Beyond Agency Conceptions of the Work of the Non-Executive Director: Creating Accountability in the Boardroom John Roberts, Terry McNulty* and Philip Stiles The Judge Institute of Management, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, UK, and *Leeds University Business School, Maurice Keyworth Building, University of Leeds, Leeds, LS2 9JT, UK Corresponding author email: j.roberts@jims.cam.ac.uk This paper examines board effectiveness through an examination of the work and relationships of non-executive directors. It is based on 40 in-depth interviews with company directors, commissioned for the Higgs Review. The paper observes that research on corporate governance lacks understanding of the behavioural processes and effects of boards of directors. Whilst board structure, composition and independence condition board effectiveness it is the actual conduct of the non-executive vis-a`-vis the executive that determines board effectiveness. Data about behaviour and relationships on boards suggest that traditional theoretical divisions between agency and stewardship theory, and control versus collaboration models of the board do not adequately reflect the lived experience of non-executive directors and other directors on the board. Developing accountability as a central concept in the explanation of how boards operate effectively enables the paper to both challenge the dominant grip of agency theory on governance research and support the search for theoretical pluralism and greater understanding of board processes and dynamics. Practically, the work suggests that corporate governance reform will be undermined by prescription that supports distant perceptions of board effectiveness but not the actual effectiveness of boards. Introduction This paper addresses the effectiveness of boards through an examination of the work and relationships of non-executive directors. Recent reviews of corporate governance in the economic and management literatures conclude that despite considerable empirical work there remains very limited understanding of the working processes and effects of boards of directors (Daily, Dalton and Cannella, Jr, 2003; Hermalin and Weisbach, 2003). Many researchers and those in the policy domains continue to focus on issues of board structure and composition, particularly non-exe- cutive independence, as proxies for understand- ing board effectiveness. Better understanding of the inner workings of boards is necessary both to advance management research and to promote its relevance to corporate governance practice and reform. The field research reported here was conducted for an independent review of the role and effec- tiveness of non-executives led by Derek Higgs, at the behest of the UK government in 2002. While other countries such as the USA responded to recent governance scandals and shocks by intro- ducing legislation (Sarbanes-Oxley Act, 2002) and new listing rules – the UK’s response was to conduct a review to explore, what, if anything could be done to strengthen to the Combined Code on Corporate Governance (Financial Report- ing Council, 2003) in relation to the role and effectiveness of non-executive directors. Having contributed to the process of governance reform in the UK (Higgs, 2003; McNulty, Roberts and Stiles, 2003), we seek in this paper to locate our British Journal of Management, Vol. 16, S5–S26 (2005) DOI: 10.1111/j.1467-8551.2005.00444.x r 2005 British Academy of Management