Relational norms as a supplement to neo-classical understanding of directorates: An empirical study of boards of directors

Abstract

This article presents some of the conclusions from a study about board of directors in small firms in Norway and Sweden. Theories built on neo-classical and socio-economic assumptions are integrated and a stakeholder approach is adapted. Theories based on neo-classical paradigms have dominated most recent research about boards of directors. These studies have focused on board composition such as insider/outsider ratio, board members stock ownership and board size. Models based on agency theory and legalistic approaches have contributed to the framework for these studies, which mainly discuss the consequences of the board's independence of management in order to be an effective control mechanism. The present study adds a dimension of "interdependence" or closeness to the traditional "independence"-criterion. Interdependence is measured by the degree of relational norms (Macneil, 1980) between directors and management. The study is an associative cross-sectional field survey of 108 joint stock dual leadership hotels in Norway and Sweden and uses a dyadic approach with CEOs and chairmen as respondents. This is the first study conducted using a dyadic approach in understanding directorates. The findings of this research contribute to an increased understanding of the role of directorates and board-management relations. The study illustrates the importance of distinguishing company size in research about directors and management and it shows that a socio-economic approach may have larger explanatory power than theories based on neo-classical paradigms. © 1993.