This is the author-manuscript version of this work. The final publication is available at www.springerlink.com, url:http://www.springerlink.com/content/j2664511305txu12/

Vandewaerde, M., W. Voordeckers, F. Lambrechts and Y. Bammens: 2011, ‘Board Team Leadership Revisited: a Conceptual Model of Shared Leadership in the Boardroom’, Journal of Business Ethics, DOI: 10.1007/s10551-011-0918-6

Board team leadership revisited: a conceptual model of shared leadership in the boardroom

M. Vandewaerde, W. Voordeckers, F. Lambrechts

KIZOK Research Center, Hasselt University, Agoralaan

Building D, 3590 Diepenbeek, Belgium

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W. Voordeckers

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F. Lambrechts

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Y. Bammens

School of Business and Economics, Maastricht University,

PO Box 616, 6200 MD Maastricht, The Netherlands

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Title: Board team leadership revisited: a conceptual model of shared leadership in the boardroom

Abstract

In the slipstream of several large-scale corporate scandals, the board of directors has gained a pivotal position in the corporate governance debate. However, due to an overreliance on particular methodological (i.e., input-output studies) and theoretical (i.e., agency theory) research fortresses in past board research, academic knowledge concerning how this important governance mechanism actually operates and functions remains relatively limited. This theoretical paper aims to contribute to the promising stream of research which focuses on behavioural perspectives and processes within the corporate board, by delving into one of the research areas perhaps plagued most by these predominant approaches: board leadership. In adopting a team perspective on the board of directors our study goes beyond traditional board leadership research, which has turned a blind eye on actual leadership dynamics, by examining leadership processes and behaviours inside the board team. Specifically, we develop a conceptual framework addressing a novel and ethical approach to team leadership within the board, i.e., shared leadership, which has previously been demonstrated to result in performance benefits in various other team settings.

Keywords: board leadership, board of directors, conceptual framework, shared leadership, teams

1 INTRODUCTION

In recent years the interest in corporate governance, not least due to several high-profile corporate scandals (e.g., Enron, Tyco International, WorldCom), has picked up momentum among scholars as well as practitioners and governments. Within this larger field, major emphasis has been on boards of directors as they are one of the primary internal governance mechanisms available to a firm (Daily et al., 2003; Fama and Jensen, 1983) and therefore uniquely positioned to bring about value protection and creation for their firms and its involved actors (Huse, 2007). In this light, shareholder activists’ and legislative efforts aimed at improving corporate governance are to a large extent targeted at boards as they are increasingly being pressured to actively fulfil their legal and ethical responsibility of safeguarding the interests of shareholders and, more and more, a wider set of stakeholders (e.g., employees, customers, local societies) (Schwartz et al., 2005). Given the importance of boards of directors for their businesses and society at large, expanding academic knowledge concerning how they actually operate and function is highly warranted. Indeed, despite the increased focus on corporate boards and the resulting upsurge of empirical studies in the area, there is still hardly any conclusive evidence on what determines a board’s effectiveness and how this in turn is related to firm performance (e.g., ROI, revenue growth, market share, CSR) (Finkelstein and Mooney, 2003). Such highly aspired insights have over the years taken on the aura of a unicorn (Johnson et al., 1996) or perhaps, for board critics, the Loch Ness monster. In this light, a growing number of researchers is currently acknowledging that the answers to these ‘mythical’ issues may in fact be out there, but that they have been cloaked by an overreliance on particular established methodological (i.e., input-output studies) and theoretical (i.e., agency theory) research fortresses (Daily et al., 2003; Gabrielsson and Huse, 2004).

Among all of the board issues that have been affected by these traditional board research paradigms, leadership has adopted a prime position. The majority of studies delving into board leadership have solely focused on structure (mainly CEO duality) and its direct relation to performance (Leblanc, 2005; Lorsch, 2009). However, such a structural preoccupation has turned board leadership into a black box as it has obscured any matter that deals with how the board team is actually led. Therefore, even though a host of contemporary scholars acknowledge that structure constitutes only a minor part of leadership in the boardroom, “little research attention has been given to systematically exploring behavioural perspectives of board leadership” (Huse, 2005, p. S74).

In response to the abovementioned issues, this theoretical paper aims to answer to the call made by several board scholars to focus on board processes and behaviour as a means of overcoming past board studies’ limitations (van Ees et al., 2009; Hambrick et al., 2008), by addressing leadership processes within the board team. Within the broad range of possible leadership approaches, a relatively novel perspective on team leadership which can be argued to be highly applicable in the context of the board of directors, i.e., shared leadership, will constitute the core of our study. Specifically, by means of an elaborate and integrative conceptual framework, this article sets out to investigate how this fluid and mutual influence process in which leadership is shared or distributed among team members (Gronn, 2002; Pearce and Conger, 2003) operates inside the boardroom.

Our work contributes to the existing academic literature in several ways. We are the first, to our knowledge, to introduce and discuss shared leadership in a board context and thereby respond to the call made by several leadership scholars to study this promising leadership conceptualization in a wide range of team settings (e.g., Day et al., 2006; Pearce and Conger, 2003). As such, we delve into an underexposed topic in the board literature by showcasing that board leadership entails much more than structure (e.g., whether or not the CEO also holds the position of Chairman) and that attention to leadership processes and behaviours that take place within the boardroom is highly needed given the demonstrated importance of leadership for team performance (Cohen and Bailey, 1997). In this light, we advance an ethical form of board leadership, characterized by a high degree of shared decision-making responsibility, which may serve as a promising means in preventing future corporate tragedies and safeguarding the interests of shareholders and society at large. Offering another contribution, this paper goes beyond commonplace theories and models which are predominantly rooted in the economic tradition of corporate governance (e.g., agency theory), as it conforms and contributes to the more recently proposed behavioural approach to the study of the board of directors (van Ees et al., 2009). By providing substantiation for addressing the board of directors from a team perspective and subsequently adopting a team approach to board leadership, we furthermore show, and aim to inspire other board researchers in the process, that embracing the wealth of literature on teams and their functioning that has been developed over the years is the next step to take in board research. Such a spotlight on the human side of corporate governance and the interactions and behaviours occurring inside the board team is essential in order to improve our understanding of how boards of directors, as key elements in the governance system, can bring about value protection and creation for their respective firms and a wider set of stakeholders (Huse, 2007; Huse et al., 2009).

The rest of our work is organized as follows. First, we address the conceptual foundations underlying our framework by developing the rationale for studying the board from a team perspective and providing a concise review of relevant team leadership literature. In the subsequent section we advance the conceptual model, clarify relevant theoretical concepts, and offer a number of novel propositions related to shared leadership in a board context. The remaining parts of this paper are dedicated to a discussion in which the implications of our work for theory, practice, and further research are elaborated upon.

2. THEORETICAL BACKGROUND

2.1 The board of directors as a team

The use of teams in organizational settings has increased dramatically over the past few decades, which has resulted in a boost of academic interest into the topic. In the context of the board, however, the concept ‘team’ has been rarely adopted to depict the collection of individual directors. This may be partly attributed to the methodological limitations of a substantial proportion of previous board studies in which attempts were made to establish a direct relationship between board demographic characteristics and board or firm performance (Gabrielsson and Huse, 2004). Such an input-output approach disregards the importance of processes and behaviours inside the boardroom (Forbes and Milliken, 1999), or at most considers demographic indicators to be good proxies for them (Lawrence, 1997; Pfeffer, 1983), which essentially makes thinking of boards as teams extraneous. On the theoretical side, the dominance of the agency theory paradigm may have served as an additional impediment. In this line of thinking, limiting the discretion of self-serving managers is considered to be the main responsibility of the board, resulting in an almost exclusive emphasis on the board’s control tasks (Fama and Jensen, 1983). Absolute director independence is consequently considered to be a prerequisite for effective board performance, which leads to a major focus on the polarized relationship between directors and management, in effect diverting attention away from how the board team in itself functions internally and how directors interact in order to perform their broad set of tasks.

