Skip to main content
SpringerLink
Log in

Stakeholders' Expectations of Board Roles: The Case of Subsidiary Boards

  • Published:
Journal of Management and Governance Aims and scope Submit manuscript

Abstract

What is the best for acompany? In most countries it isconsidered to be a duty for board membersto act in the best interest of thecompany. Few, however, question ``who orwhat really counts'' in the boards'governance decisions, and that boards mayplay various roles in carrying out theirduties. In this paper we review anddiscuss stakeholder expectations of boardroles. The arguments are illustrated by anempirical example. Depending on thedefinition of what is the best for thecompany, key stakeholder groups may havedifferent expectations of various boardroles.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Andrews, K.R.: 1983, “Directors' Responsibility for Corporate Strategy”, in R.G. Hamermesh (ed.), Strategic Management (New York: Wiley and Sons), pp. 512–521.

    Google Scholar 

  • Ashforth, B. and F. Mael: 1989, “Social Identity Theory and the Organization”, Academy of Management Review 14: 20–39.

    Google Scholar 

  • Berle, A. and G. Means: 1932, The Modern Corporation and Private Property (New York: Macmillan).

    Google Scholar 

  • Björkman, I.: 1994, “Managing Swedish and Finnish Multinational Corporations: The Role of the Board of Directors in French and Norwegian Subsidiaries”, International Business Review 3(1): 47–69.

    Google Scholar 

  • Borch, O.J. and M. Huse: 1993, “Informal Strategic Networks and Boards of Directors”, Entrepreneurship Theory and Practice 18(1): 23–36.

    Google Scholar 

  • Castaldi, R. and M.S. Wortman: 1984, “Board of Directors in Small Corporations: An Untapped Resource”, American Journal of Small Business 9(2): 1–11.

    Google Scholar 

  • Charkham, J.: 1994, Keeping Good Company. A Study of Corporate Governance in Five Countries (London: Clarendon Press).

    Google Scholar 

  • Clarkson, M.B.E.: 1995, “A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance”, Academy of Management Review 20: 92–117.

    Google Scholar 

  • Clarkson, M.B.E. (ed.): 1998, The Corporation and Its Stakeholders: Classic and Temporary Readings (Toronto: University of Toronto Press).

    Google Scholar 

  • Daft, R.L.: 1989, Organization Theory and Design (St. Paul: West Publishing).

    Google Scholar 

  • Davis, G.F.: 1991, “Agents Without Principles? The Spread of the Poison Pill Through the Intercorporate Network”, Administrative Science Quarterly 36: 583–613.

    Google Scholar 

  • Donaldson, T. and L.E. Preston: 1995, “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications”, Academy of Management Review 20: 65–91.

    Google Scholar 

  • Demb, A. and F-F. Neubauer: 1989, “The Board's Mandate: Mediating Corporate Lifespace”, European Journal of Management 7: 273–282.

    Google Scholar 

  • Demb, A. and F-F. Neubauer: 1992, The Corporate Board (London: Oxford University Press).

    Google Scholar 

  • Eisenhardt, K.M.: 1989a, “Agency Theory: An Assessment and Review”, Academy of Management Review 14: 57–74.

    Google Scholar 

  • Eisenhardt, K.M.: 1989b, “Making Fast Strategic Decisions in High-Velocity Environments”, Academy of Management Journal 32: 543–576.

    Google Scholar 

  • Engelstad, P.H. and T.U. Qvale: 1977, Innsyn og innflytelse: Styre og bedriftsforsamling (Oslo: Tiden Norsk Forlag).

    Google Scholar 

  • Fama, E.F.: 1980, “Agency Problems and the Theory of the Firm”, Journal of Political Economy 88:288–307.

    Google Scholar 

  • Fama, E. and M.C. Jensen: 1983, “Separation of Ownership and Control”, Journal of Law and Economics 88: 288–307.

    Google Scholar 

  • Fombrun, C.J.: 1996, Reputation: Realizing Value from the Corporate Image (Cambridge, MA: Harvard Business School Press).

    Google Scholar 

  • Fombrun, C.J and V. Rindova: 1994, “Reputational Rankings: Institutionalizing Social Audits of Corporate Performance”, in S. Wartick and D. Collins (eds.), Proceedings of the Fifth Annual Meeting of the International Association for Business and Society, pp. 216–221.

  • Freeman, R.E.: 1984, Strategic Management - A Stakeholder Approach (Marshfield: Pitman).

    Google Scholar 

  • Freeman, R.E.: 1995, “Stakeholder Thinking: The State of the Art”, in J. Näsi (ed.), Understanding Stakeholder Thinking (Helsinki: LSR Publications), pp. 35–46.

    Google Scholar 

  • Freeman, R.E. and D.L. Reed: 1983, “Stockholder and Stakeholders: A New Perspective on Corporate Governance”, California Management Review XXV(3): 88–106.

    Google Scholar 

  • Greenwire: 1994, “Green Board Members Help Firms”, July 19.

