Inside the black box: an investigation of non-executive director activity through the lens of dynamic capability

Through a dynamic capability lens, we investigate the activities of non-executive directors (NEDs) of Anglo-American one-tiered corporate boards. We hypothesize that their perceptions of their own efficacy and of their duties rooted in resource dependence theory are motivators for dynamic capability relevant activities - activities that may be antecedents for organization dynamic capability - and may affect organization dynamic capability performance. Based on discussions with NEDs, we developed a list of NED and board activities which could be dynamic capability relevant and conducted a survey of Anglo-American organizations in Asia-Pacific and elsewhere. Our findings suggest partial positive association between resource dependence based duty and several dynamic capabilities-relevant activity groupings of NEDs. In one of those groupings, the NEDs’ perceived efficacy may positively moderate that relationship and there may be positive association with organization performance. Our research provides a way forward in operationalizing the 3-element dynamic capability concept. It also suggests that the NEDs’ perceptions of their efficacy and importance of their duty to provide resources are positively associated with dynamic capability relevant activities and to a limited extent organization performance. NEDs can exceed traditional normative baseline activities and suggest NED activity outside of the formal confines of the board meetings can play a part in the organization. By examining NEDs in a strategic risk perspective such as that addressed by dynamic capability this may yield important findings about NEDs that extend beyond the principal-agent board-executives relationship.