However, upon consulting the academic literature on teams that has amassed over the years, it becomes clear that boards of directors can in fact be conceptualised and, consequently, dealt with as teams. We adopt the definition offered by Kozlowski and Bell (2003) pertaining to teams in an organizational context, which draws upon a host of scholarly contributions and has later on been taken up in various studies (e.g., Kozlowski and Ilgen, 2006; Mathieu et al., 2008), to provide substantiation for this rationale. They define teams as collectives who:

“(a) exist to perform organizationally relevant tasks, (b) share one or more common goals, (c) interact socially, (d) exhibit task interdependencies (i.e., work flow, goals, outcomes), (e) maintain and manage boundaries, and (f) are embedded in an organizational context that sets boundaries, constrains the team, and influences exchanges with other units in the broader entity” (p. 334).

Such a conceptualization of teams, which is generally endorsed in team literature, confirms the validity of a team perspective in the board context. First of all, one can quite straightforwardly establish that the multitude of tasks boards perform, i.e., a variety of control and service tasks, bear relevance in an organizational setting. Second, given that no board team member is likely to possess all of the required knowledge, skills, and abilities to bring these tasks to fruition individually (Gabrielsson et al., 2007), directors are generally speaking (as some activities such as networking and lobbying can be expected to require less interaction) highly dependent on each other in their work. Third, in carrying out their various control and service tasks, directors are working towards a common goal which is ultimately value protection and creation for shareholders and a broader set of stakeholders (Huse, 2007). Finally, although the board of directors can be characterized as an intact social system which is constructed on the interactions of its members (Cascio, 2004), it is also embedded in a larger contextual environment which has an undeniable impact on its functioning. In fact, several studies have shown that stakeholders both within and outside the focal firm (Huse, 1998; Ravasi and Zattoni, 2006) as well as the broader institutional environment (Aguilera and Jackson, 2003) can have a determining influence on what goes on inside the boardroom.

In line with these observations, it does not have to come as a surprise that board scholars have recently voiced support for a team perspective on boards (e.g., Nadler, 2004; Sonnenfeld, 2002). However, much of these claims are based upon “anecdotal observations or conclusions of boardroom veterans” (Letendre, 2004, p.103). As a consequence, little theoretical development and empirical testing have occurred in this promising research area, apart from a few notable exceptions. For instance, from a theoretical point of view, the application of team production theory to corporate governance has been offered as an appealing approach (Blair and Stout, 1999). In this perspective firms are conceptualized as a nexus of team-specific assets which are provided by a relatively wide array of stakeholders (Gabrielsson et al., 2007). The board is accordingly conceived as a governing body which should reflect this coalition of interests composed of actors “who add value, assume unique risks and possess strategic information” (Kaufman and Englander, 2005, p. 12). The team production approach emphasises that boards, by operating as a team, can effectively coordinate firm activities and utilize different resources to create value for their firms and its respective stakeholders, above and beyond what could be attained by a mere summarization of individual contributions. The team production approach, while offering interesting insights, takes on a rather normative stance in addressing the board from a team perspective (i.e., boards are teams if they are effective groups), whereas our analysis, in line with team literature (Cohen and Bailey, 1997; Kozlowski and Bell, 2003), does not make such a distinction (i.e., boards are teams by definition, with differing degrees of effectiveness). As such, this article theoretically develops and substantiates the conceptualisation of boards as teams, thereby providing the theoretical grounds to assure academic knowledge about teams can be validly drawn upon in order to improve our understanding of this pivotal governance mechanism and its functioning. In fact, on the empirical side of board team research, some early evidence does indicate that boards exhibit resemblance to many other kinds of teams (e.g., interdisciplinary teams) and that factors that lead to high performance in such teams also contribute to board effectiveness (e.g., McIntyre et al., 2007; Payne et al., 2009).

2.2 Team leadership: beyond individualism

Ever since the dawning of the human species, man has been fascinated by the exploits of individual leaders. Narratives describing these triumphant ‘heroes’ or dreadful ‘villains’ abound. Such popular conceptions of leadership have also found their way into academic organizational leadership literature in which over time various distinct lines of research have developed (i.e., trait, style, contingency, and ‘new leadership’), each approaching hierarchical, standalone leadership from a different perspective (Bryman, 1986). Indeed, Rost’s (1993) review of leadership studies confirms the pervasiveness of this top-down perspective in over a century of ongoing leadership research.

Given the deep-rooted tradition of leadership studies with a strictly hierarchical focus, there must be some validity to such an approach. Evidently in some, perhaps even most, organizational situations clear hierarchical leadership is advisable and desirable (Pearce and Manz, 2005; Pearce and Sims, 2000). However in a team context, the picture changes dramatically. Whereas team leadership studies have traditionally been characterized by an unadulterated extrapolation of ‘theories of leadership’ to a team setting, recently calls have been made to examine ‘team leadership theories’ as a disparate phenomenon as they are theoretically distinct (Burke et al., 2006; Morgeson et al., 2010). That is, traditional leadership theories are unable to grasp the dynamics and complexities of team leadership as they focus on leading individuals and are mainly static in kind, thereby failing to take into account the adaptive nature, specific task context, and intricate team member interactions that characterize teams (Burke et al., 2006; Kozlowski and Ilgen, 2006).

A very promising leadership conceptualisation, which ties in with the abovementioned issues and originates from the recognition of more collective forms of leadership, is that of shared leadership (Day et al., 2006). Although several definitions concerning this relatively novel leadership conceptualization have been offered in previous research (for a review, see Carson et al., 2007), this article builds on the well-received formulation put forward by Pearce and Conger (2003). They define shared leadership as “a dynamic, interactive influence process among individuals in groups for which the objective is to lead one another to the achievement of group or organizational goals or both”. Essential in shared leadership is that “this influence process often involves peer, or lateral, influence and at other times involves upward or downward hierarchical influence” (p.1). At the core of this approach is thus a focus on leadership rather than leaders and the acknowledgement that leadership is a socially constructed phenomenon which is not strictly confined to the formal or assigned leader (Hosking, 1988; Uhl-Bien, 2006). Such a conceptualization is highly compatible with functional leadership theory, which is a well-known team leadership approach that will be drawn upon here to provide a general description of leadership. As outlined by Hackman and Walton (1986, p. 75), “the key assertion in the functional approach to leadership is that ‘[the leader’s] main job is to do, or get done, whatever is not being adequately handled for group needs’ (McGrath, 1962, p.5)”. They continue by pointing out that “if a leader manages, by whatever means, to ensure that all functions critical to both task accomplishment and group maintenance are adequately taken care of, then the leader has done his or her job well”. Such a catchall depiction with regard to who performs these functions acknowledges that multiple individuals in a team, and not only the formal leader, possess the ability to exert leadership influence on an as-needed basis (Morgeson et al, 2010). Indeed, according to the law of the situation theory (Follett, 1924), individuals that are endowed with the greatest potential to satisfy team needs in a given situation should embrace the leadership role at that time. As such, in line with the conceptualisation put forward by Friedrich et al., (2009), we regard shared leadership in a team as a dynamic and fluid influence process that resembles a “ ‘whack-a-mole’ game in which the person with the most relevant skills and expertise ‘pops up’ at any given time” (p. 934).