  • Halme, M. and M. Huse: 1997, “The Influence of Corporate Governance, Industry and Country Factors on Environmental Reporting”, Scandinavian Journal of Management 13: 137–157.

    Google Scholar 

  • Hammer, T.H., S.C. Curral and R.N. Stern: 1991, “Worker Representation on Boards of Directors: A Study of competing Roles”, Industrial and Labor Relation Review 44: 661–680.

    Google Scholar 

  • Herman, E.S.: 1981, Corporate Control, Corporate Power (New York: Cambridge University Press).

    Google Scholar 

  • Hill, C.W.L. and T.M. Jones: 1992, “Stakeholder - Agency Theory”, Journal of Management Studies 29(2): 131–154.

    Google Scholar 

  • Hills, R.: 1994, “ ‘Boards Can Work!’ The Role of Corporate boards in Replacing Ineffective Management”, Directors and Boards 18: 4–xx.

    Google Scholar 

  • Hunter, L.W.: 1998, “Can Strategic Participation be Institutionalized? Union Representation on American Corporate Boards”, Industrial and Labor Relations Review 51: 557–578.

    Google Scholar 

  • Huse, M.: 1995, “Boards of Directors in Europe: Scandinavian Experiences”, in M. Huse (ed.), Stakeholder Perspectives on Corporate Governance: A Sample of Scandinavian contributions (Bodø : Nordland Research Institute).

    Google Scholar 

  • Huse, M.: 1998, “Researching the Dynamics of Board-Stakeholder Relations”, Long Range Planning 31: 218–226.

    Google Scholar 

  • Huse, M.: 2000, “Boards of Directors in SMEs: A Review and Research Agenda”, Entrepreneurship and Regional Development 12: 271–290.

    Google Scholar 

  • Huse, M. and D. Eide: 1996, “Stakeholder Managagement and the Avoidance of Corporate Control”, Business and Society 35: 211–243.

    Google Scholar 

  • Jensen, M.C. and W.H. Meckling: 1976, “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure”, Journal of Financial Economics 3: 305–306.

    Google Scholar 

  • Johnson, J.L., C.M. Daily and A.E. Ellstrand: 1996, “Boards of Directors: A Review and Research Agenda”, Journal of Management 22: 409–438.

    Google Scholar 

  • Jones, T.M.: 1986, “Corporate Board Structure and Performance: Variations in the Incidence of Shareholders Suits”, Research in Corporate Social Performance and Policy 8: 345–359.

    Google Scholar 

  • Jones, T.M.: 1995, “Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics”, Academy of Management Review 20: 404–437.

    Google Scholar 

  • Jones, T.M. and L.D. Goldberg: 1982, “Governing the Large Corporation: More Arguments for Public Directors”, Academy of Management Review 7: 603–611.

    Google Scholar 

  • Judge, W.Q. and C.P. Zeithaml: 1992, “Institutional and Strategic Choice Perspectives on Board Involvement in the Strategic Decision Process”, Academy of Management Journal 35: 766–794.

    Google Scholar 

  • Kesner, I., B. Victor and B.T. Lamont: 1986, “Board Composition and the Commission of Illegal Acts: An Investigation of Fortune 500 Companies”, Academy of Management Journal 29: 789–799.

    Google Scholar 

  • Kimberly, J.R and E.J. Zajac: 1988, “The Dynamics of CEO/Board Relationships”, in D.C. Hambrick (ed.), The Executive Effect: Concepts and Methods for Studying Top Managers (Greenwich: JAI Press).

    Google Scholar 

  • Kosnik, R.: 1987, “Greenmail: A Study of Board Performance in Corporate Governance”, Administrative Science Quarterly 32: 163–185.

    Google Scholar 

  • Kriger, M.P.: 1988, “The Increasing Role of Subsidiary Boards in MNCs: An Empirical Study”, Strategic Management Journal 9: 347–360.

    Google Scholar 

  • Kriger, M.P.: 1991, “The Importance of the Role of Subsidiary Boards in MNCs: Comparative Parent and Subsidiary Perceptions”, Management International Review 31: 317–331.

    Google Scholar 

  • Lorsch, J. and E. McIver: 1989, Pawns and Potentates: The Reality of America's Corporate Boards (Cambridge, MA: Harvard Business School Press).

    Google Scholar 

  • Lundgren, A. and M. Broman: 1985, Kooperativt styrelsearbete (Stockholm: EFI).

    Google Scholar 

  • Mace, M.L.: 1971, Directors: Myth and Reality (Boston, Harvard University Press).

    Google Scholar 

  • Mintzberg, H.: 1983, Power In and Around Organizations (Englewood Cliffs: Prentice Hall).

    Google Scholar 

  • Mitchell, R.K., B.R. Agle and D.J. Wood: 1997, “Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts”, Academy of Management Review 22: 853–886.

    Google Scholar 

  • Mizruchi, M.S: 1983, “Who Controls Whom? An Examination of the Relationships Between a Board of Directors in Large American Corporations”, Academy of Management Review 8: 426–435.

