11.1 Introduction

This chapter focuses on other disciplines than economics and law in order to answer the main research question about whether independence is overrated. The economic part of this study has focused on the economic theories and concluded that the attributed importance of independence is heavily dependent on the theoretical framework. The agency theory and TCE theory hypothesise that higher levels of board independence are associated with better performance of companies. A meta-analysis could not support these claims and showed that the relationship between independence and performance tends to be negative. The legal part of this study has focused on the way independence is incorporated in the legal frameworks. The person, composition/structure and preconditions building blocks of independence all need to be well constructed in order for there to be independence. If one of these building blocks has flaws, the chain of independence becomes weaker.

The economic theories on independence, the performance effects and the way independence is modelled in the legal frameworks are not the only important aspects of independence. Culture is an important issue for independence as well. The national culture of a country or group of people influences their view on and demand for independence. This means that not only the economic theoretical framework, but also the national culture appears to have an effect on the attributed importance of independence. Next to a description of the cultural aspects of independence, the pros and cons of social relationships are addressed. Social relationships are expected to have a negative influence on independence. Not only independence in fact, but also in appearance, as is visualised in Figure 11-1. However, for monitoring and advising there might be benefits in having less independent boards with more social ties. Besides cultural and social influences, groupthink is described as well in this chapter. Groupthink symptoms may lead to low-quality decision-making and independence might mitigate these effects. This entails that stronger independence regulation does not only lead to better monitoring, but also improves the quality of the discussion within the board and ultimately results in better decision-making. So, groupthink is associated with independence in fact and also independence in form, because independence requirements might mitigate the occurrence of groupthink. The right diagram in Figure 11-1 shows this as well. These three subjects together are referred to as behavioural aspects.

Figure 11-1: The relationship between independence in fact, in appearance and in form. Social relationships are concerned with independence in fact and in appearance. Groupthink is associated with independence in fact and in form.

It must be remarked that the study’s main emphasis is on the economic and legal parts. This behavioural part is more supportive than the economic and legal part; it has an illustrative nature to show other aspects of independence. Section 11.2 addresses the cultural aspects of a society and its influence on independence, section 11.3 addresses the issue of social relationships within the board and section 11.4 describes groupthink. Finally, section 11.5 concludes this chapter.