While the concept of shared leadership has been studied in a broad range of both team (e.g., Carson et al, 2007; Mehra et al., 2006) and wider collaborative settings (e.g., Huxham and Vangen, 2000; Lambrechts et al., 2010), board leadership studies have almost solely dealt with leadership structure, resulting in hardly any research attention being devoted to team leadership, let alone shared leadership, in the boardroom. Yet, the corporate board setting is highly likely to provide a fertile ground for shared leadership to flourish. First of all, boards of directors are characterized by a horizontal authority structure. Even the board Chairman, the team’s appointed leader, does not have instruction authority over the other board members and thus can be more rightfully conceptualized as a primus inter pares than as a commanding chief (Gabrielsson et al., 2007; Gronn, 2002). Such a team architecture in which differences in authority do not exist or are at least downplayed to a large extent (as opposed to hierarchically structured teams headed by a clear authority figure), creates a team environment which makes the prevalence of shared leadership not only more likely, but also more desirable (Barry, 1991). Indeed, a board Chairman overstepping his role by being too directive risks endangering cooperation and teamwork inside the boardroom (Pick, 2009). In addition, given the complex and ambiguous environment boards operate in, “no corporate board member is likely to possess the full complement of information and knowledge necessary to achieve desired goals” (Gabrielsson et al., 2007, p. 24), including the Chairman. It is exactly in such situations, in which the success of the team is highly dependent on the unique skills, knowledge, and backgrounds that all of its members bring to the table, that shared leadership has been demonstrated to result in more effective team performance and thus can be regarded as a relevant practice (Pearce and Manz, 2005). In congruence with these findings, it has in fact recently been offered that, due to the specific nature of the board, one should think of board leadership as a ‘system of leadership’, comprised of both formal and informal elements and actors, in which different directors may need to step forward and provide leadership for the board at different times (National Association of Corporate Directors, 2004; Lorsch, 2009).

3 BOARD TEAM LEADERSHIP AS A SHARED PRACTICE

In this section, a theoretical framework detailing the process of shared leadership in the boardroom is developed and elaborated upon. Concerning the outcomes of shared leadership, this framework distinguishes between task-oriented outcomes (i.e., board task effectiveness) and maintenance-oriented outcomes concerned with the board’s capacity to continue functioning as a team (i.e., individual and team conditions). These are the classic task and maintenance outcomes studied in prior work on team and board functioning (e.g., Forbes and Milliken, 1999). The framework also details how task characteristics moderate the relationship between shared leadership and board task effectiveness, and how individual and team conditions (i.e., dynamic constructs, such as trust, cohesion, commitment, etc., indicative of the nature and quality of team dynamics that develop as team members interact) mediate this relationship. Concerning the determinants of shared leadership, it is put forward that human capital heterogeneity provides the basis for this collective leadership effort to develop. Yet, this relationship is argued to be contingent upon the Chairman’s behaviour and the extent to which desirable individual and team conditions are present within the team. Cognizant of recent developments in the team literature (e.g., Ilgen et al., 2005; Mathieu et al., 2008), we thus posit that individual and team conditions within the board team function as both an input to and an output of shared leadership practices. Figure 1 offers a summary of our framework.

Figure 1: A model of shared leadership in the boardroom

3.1 Shared leadership in the boardroom

Boards of directors can be characterized as elite decision-making teams that operate in complex environments and produce output that is mostly cognitive in nature (Forbes and Milliken, 1999). Furthermore, they portray some distinctive features (e.g., meetings are relatively short and only held episodically, board membership is usually only a secondary activity, directors generally possess strong personalities, teams consist of a mix of inside and outside directors) which complicate the already intricate dynamics and processes that take place between interacting individuals. In such a challenging context no single team member, due to the inherent limitations on human competence (Simon, 1947), is likely to be the most proficient individual to lead the team to goal attainment, whether it be task- (i.e., desired board task effectiveness) or maintenance-oriented (i.e., desired individual and team conditions), in every instance. Therefore, performance gains can be expected when directors, who bring a diversity of experiences, skills, and personalities to the boardroom table, take on leadership functions when they are the most suited for it given the situation or task at hand (Friedrich et al., 2009). Indeed, depending on their task-related and interpersonal capabilities, some directors will have a greater likelihood of ensuring that specific task-oriented and team maintenance needs are being satisfied than others (Hackman and Walton, 1986; Yukl, 1989). As it is related to team task performance in a more direct manner, leadership focused at task accomplishment has been at the centre of attention in the majority of leadership studies. However, individuals who actively strive to ensure that the board operates as a well-functioning social unit, which serves as an essential antecedent of present and future levels of board performance (Forbes and Milliken, 1999), are imperative in a team context as well. Indeed, as evidenced by Barry (1991), teams in which such ‘social’ leadership is absent will likely degenerate into an ill-functioning mechanism.

In addition, board members adopting leadership functions represents only one side of the story. Leadership is in essence a social construction that lies in the eyes of the beholder. This implies that one can only be considered to be a leader when perceived as such by one or more followers (Hosking, 1988; Uhl-Bien, 2006). If such relational dynamics are not present in the boardroom, directors, in the absence of any formal authority over one another, will lack the ability to guide the team on its way to performance. Indeed, as demonstrated by Mehra et al. (2006), “team performance is not simply a matter of having more leaders. It also matters whether or not the leaders see each other as leaders” (p. 241). Therefore, shared leadership, although this may be hindered by directors’ own ambitions and motives, also entails that team members accept their peers’ temporary leadership and become effective ‘followers’ (Bligh et al., 2006). In line with these arguments, shared leadership in the boardroom can thus be conceptualized as a mutual and fluid influence process in which directors continuously switch between ‘leader’ and ‘follower’ roles based on desired capabilities and expertise given the situation at hand, in order to lead the team to outcome achievement.

3.2 Outcomes of shared leadership in the boardroom

3.2.1 Board task effectiveness

While a number of team outcomes can be distinguished, as will be addressed below, board scholars have been mainly interested in how effectively the board performs the tasks it has been designed for to do. Corporate governance literature generally acknowledges that boards of directors fulfil several tasks in their respective firms (Hung, 1998). Although many different categorizations exist (e.g., Hillman and Dalziel, 2003; Johnson et al., 1996; Zahra and Pearce, 1989), the broad distinction between control and service tasks is commonly endorsed.

The board’s control tasks

Given the predominance of agency theory in governance research, the board’s control tasks have received considerable attention in past board studies (Daily et al., 2003). In line with this theory, the board is considered to be an imperative instrument in minimizing the agency costs which arise due to the separation of ownership and control in many corporations (Fama and Jensen, 1983). Specifically, given the unfeasibility of designing complete contracts, managers are expected to take decisions that are suboptimal from a shareholder point of view because of both parties’ differing goals and risk preferences (Eisenhardt, 1989). The fundamental role of the board of directors in this perspective is to limit the discretion of managers, who are supposed to be opportunistic and self-interested, by monitoring their actions and decisions in order to maximize shareholders’ wealth (Fama and Jensen, 1983; Zahra and Pearce, 1989). However, as indicated in recent literature, this is not the only problem principals face. Their agents also suffer from the limitations of bounded rationality, resulting in what is labelled as ‘honest incompetence’ (Hendry, 2002; 2005). Therefore, even though managers’ behaviours may be well aligned with shareholders’ interests, they may still take suboptimal decisions due to cognitive constraints, highlighting the importance of board control in corporations.

