How boards influence business performance: developing an explanation

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.

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.

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.

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.

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.