When CEO and board chair are in conflict: A resource dependence perspective

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Abstract

The board of directors serves two functions in the organization: monitoring and resource provision. Agency theory mainly addresses the former, while resource dependence theory focuses on the latter. However, these theories consistently assume that board members are not only able but also consistently willing to fulfill their roles. From a resource dependence perspective, this means that board members are generally inclined to share their resources (information, social and political connections, and functional experience) with the CEO. We challenge this assumption by postulating that in the context of dyadic conflict between the CEO and board chair, these resources will not be accessible to the CEO, hence the resource provision function of the board will be interrupted. We, therefore, unpack the black box of the board dynamics by merging resource dependence theory with conflict literature to a) present an in-depth description of the CEO-board chair conflict and b) its implications for the CEO (heightened turnover intentions), the board (board cohesion and board’s monitoring role), and the organization. Theoretical and practical implications are discussed.

Keywords: Board Chair, Board Cohesion, Board of Directors, Board Functions, CEO, Conflict Handling, Resource Dependence Theory

Authors’ individual contribution: Conceptualization — R.A., R.E., and M.F.W.; Writing — Original Draft — R.A.; Writing — Review & Editing — R.E. and M.F.W.; Visualization — R.A.; Project Administration — R.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: D21, D74, D79, G30, M19

Received: 09.02.2022
Accepted: 05.05.2022
Published online: 09.05.2022

How to cite this paper: Ahmed, R., Eramudugoda, R., & Wagstaff, M. F. (2022). When CEO and board chair are in conflict: A resource dependence perspective. Corporate Ownership & Control, 19(3), 123–132. https://doi.org/10.22495/cocv19i3art9