Delving into the Boardroom “Black Box”: A Research Model of “Board Learning Capability” (BLC)

Abstract

This paper aims to shed light into boardroom processes by bringing together the literature on organization behaviour and that of boardroom process in order to form a model of boardroom learning capability. Board process is viewed as primarily a learning process whereby individual members with their knowledge, skills and external networks engage in a collective learning process that culminates in a “shared understanding” about the problems and respective solutions and increased “board social capital”. It can be argued that boards that do better at this “collective learning process” will display greater effectiveness and ultimately better firm performance. In learning organisation’s terms, one can speak of “board learning capability” (BLC). The chairman of the board has a pivotal role in facilitating and mastering the collective learning process in the boardroom. Central to our model are the interplay between the “chairman role and skill set” and the “board learning challenges”. Building on research literature that focuses on learning organisations and on boardroom processes, we propose a model of “board learning capability” (BLC), which could shed additional light on the boardroom process dynamics. In the future, an organisation could develop a “board’s learning capability” measure to complement “good governance” indices which rely heavily on structure and composition proxies, despite limited empirical evidence. Empirical testing of the model can be of value for boardroom development and for risk and reputational concern minimization by uncovering differences in “boardroom learning capability” in different governance domains.