• Beyond the surface: board of directors’ effectiveness regarding tasks and corporate social responsibility activities in Nigeria

      Zayyana, Abubakar Mohammed (University of BedfordshireUniversity of Bedfordshire, 2018-07)
      Despite the growing interest on board literature, what makes a board effective is still unclear. Recent events highlighting corporate abuse cast doubt on the efficacy of the existing governance codes. The main aim of this research is to investigate board effectiveness beyond board demographic variables. Specifically, the study examines the systematic relationships between board characteristics, board processes, board tasks and corporate social responsibility (legal and ethical) activities in Nigeria. In this research, corporate social responsibility activities, rather than corporate financial performance are considered. This is essential, as in addition to the Nigerian corporate governance code requirements, unethical and illegal activities of directors are the genesis of most of the previous corporate scandals. Moreover, an effective CSR strategy has the potential to influence financial performance in the long-term. Building on previous studies, an existing framework has been adapted; however, the results of semi-structured qualitative interviews show that certain board processes (cognitive conflict and effort norms) as well as board tasks (resource provision and strategy advisory) need to be amended in order to suit the Nigerian context. Additionally, the current study employs the theoretical lenses of the agency, resource dependency and stakeholder theories to investigate board effectiveness. A survey questionnaire generated through Qualtrics software was sent to all directors (1,430) of firms listed on the Nigerian Stock Exchange. A response rate of 214 (189 usable), representing fifteen per cent of the total sample was received and Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed to test the hypothesised relationships. The empirical findings show that board processes variables are more important than board characteristics in regard to board effectiveness in Nigeria. Among the board processes variables, knowledge utilisation has the strongest effect on board task (control and service), followed by board level of challenge. Commitment amongst board members has a significant impact on service task, but not on control task. Both board control and service tasks have greater influences on legal and ethical corporate social responsibility activities in Nigeria. Finally, board processes do not have mediating effects on the relationship between board characteristics and board tasks. However, board (service and control) tasks mediate the link between knowledge utilisation and CSR legal and ethical activities, but only service task has an indirect effect on the relationship between board commitment and CSR. Surprisingly, these board task variables serve as suppressors, rather than mediators on the relationship between board challenge and CSR. The current study contributes empirically and theoretically to board literature by examining factors responsible for board effectiveness, beyond board characteristics (the usual suspects) in Nigeria. Similarly, the study contributes to board processes literature by introducing a new input-process-output model that includes CSR activities. The findings of this research are expected to provide information to boards of directors and policymakers on what boards do to influence board task effectiveness and determine the effects of board task on corporate social responsibility activities. The study provides evidence which highlights the important need for board scholars to consider other variables, such as board processes and tasks, rather than fully relying on board structure when investigating board effectiveness.