Opening the ‘black box’: Challenging traditional governance theorems

This article presents both theoretical and empirical support for moving from a traditional governance research paradigm towards a more holistic research approach. This includes taking into account behavioural, contingency and evolutionary theories, in an effort to better understand governance processes and effective board behaviour. Specifically, the authors highlight the importance of three groups of relationships (board dynamics, board–management relationships and board–stakeholder relationships) as contributing to good governance practice. Whilst historically researchers have largely ignored the behavioural aspects of corporate governance, the authors have made an attempt to open the ‘black box’ of governance processes and practices, and illustrate with examples from three New Zealand companies how the development of these relationships are important for effective board functioning.