Innovation driven business development and board leadership

Swedish companies are expected to create innovation driven, profitable and sustainable business in global competition. In recent years, these eligibility requirements have been combined with demands of transparency, responsibility and a capacity to read an increasingly complex business landscape. With higher competitive pressure and global game changers such as digitalization and the climate crisis, claims are made that the role and function of the board has become an issue of vital importance.

Based on decades of research, the actual roles and functions of the board has been conceptualized as threefold: control of management and overall use of organizational resources, service in terms of providing contacts, resources and specialized knowledge, and engaging in developing business strategy. However, resent research clearly indicates that board behavior and board leadership are undergoing a major change and that expectations regarding board practices also include tasks such as external monitoring, strategic renewal, continuous skills development and revitalization of work methods and processes.

This project explores how board leadership and board practices are related to these demands, and more specifically on efforts of renewal and innovation in Swedish business firms. Examples of guiding research questions: How is board leadership interpreted and practiced in Swedish companies? What is the primary role and function of the Chair? How is the general quest for sustainable and innovation driven development addressed from a board perspective? How can the board in SMEs´ enable the future-proofing of their companies?

The project draws on three theoretical streams: board behavior and board leadership, innovation in SMEs´, and strategy research conceptualized as sustainable value creation.

One subproject focuses on the Chair of the Board of Directors in private owned companies in Sweden, and their role and function for firm performance and value creation. The approach is qualitative and the empirical data covers nomination texts as well as interviews with the award winners of the Golden Gavel, an award instituted by Styrelseakademien, Sweden in 2005. The study covers 15 years and includes in all 30 Chairpersons in two different categories; listed and non-listed companies.

A second project explores how board behavior and board leadership promote sustainable and innovation driven business development. As the literature on board practice is heavily infused with corporate governance research on large organizations this study aims at SME, thereby addressing an under-researched segment in the Swedish corporate landscape. The research design builds on expert interviews followed by in-depth case studies. Qualitative techniques will be used for data gathering and analysis.

Findings

Findings suggest that there is a strong link between value creation, innovation and growth.
While core innovation was driven by management in close connection with operations, the board´s contribution was essentially about aligning and preparing the whole organization for the next level of development i.e., to create the right conditions for sustainable growth. This work of aligning and preparing the organization requires a board that is professional in its work, members who are competent and committed, who have an interest in sharing experience and develop as a team and members who are willing and able to assist management in monitoring the environment outside the firm. The most important prerequisite for innovative and sustainable growth, however, was the rather intense interaction observed among the board, management and owners. This was demonstrable through frequent informal contacts and close cooperation, which were prioritized ahead of a clear division of roles and responsibilities. In other words, the board's function as a strategic interlocutor is significantly more prominent than its function as an independent control body.

The report is available in Swedish for free, including a summary in English
https://research.hhs.se/esploro/outputs/991001564994706056

Project leader

Ingalill Holmberg

Research team and collaborating partners

Ingalill Holmberg, Pernilla Petrelius Karlberg, Ingela Sölvell, Styrelseakademien Sverige; stiftelsen Guldklubban (the Golden Gavel).

Funding

The subproject on the role of the chairperson is funded by Vinnova 2020-2021

The subproject om innovation driven business development – from the perspective of the Board is funded by Vinnova and Styrelseakademien Sverige, 2022-2023

Keyword: strategic leadership.

Publications

Holmberg, I., Liljegren, S. och Sölvell, I. (2021) Styrelseordförandes roll och funktion för strategisk förnyelse och innovation, Handelshögskolan i Stockholm (SSE).

Other forms of knowledge dissemination

A series of webinars was carried out in collaboration with Styrelseakademien Sverige in 2021