Digitalization and Boards of Directors: A New Era of Corporate Governance?

Abstract

The ongoing megatrend of digitalization is significantly affecting societies and organizations. How organizations deal with the impact of digitalization may determine whether or not they will be competitive in the future. The board of directors may hereby play a key role for the organization to adapt to the changing strategic context. But based on various corporate failures, boards’ work and their effectiveness have recently been questioned. Are todays’ boards equipped to create values for organizations in the future? We address this important research question by introducing a framework where digitalization is predicted to influence boards in two areas. First, we argue that boards in the future consist of virtual networks of people where needs to monitor management diminish and shared leadership approaches are emphasized. Second, we suggest that boards work according to a dynamic board agenda based on organizational threats and opportunities. The agenda is built around learning and knowledge management and is reflected in the committee structure. Using dynamic capabilities arguments, we propose a framework with the ambition to contribute to the understanding of what makes boards fit future organizational needs. With such an approach, this is the first study that contributes to knowledge on boards by examining how boards need to adapt to meet the challenges in a digital world. The implications for theory and practice call for changed perspectives on what boards do and how they look like.