Boardroom Theater: Actors, Actions and Their Consequences

Abstract

Seventy seven percent of low corporate governance ratings for U.S. publicly-traded companies are attributable to poorly-performing boards. Responding to calls for more research on interpersonal dimensions of directors’ behaviors and their relationship to board performance, we conducted inductive research based on semi-structured interviews with directors of high and low governance-rated small and medium sized US firms. Illumination of their “lived experiences” on public company boards revealed the criticality of cultural intelligence (CQ) to govern distinct front- and back-stage board performance. Although seldom used to screen board candidates, behavioral sensitivity of directors may be higher in high governance-rated boards where less institutional control over non-conformance also occurs. The role and effect of CQ in the context of boards has not previously been discussed. Implications for practice and for future research are noted.

Keywords: Board governance, agency theory, resource dependence theory, behavioral models, director characteristics, team dynamics, information asymmetry, cultural intelligence, professional capital