The board's role in sustaining major organizational change: An empirical analysis of three change programs

Journal article, 2009

The importance of top management commitment for the success of major change initiatives has been emphasized in the literature, while the role of boards of directors (the board) has been in less focus. The purpose of this paper is to analyze how the boards affect the sustainability of major organizational change. This paper is based on three case studies of the diffusion of total quality management (TQM), Toyota production system (TPS), and lean production (LP). Findings from these case studies are then compared to literature on management and organization and corporate governance. It was found that a TQM/TPS/LP transformation is a long-term process. In the case studies, top management commitment is crucial for the sustainability of the implemented change programs. However, a committed top management does not “last forever.” The issue of sustaining change therefore falls back on the governance structure. If the board does not understand the essence of an organizational change, the risk is that top management is replaced with new leaders, who are given new directions by the board. Issues identified as important in order to create board commitment for sustainability of major organizational change are: board competence and experience, board meeting dynamics, board as a provider of critical resources, and the process of replacement of chief executive officers. The dominating agency theory within corporate governance also needs to be questioned and complemented by more recent theories such as the stewardship and the resource-dependence theories. This paper makes an orginal contribution by providing insights into the board’s role in sustaining major organizational change.