The role of board independence on R&D investment’ choice decided by committed managers: The cognitive management of executives’ discretion

Abstract

This study deals with appreciating the role of both governance system and executives cognitive and attitudinal aspects in the innovation decision-making. After discussing the theoretical relationship between board independence and CEOs attitude and behavior, we are advancing an empirical model testing the correlation between the managers' attitude and behavior towards innovation and his psychological commitment level. The CEOs commitment bias and attitude constituent were measured using questionnaire. The data analysis was performed using the Bayesian network method on 220 Tunisian executives. Empirical results confirm the theoretical prediction and shows that processing with persuasive mechanism does not have an effective role on the alignment of the manager's attitude and behavior in key tasks such innovation decision. CEOs authentic behavior was more related to an important manager involvement in this behavior rather than to persuasive effort committed by outside directors to make him contract this action. CEOs attitude and behavior towards innovation are shown related to commitment link "manager-task" and suggests that the board of directors plays no role in the CEOs discretion management. We argue that persuasive approach is not a sufficient path in behavior and interests alignment; yet, it should be applied with the commitment approach for understanding manager decision-making.

Corporate Governance and R&D Strategic Decision Making

“…CEOs attitude and behavior towards innovation are shown related to commitment link "manager-task" and suggests that the board of directors plays no role in the CEOs discretion management (Hamza & Jarboui, 2016).…”

Company secretary: a role of breadth and majesty

“…In Public Office, executive discretion is “the extent of legal flexibility to use government power by executive branch officials – power over personnel; budgets; information – giving coercive authority” (Cuellar, 2006, p. 236) – where in reality, “government actions are rarely purely discretionary, neither is discretion ever entirely absent […] it is relative” (Cuellar, 2006, p. 37). In corporate circles, discretion centrally features in the debates concerning agency and stewardship issues[6] (Berle and Means, 2009; Jensen and Meckling, 1976; Donaldson and Davis, 1991) and within Board accountability as governance and effectiveness (Hamza and Jarboui, 2016; Van den Berghe and Levrau, 2013). It also underpins the nature of individual leadership (Sheard et al , 2013) through periods of innovation (e.g.…”