The Board of Director's Innovative Mechanisms

Abstract

This thesis explores how boards of directors can initiate and influence strategic change and innovation through practices and processes. The study is set in the shipping industry, which is undergoing significant transformation due to its substantial environmental impact. We explore this phenomenon by conducting ten in-debt interviews with board members and CEOs, in two highly innovative companies in the shipping industry. By following an inductive approach, we find and present board members’ mechanisms and dynamics that drive innovation.

Our primary research question is:

“How can the board of directors initiate and influence strategic change and innovation?”

Our findings present an original model that incorporates prior research and empirical findings. We identify four mechanisms that the boards employ when initiating and influencing change in the shipping industry, namely procedural, guardrail, behavioral and interactive mechanisms. Procedural and interactive mechanisms were concepts built on existing literature, while guardrail and behavioral mechanisms were identified through our inductive findings. Each mechanism includes two relevant themes of influence. Our study also explores how these mechanisms affect the dynamics between the boards and management team’s fostering innovative engagement. The engagement dynamics visits the ongoing debate in the existing literature on the boards control and advice-giving role.

This study contributes to existing literature by addressing the gap between academic theories on board roles and actual behaviors observed in corporate settings, specifically in the shipping industry. By introducing new concepts like guardrail and behavioral mechanisms, and engagement dynamics, we provide a comprehensive understanding of how boards influence strategic change and innovation.

Regarding practical contribution, our framework provides actionable insights for boards in the shipping industry, highlighting mechanisms influencing processes and practices. By actively engaging in these practices, boards can foster innovation and strategic change, effectively addressing challenges and enhancing their role in driving transformative initiatives.