Undertaking Governance Reform and Research: Further Reflections on the Higgs Review
| Date | 01 March 2005 |
| Author | Philip Stiles,Terry McNulty,John Roberts |
| DOI | http://doi.org/10.1111/j.1467-8551.2005.00451.x |
| Published date | 01 March 2005 |
Undertaking Governance Reform and
Research: Further Reflections on the
Higgs Review
Terry McNulty, John Roberts
*
and Philip Stiles
*
Leeds University Business School, Maurice Keyworth Building, University of Leeds, Leeds, LS2 9JT, and
*
The
Judge Institute of Management, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, UK
Corresponding author email: tm@lubs.leeds.ac.uk
Introduction
Our research for the Higgs Review on the role
and effectiveness of the non-executive director
can itself be seen as highly context dependent. It
took place at a time when, following the collapse
of Enron and WorldCom, there were again
worldwide fears as to the adequacy of corporate
governance. The sharp, possibly knee-jerk, reac-
tion in the USA, the Sarbannes-Oxley Act, was in
many respects a mirror image of the perceived
causes of these failures. For many, however, its
provisions were felt to be driven more by a felt
need to be seen being tough with executives than
by an informed understanding of the systemic
forces that shape board effectiveness. The UK
response – a further best practice review – sought
to meet the felt need for a reassuring regulatory
response, but in a way that was informed by an
understanding of the actual conditions of board
and non-executive effectiveness. The Higgs Re-
view was time-constrained, and our own con-
tribution to this was condensed into an intense
few months of interviewing and report writing.
We sought to contribute to the review through an
analysis of board dynamics informed by extensive
interviews with chairmen, chief executives, ex-
ecutive and non-executive directors. Our audi-
ence was Derek Higgs and his review team and,
beyond this, the policymakers at the DTI and
Treasury, as well as practitioners. Our involve-
ment in this work was itself conditioned by our
own past involvement in extensive qualitative
research on board dynamics. It was this history
of work that gave us credibility with the review
team and allowed us to conduct and analyse the
research data in the time available to us.
This Special Issue has provided us with the
welcome opportunity to step back from the
immediate pressures of research and report
writing in order to seek to locate our policy-
oriented proposals in the academic literature on
boards. It has also given other governance
academics the opportunity to offer some reflec-
tions on our work and its implications for the
development of governance theory and practice.
We are appreciative of the British Journal of
Management and commentators for their interest
in our work, and in what follows we want to offer
some brief responses to their papers and their
diverse engagement with our focus on creating
accountability in the boardroom. Part of the
diversity lies in questioning the relevance of our
UK-focused work for other national systems of
governance. Aguilera’s paper perhaps most
clearly engages with the diversity of different
national systems of corporate governance and the
need to think through what creating account-
ability might mean in these different contexts. But
Dalton and Dalton’s US-focused response simi-
larly raises the issue of the relevance of our
research for the USA. John Hendry’s engagement
with our paper is amongst the most direct, and
takes him on a different path to our own by
attempting to add the monitoring of competence
to the risks of opportunism within agency
British Journal of Management, Vol. 16, S99–S107 (2005)
DOI: 10.1111/j.1467-8551.2005.00451.x
r2005 British Academy of Management
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