    Google Scholar 

  • Näsi, J.: 1995, “What is Stakeholder Thinking”, in J. Näsi (ed.), Understanding Stakeholder Thinking (Helsinki: LSR Publications), pp. 19–32.

    Google Scholar 

  • Nunnally, J.C.: 1978, Psychometric Theory (New York: McGraw-Hill).

    Google Scholar 

  • Oviatt, B.M.: 1988, “Agency and Transaction Cost Perspectives on the Manager-Shareholder Relationship: Incentives for Congruent Interests”, Academy of Management Review 13: 214–225.

    Google Scholar 

  • Palmer, D.: 1983, “Broken Ties: Interlocking Directorates and Intercorporate Coordination”, Administrative Science Quarterly 28: 40–55.

    Google Scholar 

  • Parkinson, J.E.: 1993, Corporate Power and Responsibility. Issues in the Theory of Company Law (Oxford: Clarendon Press).

    Google Scholar 

  • Patton, A. and J. Baker: 1987, “Why won't Directors Rock the Boat?”, Harvard Business Review (November- December): 10–14.

  • Pearce II, J.A. and S.A. Zahra: 1991, “The Relative Power of CEO's and Board of Directors: Associations with Corporate Performance”, Strategic Management Journal 12: 135–153.

    Google Scholar 

  • Pennings, J.M.: 1980, Interlocking Directorates (San Francisco: Jossey-Bass Publishers).

    Google Scholar 

  • Pfeffer, J.: 1972, “Size and Composition of Corporate Boards of Directors”, Administrative Science Quarterly 17: 221–228.

    Google Scholar 

  • Pfeffer, J. and G.R. Salancik: 1978, The External Control of Organizations: A Resource Dependency Perspective (New York: Harper and Row).

    Google Scholar 

  • Preston, L.E.: 1990, “Stakeholder Management and Corporate Performance”, Journal of Behavioral Economics 19: 361–375.

    Google Scholar 

  • Provan, K.G.: 1980, “Board Power and Organizational Effectiveness”, Academy of Management Review 23: 221–236.

    Google Scholar 

  • Rehnman, E. and B. Stymne: 1965, Företagsledning i en föränderlig värld (Stockholm: Aldus/Bonnier).

    Google Scholar 

  • Richardson, R.J.: 1987, “Directorship Interlocks and Corporate Profitability”, Administrative Science Quarterly 32: 367–386.

    Google Scholar 

  • Selznik, P.: 1949, TVA and the Grass-Roots (Berkeley: University of California Press).

    Google Scholar 

  • Stone, C.D.: 1975, Where the Law Ends: The Social Control of Corporate Behavior (New York: Harper and Row Publishers).

    Google Scholar 

  • Thompson, J.D.: 1967, Organizations in Action (New York: McGraw Hill).

    Google Scholar 

  • Useem, M.: 1982, “Classwide rationality in the Politics of Managers and Directors of Large Corporations in the United States and Great Britain”, Administrative Science Quarterly 27: 199–226.

    Google Scholar 

  • Useem, M.: 1984, The Inner Circle (New York, Oxford University Press).

    Google Scholar 

  • Verespej, M.: 1994, “Before It's Too Late”, Industry Week, September 19: 11–xx.

  • Wang, J. and B.S. Coffey: 1992, “Board Composition and Business Ethics”. Journal of Business Ethics 11: 771–779.

    Google Scholar 

  • Wang, J. and H.D. Dewhirst: 1992, “Board of Directors and Stakeholder Orientation”, Journal of Business Ethics 11: 115–123.

    Google Scholar 

  • Wartick, S.L. and P.L. Cochran: 1985, “The Evolution of the Corporate Social Performance Model”, Academy of Management Review 10: 758–769.

    Google Scholar 

  • Williamson, O.E.: 1985, The Economic Institutions of Capitalism (New York: The Free Press).

    Google Scholar 

  • Zahra, S.A.: 1989, “Boards of Directors and Corporate Social Responsibility Performance”, European Management Journal 7: 241–247.

    Google Scholar 

  • Zahra, S.A., B. Oviatt and K. Minyard: 1993, “Effects of Corporate Ownership and Board Structure on Corporate Social Responsibility and Financial Performance”, Academy of Management Best Papers Proceedings: 336–340.

  • Zahra, S.A. and J.A. Pearce: 1989, “Board of Directors and Corporate Financial Performance: A Review and Integrative Model”, Journal of Management 15: 291–334.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Norwegian School of Management, Box 580, N-1302, Sandvika, Norway

    Morten Huse

  2. University of Maryland, USA

    Violina P. Rindova

Authors
  1. Morten Huse
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Violina P. Rindova
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Huse, M., Rindova, V.P. Stakeholders' Expectations of Board Roles: The Case of Subsidiary Boards. Journal of Management & Governance 5, 153–178 (2001). https://doi.org/10.1023/A:1013017909067

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1013017909067

Search

Navigation