‘When in Rome, do as the Romans do’? A call for more context sensitive research on boards of directors

Abstract

Boards of directors have been the focus of many studies in the last few decades. A convergence to the Anglo-American corporate governance system has long been emphasised within this stream of research and by transnational organisations like the Organisation for Economic Co-operation and Development (OECD; Clarke, 2017). The convergent system has dominating features such as ‘outsider’ control of management by investors, a focus on shareholders as the main beneficiary of business returns and calls for independent directors that can monitor managerial behaviour and firm performance (e.g., Thomsen, 2003; Toms and Wright, 2005; Goergen et al., 2008). However, in recent years we are witnessing a growing number of studies that investigate the particularities of the context and its consequences for boards of directors. For example, rising concerns about climate change and corporate social responsibility (CSR) in many parts of the world affect conceptions and expectations about the social contract of corporations and to whom board members are responsible (e.g., Mackenzie, 2007; Prado-Lorenzo and Garcia-Sanchez, 2010; Michelon and Parbonetti, 2012). Moreover, contemporary issues such as economic protectionism, social turmoil and political instability in many countries across the world lead to strategic uncertainties and operational risks that companies and their boards must deal with (e.g., Ellstrand et al., 2002; Hillman, 2005; Kolb and Schwartz, 2009). In a recent study, Useem (2015) points to the rising complexity in company decisions since the millennium, which resulted in the reinforcement of governing boards to serve as partners in those decisions with the company top management team. This in turn shifts the emphasis from monitoring to a focus on company background and on how boards are organised and can collaborate with the executives. Therefore, an active attention on the changing dynamics of the boards is needed. Adding to this, the ongoing digital transformation of society is gradually spreading across industries, with a significant impact on workforce automation, employment relations and the strategising of boards (e.g., Bankewitz et al., 2016). Given these diverging and often conflicting occurrences, corporate governance systems and boards of directors are to be understood within historical, spatial, political and societal contexts (Huse, 2018), as these layers concurrently provide boundaries for the actions and behaviours of corporate governance actors and decision makers both inside and outside the boardroom (Aguilera et al., 2008; Yokishawa et al., 2014). Even if it is generally acknowledged in scholarly research that boards of directors are a context-bound phenomenon, we can observe that the understanding of the role of context in the academic literature on boards in many ways is limited. In part, this has to