The effect of characteristics of boards and board of directors on organizational performance within the frame of organizational context

Concern for board of directors considerably increased with the recent developments in the corporate governance field. Despite that extensive research was conducted, the understanding of the effects of the boards is still limited. Research on board of directors generally focused on the structural characteristics of boards and although the decisions that influence organizational outcomes depends on board members? prior knowledge and experiences, board member characteristics were mostly overlooked. This is mainly because that the majority of the corporate governance research focused mostly on the direct relation of board characteristics with organizational outcomes, and neglected the effect of intervening variables, leading to inconclusive research findings. Since the organizational environment influence the organizational decisions of board of directors, the environmental characteristics have an effect on the relation between board of directors and organizational outcomes. Deriving on the limitations of existing research, in this study, it was aimed to understand the effect of the characteristics of both the board and the board of directors on organizational performance. Building on upper-echelon, resource dependence and contingency theories, it is suggested that under different environmental conditions of munificence, dynamism and complexity; different characteristics of boards and board members will positively influence organizational performance. Based on the analysis of the board data from 110 companies which shares are publicly traded in İstanbul Stock Exchange, the findings indicate that apart from the board structure and composition, the diversity of board members on organizational performance has a statistically significant effect on organizational performance. Additionally, it was identified that munificence and dynamism conditions of task environments moderate this relation.