ii) NED Role Clarity (role; power; responsibility); and (iii) Access to Information.

Keywords: board dynamics, board effectiveness, communicative action, critical dialogue, Habermas, non-executive directors (NEDs)

JEL Classification: D70, J20, L20, J24, M40