The world of student associations, is not all what it seems to be. Here, like in the corporate boardroom, we find a world of personal ambition that drive unproductive acquisitions and other unwanted managerial behavior. Agency problems as studied by Jensen & Meckling (1976) and eloquently summarized by Gordon Gekko (1987) are major causes of the credit crisis of 2008.
The literature on how organizations respond to institutional pressure has shown that the individual decision-makers’ interpretation of institutional pressure played an important role in developing organizational responses. However, it has paid less attention to how this interpretation ultimately contributes to their range of organizational decisions when responding to the same institutional pressure. We address this gap by interviewing board members of U.S. and Dutch hospitals involved in adopting best practices regarding board evaluation. We found four qualitatively different cognitive frames that board members relied on to interpret institutional pressure, and which shaped their organizational response. We contribute to the literature on organizational response to institutional pressure by empirically investigating how decision-makers interpret institutional pressure, by suggesting prior experience and role definition as moderating factors of multidimensional cognitive frames, and by showing how these cognitive frames influence board members’ response to the same institutional pressure.
The decision-making process in boardrooms has a significant impact on organizational performance. In the last two decades, scientific research on the decision-making process in boardrooms has increased. This resulted in a substantial body of knowledge about boardroom factors and their relation to organizational performance. However, the effectiveness of the decision-making process in boardrooms is still mainly a black box. Amongst other things, scientific findings seem to contradict each other, which could mean additional insights are still missing. This research aims to contribute to a better understanding of this black box.
