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Integrating agency and resource dependence theory: Firm profitability, industry regulation, and board task performance

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  • Pugliese, Amedeo
  • Minichilli, Alessandro
  • Zattoni, Alessandro

Abstract

Boards of directors are key governance mechanisms in organizations and fulfill two main tasks: monitoring managers and firm performance, and providing advice and access to resources. In spite of a wealth of research much remains unknown about how boards attend to the two tasks. This study investigates whether organizational (firm profitability) and environmental factors (industry regulation) affect board task performance. The data combine CEOs' responses to a questionnaire, and archival data from a sample of large Italian firms. Findings show that past firm performance is negatively associated with board monitoring and advice tasks; greater industry regulation enhances perceived board task performance; board monitoring and advice tasks tend to reinforce each other, despite their theoretical and practical distinction.

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  • Pugliese, Amedeo & Minichilli, Alessandro & Zattoni, Alessandro, 2014. "Integrating agency and resource dependence theory: Firm profitability, industry regulation, and board task performance," Journal of Business Research, Elsevier, vol. 67(6), pages 1189-1200.
  • Handle: RePEc:eee:jbrese:v:67:y:2014:i:6:p:1189-1200
    DOI: 10.1016/j.jbusres.2013.05.003
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    1. Dugan, Michael T. & Turner, Elizabeth H. & Thompson, Mark A. & Murray, Susan M., 2017. "Measuring the financial impact of environmental regulations on the trucking industry," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 152-158.
    2. YAGLI, Ibrahim & ŞİMŞEK, Burcu, 2017. "Meta-Analytic Review Of The Relation Between Board Globalization And Firm Performance," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 21(2), pages 31-55.
    3. Groza, Mark D. & Groza, Mya Pronschinske, 2018. "Salesperson regulatory knowledge and sales performance," Journal of Business Research, Elsevier, vol. 89(C), pages 37-46.
    4. Fauziah Mahat & Noor Azman Ali, 2015. "The Roles of Risk Governance on Islamic Banking Systems," Proceedings of International Academic Conferences 2705187, International Institute of Social and Economic Sciences.
    5. Dominik van Aaken & Maximilian Göbel & Daniel Meindl, 2020. "Monitor or Advise? How Family Involvement Affects Supervisory Board Roles in Family Firms," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(2), pages 193-224, April.
    6. Anokhin, Sergey & Peck, Simon & Wincent, Joakim, 2016. "Corporate venture capital: The role of governance factors," Journal of Business Research, Elsevier, vol. 69(11), pages 4744-4749.
    7. Bauweraerts, Jonathan & Colot, Olivier, 2017. "Exploring nonlinear effects of family involvement in the board on entrepreneurial orientation," Journal of Business Research, Elsevier, vol. 70(C), pages 185-192.
    8. Tao, Qizhi & Li, Haoyu & Wu, Qun & Zhang, Ting & Zhu, Yingjun, 2019. "The dark side of board network centrality: Evidence from merger performance," Journal of Business Research, Elsevier, vol. 104(C), pages 215-232.
    9. Susanne Hügel & Markus Kreutzer & Nico B. Rottke, 2019. "Firm Innovativeness In Service Industries: A Construct Validation In The External Environment And Industry Structure Contexts," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(06), pages 1-57, August.
    10. Alessandro Hinna & Fabio Monteduro, 2017. "Boards, governance and value creation in grant-giving foundations," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 935-961, December.
    11. Chen, Xu & Yang, Huan & Wang, Xiaojun, 2019. "Effects of price cap regulation on the pharmaceutical supply chain," Journal of Business Research, Elsevier, vol. 97(C), pages 281-290.
    12. José-Luis Godos-Díez & Laura Cabeza-García & Daniel Alonso-Martínez & Roberto Fernández-Gago, 2018. "Factors influencing board of directors’ decision-making process as determinants of CSR engagement," Review of Managerial Science, Springer, vol. 12(1), pages 229-253, January.
    13. Rahul Nilakantan & Deepak Iyengar & Samar K. Datta & Shashank Rao, 0. "On Ethical Violations in Microfinance Backed Small Businesses: Family and Household Welfare," Journal of Business Ethics, Springer, vol. 0, pages 1-18.
    14. Dulyak, Yulia (Дуляк, Юлия), 2015. "Empirical Analysis of the Boards of Directors’ Impact on the Corporate Performance of Russian Companies [Эмпирический Анализ Влияния Советов Директоров На Финансовые Результаты Деятельности Российс," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 126-148, February.

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