Within this fundamental responsibility of the board, two distinct sets of tasks, i.e., behavioural control and output control, can be distinguished (Eisenhardt, 1985). On the one hand, the behavioural control task mainly embodies monitoring, evaluating, and regulating CEO and top manager behaviour (Hillman and Dalziel, 2003), concentrating on the manner in which things are done rather than on the outcomes. This form of control is mainly aimed at ensuring that management behaves and operates in function of shareholders’ best interests instead of serving their own or being hampered by their cognitive limitations. However, as boards are increasingly expected to take other stakeholders (e.g., employees, customers, local societies) into account, there is a need for them to assess managerial behaviour with respect to these other parties’ needs and objectives as well (Luoma and Goodstein, 1999; Huse, 2005). The output control task, on the other hand, is specifically directed at the performance outcomes of a firm. In effectuating this task, the board of directors, mainly by means of monitoring based on quantitative information, keeps a check on the congruence between company performance and shareholders’ and stakeholders’ expectations (Huse, 2005). If performance turns out to be subpar ex post, due to whatever reason, corrective measures can be subsequently adopted.

The board’s service tasks

While recognizing the importance of board control, many researchers stress that boards have other important tasks to fulfil in firms (e.g., Bammens et al., 2008; Van den Heuvel et al., 2006; Zahra and Pearce, 1989). In making such claims scholars do not limit their discussion to agency theory but instead draw upon multiple theories such as, among others, stewardship theory, resource-based view of the firm, stakeholder theory, and resource dependence theory (Hung, 1998). Out of this theoretical pluralism, two main sets of service tasks, i.e., advice and networking, can be distilled. First, stewardship theory posits, as opposed to agency theory, that often managers wish to perform their jobs in the best interest of the shareholder, thus acting as good stewards rather than self-serving agents (Davis et al., 1997). This renders the control tasks of the board less essential and in essence encourages the board to become more widely involved in the corporation by sharing their knowledge and experience with top management, thereby, in line with the resource-based view of the firm (Barney, 1991), taking on the shape of a valuable company asset (Hung, 1998). As such, boards of directors have important advisory tasks to fulfil which are ultimately aimed at enhancing the decision-making process in their firms (Huse, 1998). Second, stakeholder theory emphasizes the role of the board as a coordinator of the interests of the stakeholders involved in the corporation, which thereby serves as a legitimation mechanism with respect to these various actors (Luoma and Goodstein, 1999). In addition, from a resource dependence perspective the board is seen as an important boundary spanner between the organization and its environment. In this view, board members are expected to secure valuable assets or resources for the firm (Pfeffer and Salincik, 1978). As such, these theories provide a rationale for a last distinct board task, the networking task, in which boards are expected to be occupied with a number of activities such as networking, legitimizing, and lobbying in the firm’s interest (Huse, 2005).

Shared leadership and board task effectiveness

A board is often composed of a wide range of competent individuals such as business experts (e.g., current and former senior executives and directors of other firms), support specialists (e.g., accountants, lawyers, bankers, auditors), community influentials (e.g., politicians, academics), and insiders, who all have their own unique expertise and skills to offer to the team (Hillman et al., 2000). In line with shared leadership theory, depending on the subject matter, some directors will be better positioned than others to lead the team in order to effectively fulfil its diverse control and service tasks. For instance, in addressing legal or accounting matters, lawyers and auditors are likely to possess the most relevant expertise and knowledge regarding what needs to be done in order for the board to successfully perform its tasks, making them the most suited directors to take the lead in such instances. A similar argument can be made in favour of an internationally experienced director taking the lead when considering the decision to expand the firm’s activities abroad. Likewise, in the shared leadership process, a director with expertise in the field of marketing taking the lead is likely to be beneficial when the firm’s performance with respect to marketing-related outputs (e.g., market share, customer satisfaction, sales growth) is to be scrutinized or when discussing the desirability and content of a new marketing strategy. These continuing dynamics of directors exerting, and accepting, leadership influence based on knowledge and expertise in the team network will have a beneficial effect on the board’s problem-solving capabilities and, therefore, board task performance. That is, this mechanism of shared leadership, through concerted effort to access required expertise, share and integrate knowledge, collaborate, and make joint decisions in the network, results in a more effective use of the capabilities present throughout the board which positively reflects on the team’s ability to produce problem solutions (Friedrich et al., 2009). As such, given that boards in performing their work address a set of, often complex and ill-structured, problems, this collective leadership effort can be expected to be positively related to board control and service task performance. However, as a cautionary note, this does not imply that the board has to turn into a set of specialists who only contribute within their topic of expertise (Pick, 2009). Instead, directors have to find some sense of complementarity in which they can voice their opinion in all activity domains, but at the same time adopt a more active and leading position in their field of interest and expertise (Wood, 2005).

In diverse contexts ranging from change management teams (Pearce and Sims, 2002), work teams (Barry, 1991), and consulting teams (Carson et al., 2007) to top management teams (Ensley et al., 2006), shared leadership has been shown to significantly impact team performance. Given the demonstrated performance benefits of shared leadership for teams that perform tasks that are broadly similar in nature to the ones that are performed by the board of directors, shared leadership is expected to be significantly related to board task performance in like manner.

Proposition 1a: Boards of directors that demonstrate a high level of shared leadership in their team will be more effective in performing their control and service tasks

3.2.2 Individual and team conditions

Although task performance is the most commonly studied outcome in team literature, as well as in board research, the importance of other individual and team outcomes is widely acknowledged among scholars as well (Forbes and Milliken, 1999; Mathieu et al., 2008). In a similar vein, it is recognized in this framework that shared leadership will not only have an impact on board task effectiveness, which past board research has had an almost exclusive interest in, but also on a number of affective, behavioural, and cognitive director and board team conditions which are dynamic constructs indicative of the nature and quality of team dynamics that develop as team members interact (e.g., trust, cohesion, satisfaction, commitment) (Kozlowski and Ilgen, 2006; Perry et al., 1999). In particular, this collective leadership effort among directors can be expected to foster a socially well-functioning board team as a result of two underlying mechanisms. First, as an extreme case of team member empowerment (Pearce, 2004; Perry et al., 1999), shared leadership can be considered to be a highly ethical form of leadership (Den Hartog and De Hoogh, 2009). That is, instead of being subordinate to the unitary leadership of a hierarchical leader, team members are allowed the freedom to engage in a mutual peer influence process, thereby fully respecting their personhood (Palmer, 2009) and leaving the opportunity for them to develop and deploy their capabilities (Gandz and Bird, 1996). Therefore, merely functioning in line with the principles of shared leadership will in itself result in beneficial effects for the board team and its members. For example, the increased sense of autonomy and ability to contribute has been indicated to lead to higher levels of satisfaction and commitment among team members (Wood and Fields, 2007).

Second, besides these inherent positive effects on a number of individual and team conditions within the board stemming from the process of shared leadership, there is also a more active component to it. As indicated before, leadership entails ensuring that both task accomplishment and team maintenance needs are taken care of (Hackman and Walton, 1986). Similarly, shared leadership in the board team is not limited to directors adopting leadership functions on task-related matters only, but involves them actively sustaining and fostering desirable individual and team conditions, which are crucial for a team’s functioning, as well. As with functional expertise, some directors will likewise, depending on for instance their interpersonal capabilities, personality, past experiences, and backgrounds, be more suited than others to lead the team to need satisfaction in these areas. For example, directors which are perceived by their team members as highly charismatic will be more favourably positioned to inspire and arouse enthusiasm and commitment among followers, while yet others will be more gifted to function as mediators that can actively guide the board team in minimizing harmful conflict. In the same vein, some directors are inherently more socially sensitive and therefore more inclined to showcase supporting leadership behaviours (e.g., showing appreciation for directors’ contributions, being responsive to their needs and feelings, providing encouragement), which have been demonstrated to be positively related to cohesion, satisfaction, and commitment within teams (Yukl, 1989). Therefore, teams in which team maintenance-directed leadership is shared among members on the basis of who is the most appropriate given the situation at hand can be expected to exhibit superior performance with respect to individual and team conditions that characterize the nature and quality of team dynamics (Barry, 1991).

