EIASM Corporate Governance Workshop: Reflections

Thirty-six researchers from over twenty countries gathered in Brussels last week (29–30 October) to discuss emerging developments in the fields of corporate governance and board practice. While some of the contributors are 'pure' academics committed to theory development, others (like me) span academia and practice. Consequently, a sharp 'real world' edge was apparent. Here are a few of the insights and topical themes that emerged:

• A question that emerged early on the first day and seemed to underpin much of the discussion was whether researchers have begun to lose sight of what corporate governance is or might be. There was a call for researchers to return to first principles, whereby corporate governance is that set of activities and interactions that occur in the boardroom  when the board is in session. The group acknowledged that other activities occur amongst shareholders, advisors, regulators and managements. While these activities are both important and necessary they are not corporate governance.
• The impact of the 'second owner' (of entrepreneurial and high-growth businesses) on business performance was discussed. The second owner is the second-largest shareholder, the largest being the founder/CEO. The research suggested that the second owner has a large moderating effect on the founder/CEO's behaviours and decisions, and that this effect seems to be linked to increased business performance.
• Several researchers reported the results of case study research on the governance of family businesses. One paper that stood out concerned the leadership transition from the founder/CEO to another family member. Such transitions can be problematic, especially if the founder/CEO has concerns over the capabilities of the incoming leader. The research discovered that non-family shareholders (specifically, private equity investors) can play a powerful mentorship and decision-making role through a transition period. The benefits are two-fold: the incoming CEO is seen to be effective 'from day one' even though they lack the requisite skills and expertise, and the experiences gained through the process accelerate the CEO's learning and development.

Two other developments that stood out concerned the conduct of board research:

• A small but discernible move towards 'making a meaningful contribution' was apparent throughout the workshop. In the past, many researchers have simply 'published research', some of which has had questionable relevance beyond the immediate researcher's interests. However, it seemed that researchers have begun to realise that, while publishing might be an important metric within academia (the 'publish or perish' mantra), the more pressing priority—of delivering relevant, actionable research to assist shareholders, boards and executive teams—needs to prevail. This is a great development, one that might help span the sometimes gaping divide between academia and the 'real world'.
• A second noticeable trend concerned the methodological approaches being used by researchers. For many decades, the dominant approach to board, director and corporate governance research has been to look from afar—using publicly available data and statistical analysis techniques. In contrast, many of the papers recognised the complex, socially-dynamic nature of boards, and the need to utilise methodologies that studied boards holistically and (ideally) in situ. This development is significant, because it recognises that when boards are dissected they are no longer boards.