The Impact of Changes in the Corporate Governance System on the Boards of Directors: Experiences from listed Swedish Companies

The core objective of this article is to develop and apply a framework based on institutional theory for investigating and exploring how boards of directors respond to changes in the national pattern of corporate governance. In contrast to most models of institutional changes that are based on the structure of the change process, our framework focuses on the content of institutional changes in terms of changing actions, values and cognitions. By studying and comparing changes in action, values and cognition we are able to comprehend the content and degree of institutionalization of new patterns of behavior. The framework is applied to the behavior of boards in Swedish publicly-listed companies in 1994 and 1999. The results reveal significant changes in both the decision criteria applied by the boards as well as their activities. At the same time, we find no significant changes concerning directors’ attitudes towards the role of the stock market or other governance mechanisms between 1994 and 1999. Our interpretation is that there is a tendency for actors to change their behavior in accordance with their anticipations about change, while changes in value systems are more inert. The process of institutionalization is thereby, in part, given space for a certain indefinitability regarding the outcome of the institutionalization of a new pattern of board behavior.