Board of directors’ dynamics, board effectiveness and organisational performance: the case of Nordic region

Abstract

The thesis aims to explore the effect of team dynamics on team and organisational outcomes. Dynamics is a broad term that encompasses all the processes and attitudes that exist between team members and influence the direction of team’s performance. Trust, conflict and behavioural integration comprise psychological facets of teamwork and are amongst the most common dynamics of a team. The current study aims to shed light on the perceptions of board members about the level of conflict, trust and behavioural integration during board meetings, which comprise the most critical forum of the group. Trust, conflict and behavioural integration are the primary attitudes, behaviors, and cognitions that arise within the board and encompass the core aspects of teamwork. There is a gap in the literature for examining the role of social-psychological processes and interactions between the board members because access to the boardroom is difficult and the researchers are forced to turn their attention on secondary data and proxies for board behaviors. Although that board of directors is an upper echelons group of executives who can ensure the long-term survival of the organisations, there is scarce of research in studying boards from a team perspective. Until today, we have limited knowledge of team processes, such as conflict, both inside the boardrooms and in the context of strategy implementation. The literature review in this thesis is drawn from multiple disciplines, including management, psychology and sociology, which enable us to gain a deep understanding of team’s dynamics. The methodology has been based on a positivist approach since the focus is centered around the data collection process and the statistical interpretation of the findings. Primary data was collected from board members in Nordic countries, namely Denmark, Finland, Sweden, Iceland and Norway. The data was collected with the use of survey method and the findings are based on 186 usable responses. The Nordic corporate governance model remains still the less known outside the Nordic region (Thomsen, 2016) but this thesis postulates that valuable lessons can emanate from its study. The study of the Nordic model could give us useful lessons for the roles of the board and the structure of their organisations. The statistical analysis of the model involved: Descriptive Analysis, Exploratory Factor Analysis (EFA), Confirmatory Factory Analysis (CFA) and Structural Equation Modeling (SEM). The results of this thesis provide theoretical and managerial recommendations for achieving superior board performance. The importance of the role of the Behavioural Integration inside the boardroom is underlined as a significant finding of this study. Moreover, the role of Trust in the board context raises some important questions about its priority since there may be other processes or dynamics which present more clear-cut results on board effectiveness. Furthermore, the deleterious effects of conflict have been underlined. It is also underlined that in this competitive era boards should go beyond fiduciary responsibilities to a more strategic role on a broader range of matters With the exception of a few studies, researchers still to move inside the “black box” of the upper echelons processes and understand how the executives in the board interact. Building a strong board of directors requires a focus beyond demographic characteristics to board interactions. The most effective boards have the strongest board dynamics and are characterized by openness, teamness and collaborative behaviour. The power of the board comes from the ability of the directors to effectively work together and hopefully the current study contributes substantially to the corporate governance field and the way that team processes affect team outcomes.