Papers by Donald Nordberg
Institutional investors have long played a central role in corporate governance but no more so th... more Institutional investors have long played a central role in corporate governance but no more so than since the financial crisis of 2007-09. To counteract short-termism, the UK Stewardship Code (Financial Reporting Council, 2010) encouraged investors to engage with the companies in which they invest came first and develop a sense of ownership. France (Commission Europe, 2010; ORSE, 2011) and Germany (discussed in Roth, 2012) took similar actions. The European Union (European Commission, 2011, 2013) included investor engagement in its review of corporate governance, while in the US the Dodd-Frank Act (Library of Congress, 2010) gave shareholders new voting powers and made it easier to raise shareholder resolutions. Some funds that favour this approach now call themselves “shareowners” rather than “shareholders” (Butler & Wong, 2011). This approach assumes shareholders are able to prevent corporate excess and might want to. But obstacles arise from the changing structure and power balan...
The pursuit of greater efficiency in a time of austerity in the past decade has led UK local gove... more The pursuit of greater efficiency in a time of austerity in the past decade has led UK local governments to deliver local services in a new way: using subsidiary companies, many of them taking the form of conventional, non-profit enterprises, rather than outsourcing to private enterprises. The practice has energised service innovation by motivating these new corporate managers to act in entrepreneurial ways alien to the ethos of the civil servants whose work they superseded. It is called “corporatisation”, rather than “privatisation”. However, the rapid spread of the practice has outpaced both our theoretical appreciation of the issues and raised a series of practical concerns about the potential for conflicts of interest and the loss of control. This paper examines the small but growing literature about this phenomenon. Using a combination of theories from corporate governance and ethics, as well as documents from the public policy arena, it develops an agenda for research that wil...
This study examines how the introduction of new technology had a differential effect of the work ... more This study examines how the introduction of new technology had a differential effect of the work of a matched set of two workgroups of professionals. One group of internal auditors, at a major multinational corporation based in an emerging market, embraced the new methods of working, prompting new identity creation that reinforced their adherence to one of the conflicting institutional logics, and increase their professionalism. The other group, also internal auditors but working at a major domestic company in the same industry and country, resisted the change, allowing management to exploit the opportunity to undermine the professionalism of the workgroup, while engaging in symbolic management to reap the external benefits of what looked like good corporate governance. The study demonstrates, theoretically, the role that identity formation plays (or may not play) in embedding institutional change, and how a professional logic can be reconciled with organization identification. It a...
Attempts to determine what constitutes “good” corporate governance have become mired in the quick... more Attempts to determine what constitutes “good” corporate governance have become mired in the quicksand of the ethical conflict between duty and utility, virtue and rights, as well as the fight over for whose good the organization exists. This paper takes a different tack. Drawing upon evidence from the efforts to build and develop the UK code of corporate governance, it argues that the nature of “good” is intractable, but that in the practical world a philosophically pragmatic approach applies, exemplified in the preference for a comply-or-explain approach rather than more formal modes of regulation. Using Toulmin’s (2001) of advocacy the reasonable, in opposition to the rational, it argues that “reasonably good” governance is the best that can be expected, given the contingent nature of organizational life and strategies and the uncertain and potentially fungible benefits of various mechanisms of corporate governance.
Board evaluations have emerged as an important tool in public policy and corporate practice for e... more Board evaluations have emerged as an important tool in public policy and corporate practice for enhancing board effectiveness. This paper reviews the extensive literature on effectiveness and the emerging literature on evaluation to understand how the divide between two purposes of evaluation – improving board performance and creating accountability – interact with the two main methods of evaluation – internal and externally facilitated. It also integrates the literature of effectiveness and evaluation into an analytic framework for board evaluation. We believe this tool will contribute theoretical understanding of boards and their work, provide insights for the practice of boards and evaluators, and help policy formation by pointing out the limitations as well as benefits of various policy options
Philosophy of Management
Despite decades of theorising and empirical research, the problems of corporate governance seem i... more Despite decades of theorising and empirical research, the problems of corporate governance seem intractable, particularly the relationships between investors and companies. The thought experiment in this paper asks us to look at the problem through a fresh lens. It draws on the quaint British legal custom of calling shareholders “members”, and then uses the political philosopher Michael Walzer’s idea of membership in states, clubs, neighbourhoods, and families to draw lessons for the corporate world. This paper suggests that seeing how Walzer conceives “strangers” in a polity, with fewer rights but a path to membership, lets us rethink shareholder rights as something to be earned, through engagement and commitment, that is, through stewardship. Rethinking what membership of a company might mean points to a pragmatic escape from short-termism without institutional reform.
