3.1 Introduction

Now that the definition of independence has become clear in the previous chapter, this chapter addresses the research question about the aim of independence. The view whether independence is important to a company, and, if so, how the board should be composed of independent directors and the expected consequences of that composition are described for five economic theories.1 The agency theory, transaction costs economics theory, stewardship theory, resource dependence theory and stakeholder theory are chosen, because these are considered to be the main economic theories in the development of corporate governance and in the understanding of boards (Mallin 2007: 12; Nicholson and Kiel 2007: 586-587).

In short, proponents of the agency theory and transaction costs economics theory advocate board independence in order to increase financial company performance, whereas proponents of the stewardship theory advocate lower levels of board independence to achieve the same goal. Adherents of the resource dependence theory recommend the inclusion of representatives of external resources on the board, on which the company depends in order to increase company performance. These representatives are generally not considered to be independent, because they are linked to business clients of the company.

The interests of shareholders are guiding in decision-making according to the agency, transaction costs economics, stewardship and resource dependence theories. The stakeholder theory abandons this shareholder primacy and advocates considering the interests of other stakeholders as well. Dissimilar to the other four theories, stakeholder theory proponents do not focus on board composition itself, but on how stakeholders are considered in decision-making processes.

All corporate governance theories in this chapter have different views on board tasks. Before elaborating on these theories and their perception of tasks, section 3.2 first describes briefly the evolvement of board tasks over time. Sections 3.3 to 3.7 subsequently describe the five theories, the accompanying views on board composition and independence. These views on board composition are given from a unitary board point of view, because these theories originate from Anglo-Saxon countries. Section 3.8 concludes this chapter and answers the research question.