Research Question
Why do directors serve on board? The article explores and tries to understand why top executives agree to serve on board and what factors influences their decisions whether to stay or leave.
Theoretical Background
The author explores the reasons why directors choose to stay or leave boards. He identifies that a combination of two factors that affect director decision, intrinsic and extrinsic motivating factors. These two formulate self-determination theory in which the author relies on and start building arguments explaining why directors serve on board. On the other hand, the author challenge the assumption that major reason for directors exit is involuntary while ...view middle of the document...
Moreover the author selected 30% of the outside directors and conducted full board appointment data for each director. (Boivie, Graffin and Pollock, 2012).
Study Design and analysis
The author utilized longitudinal set of data over period of time through relying on quantitative data and analysis to understand various motivations and how to it influence individual decision to stay or leave. The quantitative analysis was gathered through sampling and empiricism research methods in order to generalize the results. (Boivie, Graffin and Pollock, 2012).
Data Analysis:
The analysis of the motivation factors were classified according to (Boivie, Graffin and Pollock, 2012).into three components: Dependent Variable, Independent variable and controlled variables of individuals and firm in order to understand the motivation levels
Results:
The author concluded that both intrinsic and extrinsic motivations works in parallel and affect directors’ decision to stay or leave.1- Prestige, self-esteem, media visibility, company performance, influence and commitment are the key motivational factors that influence positively directors’ motivation. 2- While busyness, commitment and company performance de-motivate the individuals and they are likely to leave. (Boivie, Graffin and Pollock, 2012).
Prestige Hypothesis 1 |
1a | 1b | 1c | 1d |
Supported | Supported | Supported | Supported |
| | | |
Influence and Commitment Hypothesis 2 |
Partially Supported |
| | | |
Busyness Hypothesis 3 |
3a | 3b |
Supported | Supported |
| | | |
Reputational and financial risk Hypothesis 4 |
Not Supported |
| | | |
Moderating Effects of Reputational and Financial Risk on the Motivating Effects of Prestige- Hypothesis 5 |
Partially Supported |
Contribution to knowledge:
The author aims from this research to generate novel predictions and tries to understand the factors behind directors’ exits that weren’t researched before. He aims to showcase that directors serving on board influence positively firm performance during their service. As a result, the research proved that prestige, media visibility, company performance does affect directly these motives in positive manner along to their personal contribution to the firm. However, negative company performance wasn’t directly influenced their motives except in crisis situations.(Boivie, Graffin and Pollock, 2012).
On the other hand, the author confirmed his assumption that most exits are voluntary with some exceptions. Demotivating factors were researched and the author supported this argument that directors’ exit links directly to individuals who serves in another influence role which tends to increase their busyness and ultimately demotivating them.
Finally, the author contributed to agency theory with respect to corporate governance in which he unveiled set of various motivation factors affected individuals’ decision through utilizing self-determination theory in...
