This article was produced and financed by BI Norwegian Business School
Norway leads Italy in board work
Measures to raise the quality of board work would have a greater effect in Italy than in Norway because Italy starts at a lower level.
BI Norwegian Business School
With Norway being the first country in the world to require boards in public limited companies (ASAs) to have balanced gender representation of at least 40 percent of each, the world’s attention has been directed at Norwegian boards.
This attention does not only focus on the effect of more women on the boards, but also on whether there is something to be learned from board work in Scandinavia.
Professor Morten Huse, of BI Norwegian Business School, has, together with researchers Alessandro Minichilli and Alessandro Zattoni at the Bocconi University in Italy and Sabina Nielsen at Copenhagen Business School, carried out a study to compare board work in Scandinavia and Latin Europe.
They wanted to look at whether cultural and institutional differences between the countries also had an effect on the work processes in the boardrooms.
Research across national borders
Norway was elected to represent the Scandinavian countries, while Italy represented the countries in Latin Europe.
The study is based on responses from executives in 256 Norwegian and 279 Italian companies, obtained through questionnaires. All the companies had more than 50 employees.
The results of the study are published in the Journal of Organizational Behaviour.
Inside the boardrooms
The researchers have been concerned with looking at board work on the micro level – how work processes impact the board’s effectiveness.
They looked at three aspects in particular:
1. The board members’ standards for preparation and involvement (effort norms)
2. Differences of opinion
3. The use of the knowledge and skills of the board members
Huse and his colleagues found that two of these aspects, standards for preparation and the use of knowledge and skills, are keys to understanding which tasks the boards will tackle and how they will solve the tasks.
Differences of opinion conflicts may also play a role, but the study does not yield any clear-cut correlations in this respect.
“Board processes contribute more to explaining variations in the tasks the boards perform than a demographic description of the board members,” says Huse.
Cultural factor impact
In the second part of the study, the researchers looked at how macro factors in the form of cultural and institutional differences impacted the work processes in the boardroom and how effective the board’s work was.
The study shows that the quality of the board work varies across national borders and cultures.
“The national context, such as legal and cultural differences, impacts the correlation between board processes and which tasks the boards tackle,” says Huse.
He believes that Norwegian boards are leading the way as regards to preparing for board meetings and achieving a team-oriented environment.
The results show that board development measures will have positive effects in both Norway and Italy. “However, the effect will be greater in Italy than in Norway, as Italy starts at a lower level than Norway.”
Introducing standards for how board members should prepare for and involve themselves in the board meetings would also have greater effect on work processes in Italy than in Norway. This is also due to the improvement and development potential being greater in the Italian boards.
The study also shows similarities between the two boards. These include the acknowledgement that recruiting board members with the right expertise and experience is not enough. The expertise and experience must also be put to work by the board.
- Minichilli, A., Zattoni, A., Nielsen, S.T. og Huse, M (2012): “Board task performance: An exploration of micro- and macro-level determinants of board effectiveness”. Journal of Organizational Behaviour. Vo 33, Issue 2, pages 193–215, February 2012.