Investigating the Development of the Internal and External Service Tasks of Non‐executive Directors: the case of the Netherlands (1997–2005)

Abstract

During the last decade, globalisation and liberalisation of financial markets, changing societal expectations and corporate governance scandals have increased the attention for the fiduciary duties of non‐executive directors. In this context, recent corporate governance reform initiatives have emphasised the control task and independence of non‐executive directors. However, little attention has been paid to their impact on the external and internal service tasks of non‐executive directors. Therefore, this paper investigates how the service tasks of non‐executive directors have evolved in the Netherlands. Data on corporate governance at the top‐100 listed companies in the Netherlands between 1997 and 2005 show that the emphasis on non‐executive directors' external service task has shifted to their internal service task, i.e. from non‐executive directors acting as boundary spanners to non‐executive directors providing advice and counselling to executive directors. This shift in board responsibilities affects non‐executive directors' ability to generate network benefits through board relationships and has implications for non‐executive directors' functional requirements.