The Cadbury Code and Recurrent Crisis, 2020
The codification of the work of boards marked a major shift of direction in corporate governance.... more The codification of the work of boards marked a major shift of direction in corporate governance. This chapter sets the process in historical context, examining both the market and political settings that pre-dated the Cadbury Code. It shows how those contexts subsequently developed as renewed crises emerged, even as the core tenets of the code persisted. Keywords Codes of corporate governance • Market developments • Political context Codes of corporate governance have been in use for long enough now that they have become part of the wallpaper in business practice. So, let's reflect about on the state of play before they become the normative institution they now are. Boards of directors, even in countries with well-established and wellregulated capital markets, were legally a quasi-sovereign power, even though in practice they often abdicated that role and left executives to decide (MacAvoy, 2003). The absence of oversight of the management of listed companies in the US in 1920 led the scholars Adolf Berle and Gardiner Means to conclude that one of the sources of the Wall Street Crash of 1929 and the ensuing Great Depression of the 1930s was the 'separation of ownership and control', with distant, dispersed shareholders
For a quarter of a century, corporate governance in many countries has been viewed as a process o... more For a quarter of a century, corporate governance in many countries has been viewed as a process of institutionalising codes of good conduct. Episodic shocks, induced by spectacular corporate failures, have created opportunities for more radical change, but such codes have proved resilient. But has this been process firmed up a thickening core? With each revision, the corporate governance community has come to live in a field increasing dominated by the ideas traditional actors – corporate management and mainstream institutional investors – who colonized the ill-defined territory of corporate governance at the outset. Over time, however, the changing investment landscape has undercut some of the principles on which this domination was based. Let us explore the philosophical underpinnings basis of the code, drawing on concepts from the writings of de Certeau (1984) and Turner (1977), to reflect on places, spaces, rituals, and explorations, to understand what creates and constitutes co...
Socially Responsible Investment eJournal, 2020
Purpose: This paper examines the puzzles of “ownership”, the legal and psychological commitment o... more Purpose: This paper examines the puzzles of “ownership”, the legal and psychological commitment of directors, through the experience of the work of boards at non-profit organisations. Design/Methodology/Approach: An exploration of the literature on charity governance leads to a first-person reflection on the tensions in directing two common types of non-profit organisations. Findings: In the UK as in other countries, charities are companies, bound by company law as well as regulatory constraints of the non-profit sector. This creates responsibilities of ownership without the material benefits. In contrast to corporate share ownership, a sense of psychological ownership may pre-date appointment as a director, facilitating stewardship behaviour, facilitating stewardship and accountability. Research implications: This paper calls for expanded empirical work on boards of non-profit organisations, giving a focused agenda of aspects to highlight the differences between charities and the c...
This paper examines how a new institution, a code of conduct, arises and develops over time. It s... more This paper examines how a new institution, a code of conduct, arises and develops over time. It shows how the process of debate airs competing logics, questions and fails to question assumptions taken for granted, and yet achieves a large degree of legitimacy without having resolved certain core issues. The UK code of corporate governance has been emulated around the world as a model of good practice. By examining in detail one aspect of the debate – the issue over unitary or two-tier boards – the paper shows how the contest of logics leads not just to new, blended or hybrid logics, but also to suspended logics. The process of consultation brings together actors from differing organizational fields and institutional orders, offering an opportunity to create a new field in a different order, with specific lessons for the practice of corporate governance and general lessons for institution-building.
