How boards influence business performance: developing an explanation

Abstract

Purpose

The purpose of this paper is to explore the relationship between boards and board activity and subsequent business performance, in the context of high-growth companies, through the lens of decision making and business performance.

Design/methodology/approach

A critical realist approach was used to conduct a longitudinal multiple-case study of two medium-sized, quasi-public high-growth companies. Data collection included first-hand observations of boards in session, semi-structured interviews with key actors and the inspection of board and company documentation. An iterative approach to analysis was used to gain an in-depth understanding of how the boards worked and how they sought to exert influence.

Findings

The paper provides empirical insight about board involvement in strategic management. A proactive involvement by boards in the strategy development process and assessment of strategic options, and a collaborative form of board involvement in strategic management together with management is indicated as being important if the board is to exert influence beyond the boardroom. A conceptual model of a collaborative form of board-management interaction is developed.

Practical implications

The paper provides guidance for boards, suggesting that a more direct level of involvement in strategic management by the board together with management may be material to improved business performance.

Originality/value

The paper responds to calls for more research on the relationship between boards and business performance. It contributes much-needed first-hand evidence from within the boardroom.

Citation

Crow, P.R. and Lockhart, J.C. (2016), "How boards influence business performance: developing an explanation", Leadership & Organization Development Journal, Vol. 37 No. 8, pp. 1022-1037. https://doi.org/10.1108/LODJ-08-2014-0168