Boards of directors and resource dependence theory : a replication study of Australian public companies

Abstract

Several competing models have been developed to explain the function of corporate boards. Two of these models are diametrically opposed regarding the board's role in the strategic management process. Management Control proposes that the board of directors is a rubber stamp for management, and plays a minor role in strategic management, while Resource Dependence asserts that the board is a tool used to manage environmental uncertainty. A structural model is developed in this study to determine whether corporate boards respond to different types of environmental uncertainty, using sample data from 280 Australian public listed companies in eight industry groups. Prior to this analysis, board structure and corporate interlocks data is presented for a sample of 725 Australian public listed companies in fifteen industry groups.