The world of boards of investment funds – like that of corporations in general – has come under i... more The world of boards of investment funds – like that of corporations in general – has come under increasing scrutiny. These entities are constituted as companies in law, but their boards of directors have traditionally had only a helicopter view of the landscape. Making them better – getting them to contribute more to fund governance – may require us to look at these boards even more closely, and to employ the tools being development to evaluate corporate board performance. In the early 1990s, as the Cadbury Code brought the term corporate governance into the vocabulary of business, board performance was associated mainly with board structure: independent chairman, non-executive directors, and committees that brought the most sensitive recommendations into the hands of outsiders. Those changes led to corporate boards and worked harder and were in a better position to monitor the chief executive and senior management. But they didn’t stop catastrophic failure from occurring. In the wa...
A revised and enlarged version of this paper has been published in Business Ethics: A European Review, Jun 1, 2011
How does a board of directors decide what is right? The contest over this question is frequently ... more How does a board of directors decide what is right? The contest over this question is frequently framed as a debate between shareholder value and stakeholder rights, between a utilitarian view of the ethics of corporate governance and a deontological one. This paper uses a case study with special circumstances that allow us to examine the conflict between shareholder value and other bases on which a board can act. In the autumn of 2010 the board of Liverpool Football Club sold the company to another investing group against the wishes of the owners. The analysis suggests the board saw more than one type of utility on which to base its decision and that one version resonated with perceived duties to stakeholders. This alignment of outcomes of strategic value with duties contrasted with the utility of shareholder value. While there are reasons to be cautious in generalizing, the case further suggests reasons why boards may reject shareholder value in opposition to mainstream notions of corporate governance, without rejecting utility as a base of their decisions.
Corporate Governance: Economic Consequences, 2020
Since 1992, corporate governance in the UK and much of the world has been articulated in codes of... more Since 1992, corporate governance in the UK and much of the world has been articulated in codes of conduct, rather than formal law and regulations or even less formal social arrangements. Moreover, despite their gradual revision over the years, their core tenets survived despite repeated and arguably growing shocks to the system they were meant to protect. That suggests the problems they sought to address have not been solved. Britain – in particular its banks – was perhaps the worst hit by the global financial crisis, at a cost to the state that continues more than a decade later. How did various revisions fail to undertake fresh approaches to the recurring crises? This book explores how corporate governance in Britain came to be codified, what key disputes took place during its major revisions, and how it institutionalised a way of viewing what corporate governance should be. This study also suggests that the while the flexibility that was built into the code’s compliance regime al...
SSRN Electronic Journal, 2019
For at least 30 years, and with growing intensity through recurring corporate governance crises, ... more For at least 30 years, and with growing intensity through recurring corporate governance crises, public policy in many countries has been striving to encourage boards of directors to undertake regular evaluations. The policy push has stimulated much practical advice, many tools for evaluation, strong encouragement from professional bodies, and considerable skepticism from those being evaluated. While some scholars have sought to conceptualize the practice, we lack a fuller understanding that can help us see how the promised benefits and feared drawbacks arise. This Director Notes report reviews the policy context and practitioner accounts and builds frameworks for practice and policy analysis. The authors find that board evaluation is a multidimensional concept in which the interactions across the dimensions open paths to improvement of boards processes while also to unintended consequences. The authors then suggest avenues for future research and a shift in policy and practice toward greater experimentation.
For a quarter of a century, corporate governance in many countries has been viewed as a process o... more For a quarter of a century, corporate governance in many countries has been viewed as a process of institutionalising codes of good conduct by institutionalising their periodic and partial deinstitutionalisation. Episodic shocks, induced by spectacular corporate failures, have created opportunities for more radical change, but such codes have proved resilient. But has this been process firmed up a thickening core? With each revision, is the corporate governance community living in increasingly familiar places or opening itself to liminal spaces? This paper deals with a story that is even now unfolding. The UK Corporate Governance Code is undergoing a major revision, with submissions to a consultation closing on February 28. As we wait for a new code to emerge, let us explore the practical background and its philosophical underpinnings, drawing on concepts from the writings of de Certeau (1984) and Turner (1977), to reflect on places, spaces, rituals, and explorations, to understand ...