Previous research has in fact linked shared leadership to a wide range of alternative outcomes such as higher levels of member satisfaction (Mehra et al., 2006; Wood and Fields, 2007), trust (Shamir and Lapidot, 2003), commitment (Pearce and Sims, 2000; Perry et al., 1999), cohesion (Ensley et al., 2003), and collective efficacy and potency (Perry et al., 1999). Given that the impact of shared leadership on these individual and team conditions has been established in numerous team settings, similar dynamics can be expected to be prevalent in the boardroom as well:

Proposition 1b: Boards of directors that demonstrate a high level of shared leadership in their team will perform better with respect to a wide range of individual and team conditions

Individual and team conditions as a mediating mechanism to board task performance

Team and individual conditions resulting from of a collective’s functioning have long been recognized in team literature to constitute an important mechanism in explaining task performance (Kozlowski and Bell, 2003; Mathieu et al., 2008). As indicated in previous research, this can be argued to hold in a board context as well (Forbes and Milliken, 1999). In line with these conceptions, we argue that affective, cognitive, and behavioural board team and director responses to shared leadership are essentially intermediate in nature and as such play an important role in the mechanism that results in increased board task performance (Friedrich et al., 2009; Perry et al., 1999).

Many of these individual and team conditions which have been argued to be positively affected by shared leadership in the previous section (e.g., satisfaction, commitment, potency) have been granted considerable attention in team effectiveness studies, in which their importance for team performance has been demonstrated (Kozlowski and Ilgen, 2006; Mathieu et al., 2008). In line with these insights, we put forward that shared leadership in the boardroom, besides its direct effect on board task effectiveness, results in more effective internal team management processes and as such builds capabilities within the board which enable future team performance (Carson et al., 2007; Friedrich et al., 2009). That is, shared leadership positively affects and develops a series of individual and team conditions within the collective that foster a board’s ability to effectively perform its tasks. For instance, cohesion has been offered as a central mediator in the relationship between shared leadership and performance, and can be expected to function so similarly in the boardroom (Ensley et al., 2003). In particular, evidence indicates that individuals in highly cohesive teams are more likely to share uniquely known information and demonstrate a high degree of commitment, resulting in increased effort, towards the team’s tasks and goals (Kozlowski and Ilgen, 2006). In addition, as described above, shared leadership may be linked to improved conflict management within the board. Boards that more effectively manage dysfunctional affective conflict and foster cognitive conflict, which has been shown to result in the generation of more and better problem solutions and the mitigation of groupthink in highly cohesive groups through the inclusion of multiple viewpoints, are characterized by an increased team capacity for decision-making and, consequently, superior task performance (Forbes and Milliken, 1999). Along the same lines, trust, which can be defined as the willingness of an individual to be vulnerable to the actions of other individuals based on positive expectations regarding the trustee’s behaviour (Mayer et al., 1995), has been argued to constitute an important determinant of team performance as it functions as some sort of lubricant in the social system (Costa, 2003). That is, higher levels of trust among board members are likely to increase board task performance as directors will be more willing to engage more closely with each other, which entails risk-taking on their part, thereby facilitating coordinated action, open cooperation, and information sharing (Dirks, 1999).

Therefore, the affective, cognitive, and behavioural individual and team responses to this collective leadership effort can be argued to play a pivotal role in the dynamics of shared leadership in the boardroom as they, exemplified by these illustrations, give way to enhanced internal team mechanisms which enable boards to handle the situations they come to face in a more effective manner. In line with shared leadership and team literature, in offering the following proposition, the significance of these individual and team conditions affected by shared leadership for board task performance is therefore acknowledged:

Proposition 1c: Individual and team conditions function as an important mediating mechanism in the relationship between shared leadership and board task effectiveness

3.2.3 The nature of the task as a moderator

Although shared leadership has been demonstrated to lead to superior team task performance in a number of contexts, it cannot be considered to be a panacea in all organizational settings and at all times (Pearce, 2004). Whether shared leadership is desirable and worthwhile considering its inherent additional interaction costs or process losses (Steiner, 1972) is to large extent dependent on the nature of the tasks performed by the team. In particular, both task complexity and task interdependence have been put forward as critical moderators of its performance implications (Bligh et al., 2006; Cox et al., 2003; Pearce and Manz, 2005).

Task complexity

Task complexity can be conceptualized as the degree to which a number of determinants, i.e., multiple potential paths to arrive at desired outcomes, multiple desired outcomes to be attained, conflicting interdependence among paths to multiple outcomes, and uncertain or probabilistic links among paths and outcomes, characterize a task (Campbell, 1988). As tasks increase in complexity, higher cognitive demands are placed upon the task-doer (Campbell, 1988). Consequently, it becomes less likely that all of the necessary capabilities to lead the team to successful task fulfilment will reside in a sole person, which makes that sharing leadership in such instances will result in increased task performance. On the opposite side of the same coin, extremely routine and non-complex tasks have been shown to reduce the need for leadership (Kerr and Jermier, 1978). Therefore, task complexity is expected to moderate the relationship between shared leadership and the board’s effectiveness in performing its distinct subtasks. For example, as the behavioural control task can be considered to be more complex than the output control task, not in the least due to the information asymmetry between directors and managers and the inherent greater intangibility of human behaviour (Eisenhardt, 1989), shared leadership is likely to be more strongly positively related to behavioural control effectiveness than to output control effectiveness as the efficiency gains in the use of director’s competences will be more outspoken for complex tasks. Similarly, given the complex nature of the corporate decision-making process, a strong positive relationship between shared leadership and advisory task effectiveness can be expected which will, however, be further determined by the level of complexity of the specific matter being handled.

Proposition 2a: Task complexity will moderate the relationship between shared leadership

and board task effectiveness

Task interdependence

Task interdependence, which refers to the degree to which team members depend on one another for their efforts, information, and resources (LePine et al., 2008), has been offered as a second prime moderating variable in the shared leadership literature (Bligh et al., 2006; Pearce, 2004). Tasks that are characterized by high interdependence require cooperation, coordination, and integration of the efforts of team members (Stewart and Barrick, 2000), whereas in the case of tasks which score low on interdependence, members’ contributions are merely pooled rather than integrated (Thompson, 1967). Therefore, performing highly interdependent tasks requires more effective mechanisms to properly coordinate and integrate the efforts of board team members, making such mechanisms more strongly related to team effectiveness as task interdependence increases (Burke et al., 2006; LePine et al., 2008). As shared leadership has been put forward as one of those key mechanisms in improving the coordination and utilization of team members’ contributions (Friedrich et al., 2009), board task interdependence is likely to moderate the relationship between shared leadership and the board’s effectiveness in performing its disparate control and service tasks. In fulfilling the networking task, for instance, directors operate relatively independent from each other, resulting in pooled rather than integrated contributions, which is likely to limit the benefits accruing from shared leadership. On the other hand, many of the other board tasks generally are, although to differing extent, dependent on the combined input of a wide range of directors to be completed successfully, making shared leadership highly instrumental in such cases.

