Board Roles to Its Effectiveness

The board of directors provides the focal point of corporate governance that is itself a key component in improving efficiency and economic growth. Therefore, the effectiveness of company boards in fulfilling their responsibilities becomes decisive to a country's competitive position. Hence, the health of our organizations, economies and society in general depends on understanding how boards are able to influence the performance of their companies. However, defining just what a company's board of directors should undertake represents a complex task, exacerbated by the continuous evolution of its legal duties and the expectations of society at large. This complexity is further compounded by the different theories attempting to explain the best practices for effective corporate governance. Correspondingly, different authors, based on different theoretical perspectives, propose different functions as no single corporate governance theory is capable of fully capturing the complexity and heterogeneity of the board's functions. Therefore, in accordance with the theories most widely applied in corporate governance research, specifically the agency, stewardship, resource dependency and stakeholder theories, we may identify five critical roles/functions for enhancing the effectiveness of this institutional body – CEO turnover, service, strategy, control, and resource. Furthermore, we may measure board of director effectiveness in terms of company financial, environmental, and social sustainability results. This research correspondingly aims to present a conceptual model of the functions fostering the effectiveness of boards of directors.