Document Type
Article
Publication Date
1-1-2013
Abstract
Board performance research focused on individual director's economically-motivated behaviors and outcomes has generated inconsistent and disappointing results. Most research does not consider the board as a team, despite recent calls for a focus on collective board processes and behaviors. As 90% of directors rate their individual performance at very effective but only 30% rate overall board performance at an equivalent level, it is obvious that this gap needs to be addressed. The discrepancy between individual and team performance effectiveness was the focus of this research, based on original data from 182 directors and their assessment of their board's dynamic, team task performance efficacy, team potency and the impact of their activities as a board on firm profitability. Our findings show that director experience, social network and cultural intelligence quotient as well as their ability to achieve high levels of team interaction, thereby lowering information asymmetry, have a significant impact on profitability. We found that this dynamic as well as team potency had a positive impact on profitability, while the focus on task performance compliance quality had a significantly negative effect on profitability. The insights of this study should help boards and their advisors better focus their efforts to improve team dynamic, optimize board interactions and refocus their attention on value-creating activities. We also believe improving board team dynamics will have an unintended consequence of bring a level of individual and team satisfaction back to the boardroom.
Keywords
board of directors, board capital, cultural intelligence quotient, team interaction quality, task performance, potency, information asymmetry
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Charas, Solange, "Enhancing Firm Profitability by Improving Director Dynamics" (2013). Student Scholarship. 194.
https://commons.case.edu/studentworks/194