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All on Board? Supervisory Boards in Transition

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All on Board? Supervisory Boards in Transition All on board? Supervisory boards in transition A study on supervisory boards regarding Digital Transformation Master thesis Business Administration 2019-2020 Organizational Design and Development Radboud School of Management Name: C.F.J. (Chris) Garstenveld Student number: s1022331 Supervisor: dr. A. Verhoeff (Arjen) Examiner: dr. S. Schembera (Stefan) June 15th, 2020 II Preface Dear reader, In front of you, I present my thesis: ‘How are supervisory boards informed about the digital transformation, and from what perspective do supervisory boards’ evaluate on this development?’ After graduating in Business Administration at the University of Applied Sciences in 2018, I decided, instead of finding a fitting job, to aim for the academic adventure. By choosing to further educate myself by obtaining academic knowledge, I consider to be of greater value for organizations and society, having better opportunities in finding an appropriate job, and above all to develop myself on a personal level. Now, almost two years later, I do not regret the choice made. The last two years, and especially the last six months (January 2020 – June 2020) of conducting the master thesis, have been eye-opening, intensive, and above all, very worthwhile. Having had the opportunity to write a master thesis in times of COVID-19 was challenging, but due to the ingenuity of all individuals involved, I was able to fulfil my objective. I would like to express my gratitude to all people who were involved in the accomplishment of my master thesis. Thank you, Dr. A. (Arjen) Verhoeff, for the pleasant guiding, expertise on the topic, and excellent support regarding the process. Above all I want to thank you for getting me in touch with inspiring people in, for me the onetime unexplored, the societal field of supervisory boards and governance: this certainly contributed to my ability to bridging and interpreting literature to practice patterns. Furthermore, I want to thank Dr. S. Schembera for his helpful feedback on my initial research proposal. Essential in this study are the respondents and the experts I have been speaking with about the Dutch world of internal governance. I want to thank all of you for your willingness and adaptability to participate in these disturbing times, especially for getting in touch quickly. Moving from my students’ house to my parents home due to COVID-19 asked adaptability from my parents, brother, and girlfriend, thank you. I hope you all do enjoy reading my thesis, Chris Garstenveld Vragender, June 15, 2020 III Abstract In the Netherlands, internal governance is to be executed by supervisory boards provisioning interests for the organization they serve, and the interest of all stakeholders involved. Nowadays, the digital transformation brings complexity and adds new challenges to the supervisory boardroom. Supervisory boards need to go along with external developments in order to understand the effects for the organization they supervise. With regard to the digital transformation, stakeholder groups compete for influence on the perception of supervisory boards with regard to this irreversible transition and internal governance role to be fulfilled by these boards. This study addresses a relatively unexplored area of role perceptions in relation with the digital transformation as evaluated by supervisory boards. Firstly, I conducted a document analysis in order to explore if and how supervisory boards are aware and informed about the digital transformation and its implications. Secondly, I conducted 16 interviews with supervisory boards (13) and experts (3) to study different theoretical perspectives held regarding the role supervisory boards fulfill for certain internal and external stakeholder groups. Findings indicate that supervisory boards are aware on the presence of the digital transformation. Simultaneously, supervisory boards do struggle in creating a clear contextual perspective for the organization they serve. Subsequently, data shows that most supervisory boards prefer stewardship characteristics over agency characteristics. Despite some solely internal and external perspectives, supervisory boards evaluate and serve their organization from both internal and external coalition perspective, a mixed perspective. This study, besides it contributed to the literature, provided several insights and recommendations on Dutch internal governance with regard to the digital transformation. Keywords: Organizational design, internal governance, supervisory boards, digital transformation, stakeholders IV Contents Chapter 1: Introduction ...................................................................................................... - 7 - 1.1 Active governance, fit for purpose? ............................................................................ - 7 - 1.2 Motivation and gap .................................................................................................... - 10 - 1.3 Research objective and research question ................................................................. - 11 - 1.4 Relevancy and contribution of this study .................................................................. - 11 - 1.5 The Dutch Case ......................................................................................................... - 12 - 1.6 Outline of the thesis ................................................................................................... - 13 - Chapter 2: Theoretical framework .................................................................................. - 14 - 2.1 The digital Transformation ........................................................................................ - 14 - 2.1.1 Organizing Digital Transformation ........................................................................ - 15 - 2.2 Position and role of a supervisory board in the Netherlands ..................................... - 16 - 2.3 Perspectives on internal governance: coalition theory .............................................. - 16 - 2.4 Stakeholder and governance theories ........................................................................ - 19 - 2.3 Theoretical framework .............................................................................................. - 21 - Chapter 3: Methodology ................................................................................................... - 22 - 3.1 Approach ................................................................................................................... - 22 - 3.2 Methods of data collection ........................................................................................ - 25 - 3.3 Data analysis .............................................................................................................. - 27 - 3.4 Quality of the methods used ...................................................................................... - 29 - 3.5 Research ethics .......................................................................................................... - 30 - Chapter 4: Findings .......................................................................................................... - 31 - 4.1 Awareness and informing on digital transformation in supervisory boards .............. - 31 - 4.2.1 Incorporating digital knowhow: ensuring viability ................................................ - 33 - 4.2.2 Steps towards the right direction ............................................................................ - 36 - 4.3 Evaluating the digital transformation ........................................................................ - 40 - 4.3.1 The domestic priority: a solid base for the internal coalition ................................. - 40 - 4.3.2 Engage with the outside world: an external coalition? ........................................... - 42 - 4.3.3 Questions to ensure trust: emerging stewardship ................................................... - 43 - 4.3.4 Tension and distrust: a matter of agency?! ............................................................. - 45 - 4.3.5 Positioning the supervisory boards ......................................................................... - 46 - 4.4 The importance of the right focus .............................................................................. - 47 - 4.5 The impact of COVID-19 pandemic on the digital transformation ........................... - 49 - Chapter 5: Conclusion and discussion ............................................................................ - 50 - 5.1 Conclusion ................................................................................................................. - 50 - V 5.2 Limitations ................................................................................................................. - 52 - 5.3 Theoretical implications ............................................................................................ - 53 - 5.4 Practical implications ................................................................................................ - 55 - 5.4.1 The supervisory board at turn ............................................................................. - 56 - 5.4.2 Learn from colleague supervisory boards ........................................................... - 56 - 5.4.3 Guided by external institutes............................................................................... - 57 - 5.5 Recommendations for further research .....................................................................
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