Proposition 2b: Task interdependence will moderate the relationship between shared

leadership and board task effectiveness

3.3 Determinants of shared leadership in the boardroom

In this section, a number of factors which are likely to affect the prevalence of shared leadership in the boardroom are distinguished. First, we acknowledge that the way the board team is designed, while not being directly linked to performance, has an important impact on its functioning. Specifically, it is put forward that human capital heterogeneity (i.e., the extent to which different board members possess different skills, expertise, experience, etc.) provides the basis for this mutual influence process in which directors take on leadership based on who is the most capable given the situation at hand to develop. In addition, we argue that the degree to which this relationship holds is dependent upon both the Chairman’s behaviour and the extent to which desirable individual and board team conditions are present within the team.

3.3.1 Human capital heterogeneity

Although boards have sometimes been depicted as old men’s clubs, this does not imply that they are necessarily homogeneous in composition. Board members are likely to differ to some extent on job-related (i.e., functional, educational, and industry background) and other (e.g., ethnicity, age, gender) dimensions, resulting in a varied mix of human capital available to the board (Forbes and Milliken, 1999). Board teams that are more diverse are likely to have a wider palette of capabilities at their disposal as their members bring a broader range of educational, work, and life experiences, knowledge, and expertise to the boardroom table. Inherent to the heterogeneous nature of those boards, these capabilities are spread over the different individuals throughout the team. Given that shared leadership can be regarded as a dynamic and fluid influence process in which the individuals with the most relevant skills and expertise given the situations at hand emerge as temporary leaders, human capital heterogeneity within the board can be argued to constitute an important determinant of this collective leadership effort (Friedrich et al., 2009). That is, the incidence of leadership being shared based upon situational proficiency is likely to increase with the degree of diversity of directors with unique competences and expertise. Given the diverse nature of the corporate decision-making process, boards that have a more heterogeneous collection of human capital to their disposal (e.g., directors with differing backgrounds in marketing, finance, law, etc.) are more likely to showcase different directors adopting leadership positions in different situations. On the other hand, if diversity is low (e.g., all male directors with a background in finance) there is little ground for directors to make credible leadership claims, and consequently receive reciprocal leadership grants, based on situational proficiency, making shared leadership less likely to develop in such instances (DeRue and Ashford, 2010). However, the relationship between human capital heterogeneity and shared leadership can be expected not to be linear given that as boards become more and more diverse, the common frame of reference among its members fades away, resulting in directors failing to recognize and understand their peers’ contributions (van Knippenberg and Schippers, 2007). Therefore leadership behaviour expressed by others may not be perceived or accepted as such, making shared leadership in overly diverse board teams less likely to be witnessed. In line with these insights, team diversity can be argued to operate as a double-edged sword (Milliken and Martins, 1996), indicating that the calls for increased board diversity need to be more nuanced:

Proposition 3: Human capital heterogeneity is positively related to shared leadership up to a saturation point, after which the relationship turns negative (inverted U)

3.3.2 Individual and team conditions as a moderator

While human capital heterogeneity is an essential input to shared leadership as it provides the basis for it to develop, a number of factors are likely to moderate the degree to which this relationship holds. Specifically, we argue that shared leadership will more likely emerge when contingencies that enable the team to capitalize on the different types of skills and expertise within the team are present within the board (Friedrich et al., 2009). Individual and team conditions indicative of the nature and quality of the board team’s dynamics can be expected to play an important role in this regard. That is, the degree to which shared leadership will develop among directors who bring a diversity of skills, expertise, and experiences to the boardroom, will be dependent on the extent to which they function effectively from an internal team management perspective. Hence we put forward that individual and team conditions within the board moderate the relationship between human capital heterogeneity and shared leadership.

A number of key mechanisms can be argued to be pivotal in this respect. First, for shared leadership to develop out of a heterogeneous collection of human capital within the boardroom, directors need to be motivated and willing to take on and accept leadership based on situational proficiency (DeRue and Ashford, 2010; Friedrich et al., 2009). In this respect, the level of engagement in and commitment to the team and its goals have been argued to be of importance (Friedrich et al., 2009). In addition, the extent to which individuals believe they are able to successfully lead the team to task fulfilment (i.e., self-efficacy) and view themselves as potential leaders has been shown to play an important role in the willingness of team members to claim leadership positions (DeRue and Ashford, 2010). Second, in order for a variety of skills and expertise within the board to result in shared leadership, some degree of awareness among board members of their own competencies and the ones present throughout the team network can be expected to be required to enable them to claim and grant leadership positions based upon who is the most capable given the situation at hand (Friedrich et al., 2009). In this respect, collective cognition, and in particular the extent to which transactive memory (i.e., a set of distributed, individual memory systems that combines the knowledge possessed by directors with an awareness of who knows what) has been developed within the team can be argued to be of importance as this allows directors who bring a diversity of skills, knowledge, and experiences to the boardroom table to judge when it is appropriate to exercise, and accept, leadership influence in particular situations (Kozlowski and Ilgen, 2006). Third, for shared leadership to develop, some sense of psychological safety (Edmondson, 1999) and an atmosphere of openness among board members is needed in order for directors to be willing to share information, cooperate, and adopt highly visible positions within the board team. The level of trust board members have in other directors’ capabilities (competence-based trust) and their integrity (affect-based trust) (McAllister, 1995), for instance, can be argued to function as an important moderator of the relationship between human capital heterogeneity and shared leadership. Board members who experience high levels of affect-based trust in the other directors are more likely to openly express their concerns and opinions and position themselves vulnerably by adopting a leadership role. They will also be more inclined to accept their influence, since the perceived integrity of the other party assures them they will not be taken advantage of (Bligh et al., 2006). With respect to cognitive-based trust, if board members perceive the temporary leader, based on past performance or professional credentials, to have the necessary capabilities they will be more likely to accept his influence when matters in his area of expertise are being handled. In addition, when directors believe that other board members lack the capabilities to perform their tasks, expectancy theory advances that they will not be motivated to take on leadership roles because they assume that such extra effort, which goes beyond mere compliance (Pearce and Manz, 2005), will be unrelated to task performance in such instances (Dirks, 1999). In this light, it can therefore be expected that the degree to which human capital heterogeneity will result in directors mutually influencing each other by sharing leadership based on who is the most capable given the situation at hand, will be dependent on the extent to which directors have developed trusting relations with each other.

In line with these arguments, the importance of individual and team conditions within the board team for the development of shared leadership out of a diversity of skills, expertise, and experiences that directors bring to the boardroom table is acknowledged. Specifically, we put forward that the extent to which human capital heterogeneity will lead to directors sharing leadership based upon situational proficiency will be contingent upon the degree to which desirable individual and team conditions (e.g., board members committed to the team and its goals, awareness of capabilities among directors, trusting relations within the team) are present within the board.

Proposition 4: Individual and team conditions will moderate the relationship between human capital heterogeneity and shared leadership

3.3.3 Chairman behaviour as a moderator

Shared leadership, although going beyond traditional top-down leadership approaches, does not imply that formal or assigned leadership is irrelevant. In fact, many researchers highlight the critical role the appointed leader, i.e., the board’s Chairman, plays in making or breaking this effective team leadership practice (Lambrechts et al., 2010; Lorsch, 2009; Pearce, 2004). Specifically, it is put forward here that the extent to which shared leadership will develop out of the diversity of skills and expertise that different board members bring to the boardroom table, will be contingent upon the Chairman’s behaviour within the board team.

