Mark Macus

Multitheoretic board research and research on board processes have, to date, been pursued in isolation. I argue that board interactions can serve as the conceptual basis for a combination of these two approaches to board research. I argue that board composition and board structure merely endow the board with a certain potential to contribute to firm performance but do not ensure that this potential actually comes to bear. Based on the insights from social psychology and group research, I propose board interactions as an enabling factor that allows boards to realize their problem-solving potential and to thus contribute to the firm's performance. Based on this theoretical argument, I suggest that boards with adequate configurations of composition, structure, and interactions can build "board capability" that would enhance the firm's competitive advantage.

Existing research on the effects of boards of directors on firm performance has failed to produce consistent empirical results. In the research presented, I argue that this may be due to the fact that such research has largely ignored the interactions that take place on a board and that serve as an enabling mechanism for the board to be able to contribute to firm performance. I introduce the concept of 'board capability', which allows scholars to consider a board's composition, structure and interactions simultaneously. Also, the results of two empirical studies of boards in adolescent companies are presented. Taken together, these studies support the theoretical argument for the importance of board interactions and shed light on the performance effects of boards in adolescent companies.