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seemed meaningful, but their view was fragmented and did not take into consideration the various needs and environments of firms during different phases of their life cycle. There appeared to be an opportunity to bridge the gap between the existing literature and the limited perspective of those involved directly by developing a more comprehensive analytical framework with which to view this possible linkage.
As noted earlier, board performance represents only a small fraction of a firm’s overall performance equation, and further study seeking a direct link between the two may be only of limited interest. More meaningful, however, would be the study of the various ways to improve board performance. Effective boards may be those in which the strengths and expertise of the members match the needs of the organization at any given time. Therefore, the first research question is as follows: How do the criteria for board member selection reflect the changing functions of the board in varying phases of the organization life cycle?
While the first research question concerns boards in both the for-profit and the not-for-profit sectors, the second concerns boards in the for-profit sector in general and listed companies in particular. This second question addresses the impact of recent changes in the regulatory framework. Effective on December 31, 2003, new regulatory frameworks in the United States and Canada imposed additional requirements that a majority of board members be independent and that the scope of the director’s responsibilities be expanded. This has profound implications with regard to the type of professionals who can be approached to become board members, as well as the number of board memberships a director can assume at any given time. Therefore, the second research question is as follows: How has the new regulatory framework modified the criteria for board selection and affected board interlocks?5
This study begins with a theoretical foundation in chapter 1. Here, the discussion focuses on the various functions of the board and the link to organizational performance will be set aside. Section 1.1 on agency theory examines the relationship between control and ownership of an organization. Section 1.2 provides an overview of the governance context by reviewing key areas researched in extant literature. The theoretical