Developments in the governance practices in UK public organizations show how ideas from the gover... more Developments in the governance practices in UK public organizations show how ideas from the governance of listed companies have translated into public sectors bodies, government departments and the governance of parliament itself. The use of independent, non-executives directors in public bodies encapsulates the tension in the private sector between the service role of directors and how they control the executives who manage the business. This paper gives a preliminary examination of three public bodies, comparing how reform of their governance mechanisms has affected tensions in accountability and director motivation. What is evident is that the changes involve greater emphasis on extrinsic goals, potentially at the cost of the intrinsic ones that characterize public service motivation. These tensions seem inevitable, and the challenge for board is to maintain a balance.
Corporate Governance: Principles and Issues, Chapter 1
This paper is the first chapter of a book published by Sage Publications examining the principles... more This paper is the first chapter of a book published by Sage Publications examining the principles considered in contesting theories of the field, and then the issues facing boards of directors in dealing with matters within the board, between boards and owners, between different types of owners, and then with the wider public. Taking a global outlook, the book also explores the role and limitations of transparency as a method of accountability before returning to the many unresolved questions in a field with an unsettled and perhaps unsettling future. This first chapter sets the stage with discussion of Lehman Brothers and aspects of the financial crisis of 2007-09, the echoes of previous lapses in various countries around the world, and the policy responses to them that left corporate governance with more questions than answers.
Self or other: directors’ attitudes towards policy initiatives for external board evaluation
International Journal of Disclosure and Governance
Recurrent crises in corporate governance have board practice and created policy pressure to asses... more Recurrent crises in corporate governance have board practice and created policy pressure to assess the effectiveness of boards. Since the 1990s boards have faced calls to undertake regular, formal evaluation. Since 2010, the UK Corporate Governance Code has urged large corporations to engage outside parties to conduct them at least every three years, a move that other jurisdictions have copied. Despite this policy importance, little research has been conducted into processes or outcomes of board evaluation. This study explores the attitudes of directors on evaluation, whether self-administered or facilitated by others. We find acceptance of the principle but reservations about the value and even honesty in questionnaire-based approaches. We find scepticism about, but also acknowledgement of, the benefits of using outside facilitators, especially for their objectivity and because their interviewing elicits insights into board dynamics. As this practice expands beyond listed companies to non-listed ones, charities, and even governance branches of government, our findings point to a need to professionalise outside facilitation.
Philosophy of Management
Corporate governance sits at the intersection of many disciplines, among them law, business, mana... more Corporate governance sits at the intersection of many disciplines, among them law, business, management, finance, and accounting. The point of departure for large portions of this literature concerns the ugliness of greed, ambition, misdemeanors, and malfeasance of corporations, their directors, and those actors who hold shares in them. This essay takes a rather different starting point. Drawing upon insights from a distant field, it uses the discussion of aesthetics in Dewey’s treatise on art to ask what motivates directors to act in ways that constitute the attention and engagement that we associate with the effectiveness of boards. Using Dewey’s thinking about aesthetic experience, this paper examines the experience of organization boards, both in the literature and in the personal experience of the author. These observations point to need to reflect on motivation when considering both the practice of corporate governance and the policy frameworks in which it operates.
Leadership
The democratisation made possible by social media presents leadership studies with an opportunity... more The democratisation made possible by social media presents leadership studies with an opportunity to re-evaluate the often-neglected role of power in leader–follower dynamics. Drawing on Critical Leadership Studies and using a hybrid qualitative methodology, we discover that relationships between social media leaders and followers are co-produced and largely accompanied by continuous shifts and re-negotiation of power between social media leaders and social media followers. We show that social media platforms and their metrics play an important role in such power shifts by granting equal access to communication whilst potentially tilting information asymmetries in favour of the follower. The study also shows how these relationships can affect and even pervert the leaders’ problematic search for a ‘true self’. From this observation we draw attention to wider challenges in the social media context, which poses important questions for the leadership field.
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Papers by Donald Nordberg