In this respect, a number of formal leader behaviours which are constructive in the light of shared leadership have been distinguished in literature. First of all, the Chairman, just like any other board member, has the duty of ‘taking action’ by adopting leadership roles when appropriate (Hackman and Walton, 1986). In doing so, he or she additionally serves as a visible role model for the other directors through demonstrating desired behaviour, thereby encouraging them to partake in the shared leadership process as well (Pearce and Manz, 2005). Beneficial Chairman behaviour also includes publicly reinforcing and rewarding appropriate team member leadership behaviour as it will encourage these members to continue on the path taken while also signalling role model behaviour to the other members, thereby creating a virtuous cycle of shared leadership. Furthermore, as not all individuals may have the natural tendency to emerge as leaders in a team (Mehra et al., 2006), inviting and stimulating directors that may be more reserved in nature and therefore do not take the lead when desirable, and keeping others that dominate the rest in line, is essential to ensure that all board members contribute appropriately in the shared leadership process (Pick, 2009). This is particularly important given the fact that directors are peers with respect to formal authority over one another, but not so from a group dynamics perspective. That is, directors bring different influence bases into the boardroom (e.g., tenure, ownership, executive position, prestige) which, if left unbridled, could potentially pose problems for shared leadership to develop (Pettigrew and McNulty, 1995). Therefore, this promoting of equality and shared responsibility within the board team by actively monitoring and, when necessary, regulating and balancing members’ contributions is indeed one of the most critical Chairman behaviours from a shared leadership perspective. Finally, it is the appointed leader’s responsibility to judiciously intervene in the team’s processes on a strictly as-needed basis in order to make sure that the team does not drift out of direction (Pearce, 2004). As such the constructive role of the board Chairman in a shared leadership approach can in essence be summarized as that of a supportive coach (Morgeson, 2005) who fosters the effectiveness of the board by creating and maintaining the right circumstances in order to get the most out of the heterogeneity of perceptions, competencies, and resources that all directors bring to board (Vansina, 1999), while at the same time functions as a peer within the team. On the other hand, however, improper Chairman behaviour can form a critical impediment to the development of shared leadership in the boardroom. Specifically, while failing to portray one or more of the aforementioned constructive behaviours may hinder such beneficial processes, the real threat comes from Chairmen who overstep their role by being too directive, thereby overcrowding other directors and jeopardizing the effective working of the team (Pick, 2009).

In line with these arguments, we acknowledge the importance of Chairman behaviour and argue that it will play a decisive role in the development of shared leadership in the boardroom. Specifically, it is put forward that while board team human capital heterogeneity provides the basis for board members taking on leadership depending on who has the most relevant capabilities given the situation at hand, the extent to which this relationship holds is contingent upon the behaviour of the Chairman. That is, the degree to which skills, expertise, and experience being spread over different directors will result in directors taking on leadership based on those competencies will depend on the extent to which the Chairman creates and maintains the right circumstances for it to thrive or hinders its development by being overly directive in fulfilling his or her function as appointed leader. Therefore, the following proposition is offered:

Proposition 5: Chairman behaviour will moderate the relationship between human capital heterogeneity and shared leadership

 

4 DISCUSSION

4.1 Contributions

Leadership scholars are increasingly acknowledging that traditional, unitary approaches to leadership are likely suboptimal in team settings (Day et al., 2006; Gronn, 2002; Pearce and Conger, 2003). In this paper it has been offered that in the context of the board of directors, characterized by its horizontal authority structure, a more collective form of leadership, i.e., shared leadership, will be more appropriate and effective. As such, this work adds to existing academic literature in several ways. First, it answers to the call made by several leadership scholars to study the concept of shared leadership in a wide range of team settings (e.g., Day et al., 2006; Pearce and Conger, 2003) by demonstrating its relevance in the context of the board of directors. Second, it provides additional insights and evidence regarding the appropriateness of describing the board as a team and infusing team concepts into board literature, thereby clearly contrasting previous board research which has largely ignored the existence of a board team. Such an understanding is crucial as we, along with other scholars (e.g., Bammens et al., 2011; Hambrick et al., 2008; Huse, 2005, 2007), clearly believe that getting an understanding of how inherently complex and dynamic board teams function and operate is the next step to take in board research.

Although the importance of boards for their firms and society at large is generally acknowledged, academic knowledge concerning how they actually function is fairly limited due to a major bias towards board demography and agency theory in past board studies (Daily et al., 2003). This knowledge is crucial, nevertheless, as such research has produced largely inclusive and inconsistent findings with respect to board and firm performance, perhaps most strikingly evidenced by the ofttimes exemplary and even applauded composition of the boards of firms that ended up as some of the most devastating and scandalous corporate meltdowns in history (e.g., Enron and WorldCom) (Finkelstein and Mooney, 2003). Therefore, our work is inspired by and aims to contribute to the expanding stream of research which focuses on behavioural perspectives and board processes in an attempt to overcome past board research limitations. Specifically, drawing upon the recognition that boards can be conceptualized as teams, it shows that board leadership is much more than just structure by investigating how a relatively novel team leadership conceptualization which is characterized by a mutual and fluid distribution of leadership throughout the team, i.e., shared leadership, is manifested inside the boardroom. The focus of this paper is thus on leadership rather than leaders (Hosking, 1988), which evidently encompasses much more than just the traditional question of whether or not the CEO should also hold the position of Chairman. Likewise congruent with this behavioural and process-oriented stream of board research is this paper’s attention to individual and team conditions within the board which develop as directors interact. Specifically, we put forward that the extent to which human capital heterogeneity will result in directors taking on leadership depending on the situation at hand, will be contingent upon the degree to which desirable individual and team conditions (e.g., board members committed to the team and its goals, trusting relations among directors) are present within the team. In developing a dynamic process model of shared leadership in the boardroom we furthermore acknowledge the impact of this collective leadership effort on a wide range of conditions indicative of the nature and quality of team dynamics within the board. In doing so, the complex, dynamic, and adaptive character of board team functioning, regulated by cyclical feedback loops, is recognized (Ilgen et al., 2005; Mathieu et al., 2008). For instance, shared leadership can be expected to more likely develop out of a heterogeneous collection of human capital when directors are motivated, committed, and engaged in the board team. As shared leadership is likely to result in increased levels of commitment among team members (Pearce and Sims, 2000), these mechanisms give rise to a cyclical adaptation process which sustains and fosters this collective leadership effort among directors.

Finally, with regard to the traditionally most prominent board outcome, our work provides interesting insights which conceptually expand the contributions made by previous theoretical board models (e.g., Forbes and Milliken, 1999; Zahra and Pearce, 1989). Specifically, we advance that a more fine-tuned delineation of the board’s tasks is required as the impact of shared leadership, and most likely many other board processes as well, is not uniform for all the distinct tasks the board performs.

4.2 Practical implications

Although this paper’s contributions are primarily to be found in the theoretical realm, a number of resultant insights will be of relevance for practitioners as well. For instance, this article provides general and preliminary indications that installing shared leadership principles in the boardroom will prove to be rewarding with regard to board task effectiveness as well as individual and team conditions within the board team. As such, shared leadership within the team may be one of the much sought-after tools by which boards can bring about value protection and creation for their firm and its wide set of involved actors. Shared leadership may be of particular use in the prevention of corporate scandals like the ones that have shaken market confidence and stirred outrage throughout societies worldwide as well as smaller-scale corporate abuses. As elaborated upon earlier, such a collective leadership effort within the board team can be expected to result in boards being able to more effectively control the firm’s internal actors (mainly the CEO and top management). In addition, as in this process leadership and power are distributed throughout the team instead of centralised in one person, it provides a leadership system of checks and balances in which decision-making responsibility is shared and domination over the decision-making process by a sole director, for instance the Chairman, is precluded (Pearce et al., 2008). Therefore, shared leadership will likely lead to a more robust control system as it will have less to suffer from unethical or illegal actions stemming from single, authoritative individuals whose behaviour may be guided by direct or indirect conflicts of interests (e.g., personal financial gain, business relationship with the firm, personal links to management). By taking up their responsibilities in such a correct and fiduciary way, boards of directors moreover fulfil an implicit signalling and role-modelling function by setting the tone at the top (Driscoll and Hoffman, 1999; Schwartz et al., 2005), which has been shown to have an important trickle-down effect on the ethical behaviour of other corporate actors (Posner and Schmidt, 1987; Soutar et al., 1994).

