Economics and Business Review

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Poznań University of Economics - Poland

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Volume 10 Number 2 pp. 15-32

Gary Evans

University of Prince Edward, Island

Corporate governance culture - an interview-based ethnography of two boards of directors using grounded theory

Abstract: This paper draws upon the broad range of research conducted on corporate governance and narrows the focus to a new model for governance that places culture as the focal point. The purpose of the research is to analyse the influence of culture on the creation of value added boards, the role of the Chairperson and directors in the development of board culture and how culture impacts the effectiveness and efficiency of the board. The paper draws together good practice as distilled from the interviews and is grounded in the 'Value-Added Board' model. This model takes a holistic view of governance, and focuses on the dynamics of the board's culture. The model focuses on how the board organizes its activities, what activities are valued, how information is evaluated, and how decisions are formed. The model also addresses how the board keeps itself fresh and competent by evaluating itself through continuous improvement. This paper reviews the background literature on board culture pinning the creation of the model, and assesses why culture is critical in the evaluation of board performance. The ethnographic approach to the interviews included one on one taped interviews with directors and taped board meetings where the interaction and decision making process could be directly observed. For this paper two boards have been selected that had substantially different board cultures. Past research has been unable to establish an unequivocal relationship between good corporate governance and firm performance. The evidence is either non-existent, mixed, or weak for such a relationship, and there is no evidence of causality. There is nothing that indicates that if companies follow some set of corporate governance practices that shareholders and stakeholders will benefit in some manner. A key question is why after thousands of research hours and numerous papers has no strong and definitive relationship been found? To date, the methodologies used to study this issue are primarily positional in nature and based on quantitative variables. Researchers take board structure or governance variables and develop numeric scores, ratings, or rankings of the data. These data are then regressed against financial, market return, or valuation variables to see if a relationship exists. This work converts primarily qualitative data into quantitative data. That is a problem when the research question is qualitative in nature. The problem may be that there is a relationship between governance and the financial and market performance of the company, but the methodologies used to detect it have not been successful. The methodology used in this study is qualitative in nature and is consistent with the qualitative nature of the data and consequently provides a robust approach to analysing this phenomena. Ethnographic research has had limited exposure in the board room mostly due to access issues with corporate directors and a tendency for researchers to still over focus on quantitative data collection. This paper provides a unique view of culture from within the boardroom and offers an alternative to the corporate scorecards developed from past research studies. (original abstract)
pub/2010_2_15.pdf Full text available in in Adobe Acrobat format:
http://www.ebr.edu.pl/volume10/issue2/2010_2_15.pdf
Keywords: Corporate governance, Culture, Research methodology, Ład korporacyjny, Kultura, Metodologia badań

For citation:

MLA Evans, Gary. "Corporate governance culture - an interview-based ethnography of two boards of directors using grounded theory." Economics and Business Review EBR 10.2 (): 15-32.
APA , (). Corporate governance culture - an interview-based ethnography of two boards of directors using grounded theory. Economics and Business Review EBR 10(2), 15-32
ISO 690 EVANS, Gary. Corporate governance culture - an interview-based ethnography of two boards of directors using grounded theory. Economics and Business Review EBR, , 10.2: 15-32.