Corporate Governance & Organization Life Cycle: The Changing Role ...

Chapter 1

Theoretical Review

This literature review forms the basis for developing the theoretical framework presented in chapter 2. The role of a board is complex and changes over time as the organization and context change. Agency, resource dependence, institutional, and network theories are reviewed as each contributed to understanding the basic relationship between the board and its environment, both internal and external. Cognitive and political theories are subsequently reviewed to shed additional light on the interlock phenomenon. In this study, it is argued that interlock enhances the ability of the board to perform its basic functions. The life cycle theory is covered last. While each theory sheds light on the functions of the board, a multitheory approach is used because the degree of relevance of each theory varies depending upon the context of the organization within the phases of the organization life cycle.