Second, while acknowledging that structural characteristics will not impact performance directly to a great extent, this paper does indicate that how the board of directors is composed serves as an important determinant of its functioning. As such, we uphold that in forming the board team and selecting individual members, the discussion should not be limited to some heavily advocated issues such as director independence and non-CEO duality, but instead needs to be directed at ensuring that the board is composed in a manner (e.g., adequate human capital heterogeneity) that will enable it to function as an effective team and that will foster effective team processes such as, for instance, shared leadership. Such topics should furthermore continue to receive the necessary attention and, if necessary, polishing, making it essential for them to play a major role in periodic board and director evaluations (Minichilli et al., 2007).

Besides in the selection and dismissal of directors resulting from unveiled compositional flaws, such evaluations also have an valuable role to play in the team’s internal functioning as they provide relatively tangible inputs for the learning and adaptation processes that regulate the team’s working. Indeed, disciplined reflection and learning moments (Edmondson, 2008) built into the regular working of the board can be argued to be highly important in this respect. For example, periodically, a board might reflect on questions such as: What did we set out to do? How did we enact our control and service tasks as a team? Concerning our way of relating to one another, what worked well and how can we sustain this? What did not work well in this respect and how can we improve on this? The goal of these moments is to ‘pause the action’, allowing time to learn from joint board team experiences regarding the team’s dynamics and the way of working together. In doing so, directors explicitly surface and discuss individual and team conditions within the team that have developed during their interactions, making them cognizant of these matters and allowing them to learn and improve in this regard. As such, board evaluations might constitute an important instrument in facilitating shared leadership as engaging in such systematic learning practices can help board members to develop into a team of ‘true peers’, which goes beyond them just being peers with respect to formal authority over one another. That is, these practices may aid in fostering the development of a board team in which team members act as co-creators of value within an equal relationship characterized by reciprocity between directors’ contributions (versus one-sided influence) (Lambrechts et al., 2011) and lived interdependence as the mutually negotiated and accepted way of interacting among directors who recognize and appreciate each other’s perspectives, expertise, contributions, and identity (Bradford et al., 1964; Bouwen and Taillieu, 2004).

In addition, as the board team has been put in place, its members may need supplementary training, also on the interpersonal level, to ensure they will be able to function properly within the team. In order for directors that join the board at later stages to be able to effectively contribute to the board team, such training should, moreover, be included in director induction programmes as well (Higgs, 2003). Specifically with respect to shared leadership, directors, although usually at least to some extent experienced in leading individuals, may need to be trained to cope with this mutual and fluid influence process which they may not be accustomed to. This can be expected to be of particular importance for Chairmen, not in the least given their decisive role in the development of shared leadership, as they may need to be aided in how to deal with their new roles and responsibilities as appointed, but not authoritative, leaders. As a caveat, however, before specific interventions addressing these practical insights can be developed, elaborate empirical testing will be required. Moreover, although a number of contributing factors are identified here, specific research with respect to how to actively foster shared leadership in the boardroom will be necessary.

4.3 Further research

This paper has clearly advocated that boards can be rightfully conceptualized as teams and therefore should be studied as such. This recognition opens up a whole world of research perspectives and opportunities which have the ability to result in a perpetual stream of theoretical and empirical contributions. In drawing upon the vast amount of team literature, board scholars will be equipped with the necessary tools to go beyond traditional, ofttimes equivocal, board research by investigating how processes and behaviours inside the boardroom impact board decision-making and performance (Huse, 2007). As highlighting all possible research avenues at this point is beyond the scope of this work, the discussion in this section will be limited to a number of issues that we find of particular interest. Given that boards have been recognized as dynamic social systems, it will be highly rewarding to apply dynamic process models, as we have done in this paper, in future board studies in order to do honour to the complex and adaptive nature of board teams. Specifically, investigating how cyclical feedback loops unfold within the board team as outcomes of its functioning serve subsequently, through a learning and adaptation process, as determinants of its future functioning is bound to result in interesting insights. As is indicated in this paper as well, in order to develop a more comprehensive understanding of board teams and their functioning, research attention to board outcomes should furthermore not be limited to whether or not task performance is enhanced, but should also include implications for individual and team conditions within the board such as trust, collective efficacy and potency, shared mental models, commitment, cohesion, and a host of other concepts that have been distinguished in team literature (e.g., Kozlowski and Bell, 2003; Mathieu et al., 2008). Research delving into the relationship between these non-task-related team and individual outcomes and board task performance may further add to this knowledge, which is crucial given the important responsibilities boards have towards their firms and its involved actors.

Specifically with respect to shared leadership, this paper provides the theoretical foundations for this relatively novel leadership conceptualization in a boardroom setting and as such opens up the door for a wealth of future studies investigating this promising board leadership approach. Additional conceptual efforts may be aimed at expanding the offered theoretical framework by providing other antecedents or outcomes which may be of importance. However, as any model, including the one put forward here, is by definition a simplified representation of a more complex phenomenon, more ground-breaking contributions can be expected from studies which provide a fine-grained theoretical analysis of specific fragments that make up the model and thus offer a more detailed account of how shared leadership is manifested inside the boardroom. For instance, investigating the interplay between the Chairman as the appointed leader of the board and the numerous emergent leaders is destined to yield interesting insights into the true leadership dynamics that unfold in the boardroom. Moreover, although this paper has addressed Chairman behaviour which will play a constructive or destructive role in developing shared leadership among directors, relatively little is known about the specific actions that these appointed leaders would need to display (e.g., how Chairmen may invite and stimulate more reserved directors to take the lead when appropriate). Getting an in-depth understanding of these issues, given their critical importance, would be a major step forward, both for theory and for practice. The novel insights which would result from such studies, along with the propositions offered in this paper, should furthermore be subjected to rigorous empirical testing. Although empirical studies on the topic of shared leadership have been relatively scarce, a number of distinct quantitative approaches have demonstrated promising results and may serve as a guide in this process (e.g., Bligh et al., 2006; Carson et al., 2007; Ensley et al., 2006). Furthermore, detailed board-in-action qualitative research will most likely serve as an appropriate and rewarding, though challenging and time-consuming, research method as it will allow researchers to study leadership processes as they unfold in real time (Samra-Fredericks, 2000).

 

5 CONCLUSION

Past board leadership studies have been mainly preoccupied with assessing the relationship between a number of structural board leadership characteristics, chiefly CEO duality, and board and firm performance (Finkelstein and Mooney, 2003). However, in a team context, it is widely recognized that leadership encompasses much more than just structure. In this light, this paper has offered an alternative perspective on board leadership by addressing how actual leadership processes and behaviours are manifested among directors. Specifically, it has been advanced that the corporate boardroom is a prime setting in which a relatively novel leadership conceptualization, i.e., shared leadership, will be able to flourish and consequently result in superior board team performance. From an overarching perspective, our theoretical discussion thus provides further indication that a focus on the human side of corporate governance, which acknowledges that boards are made up of interacting individuals, is highly rewarding and commendable in the light of increasing our understanding of this important governance mechanism (Huse, 2007).

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