Vlerick Leuven Gent Working Paper Series 2007/03 ... - Vlerick Public

Proposition 4 : the greater the conflict norms, the stronger the relationships
between board size, independence, diversity and debate
Indirect effects of board characteristics: the board processes-task performance link
The strategic as well as the control role of the board include complex and interactive
tasks which require a minimum level of interpersonal attraction, or cohesiveness, among the
board members in order to perform these tasks effectively. In particular, the performance of
these tasks depends on mutual trust and professional respect and this is more difficult to
sustain when boards are more fragmented (Forbes and Milliken, 1999). Genuine collegiality
in the boardroom is required which breathes confidence that board members are respectful
listening to each other point of view and are committed to working through the board tasks in
a collective way. Empirical research on other groups has already found a positive relationship
between cohesiveness and performance outcomes (Cohen and Baily, 1997). Higher cohesive
or integrated groups experience higher levels of member satisfaction (Bettenhausen, 1991), a
higher productivity (Shaw, 1976) and a lower turnover rate (O’Reilly et.al., 1989).
Still, it can be argued that the impact of cohesiveness on board task performance is not
simply linear. In fact, group studies have demonstrated that a high level of cohesiveness may
lead to a pressure to conform with group standards and a striving for unanimity at the expense
of critical thinking and questioning of assumptions, a phenomenon known as ‘groupthink’
(Janis, 1983). Also boards of directors may be vulnerable to the danger of groupthink to the
extent politeness and courtesy is emphasized over critical oversight and quality strategic
decision-making (Jensen, 1993). In this respect, board members are failing to examine
alternatives, to be either self-critical or critical to others, and being selective in gathering
information (Bainbridge, 2002). Based on these assumptions, we advance the following
propositions:
Proposition 5 : the effect of cohesiveness on board task performance will be positive
but when cohesiveness is too high, the impact on board task performance may be
negative
As noted before, in most boards, directors are faced with complex strategic and
monitoring issues.
22