The quad model for identifying a corporate director's potential for effective monitoring: Toward a new theory of board sufficiency

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Abstract

We introduce a new theoretical perspective for predicting effective monitoring, which involves a two-stage logic. First, we focus on individual directors, arguing that effective monitoring is highly likely when a given director possesses certain qualities. Based on prior research not previously coalesced, we set forth this baseline proposition: a director's likelihood of being an effective monitor in any given domain (say, financial matters) is greatly increased when he or she has all four of the following qualities: independence, expertise in that domain, bandwidth, and motivation. Second, we extend this quadrilateral model-or quad model-to make propositions at the board level. We argue that it is not sufficient for these four qualities to be distributed among all directors on a given board, since this makes it likely there will be no directors who can rise to the challenging task of monitoring. We propose that having just one quad-qualified director will be more predictive of board efficacy than will be any customary board descriptors. And we posit that if a board has two or more quad-qualified directors who can bolster and amplify each other, the company's likelihood of governance failures will be especially reduced. We discuss theoretical and practical implications and lay out a research agenda.

Original languageEnglish (US)
Pages (from-to)323-344
Number of pages22
JournalAcademy of Management Review
Volume40
Issue number3
DOIs
StatePublished - Jul 1 2015

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All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Management of Technology and Innovation

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