The governance world has spent three decades perfecting the art of assembling boards. Independence ratios, gender quotas, skills matrices, diversity mandates − an elaborate architecture built on one powerful conviction: that who sits on the board determines how the company performs.
The evidence invites us to think again.
The research record on board composition and firm performance is, to be frank, inconclusive. Studies on board size point in opposite directions − the answer seems to depend on how complex the firm is. Independence − the single most regulated compositional variable − shows no reliable link to performance, and the modest benefits that do appear are largely confined to countries with weak legal systems. Gender diversity produces a small positive effect, but it is highly conditional: in firms that are already well-governed, adding monitoring capacity can actually tip boards into over-monitoring. Even Norway's pioneering 40% quota − arguably the most studied natural experiment in board composition − showed negligible effects on firm value once researchers accounted for how firms select their directors.
None of this means composition is irrelevant. It means we may have been asking the wrong question. The question is not "does independence improve performance?" It is: "under what conditions do the people around the table actually make the company better?" And that question is harder to answer, in part because companies choose their own boards. A struggling firm recruits high-profile independents to signal reform, while a thriving firm keeps its insider-heavy board because it seems to be working.
The answer lies in a word the governance world chronically undervalues: process.
Two boards with identical profiles − same independence ratio, same gender balance, same skill mix − can produce radically different outcomes. Compositional resources only create value when they are actually mobilized through genuine debate, constructive conflict and effective use of knowledge. The difference between a high-performing board and a ceremonial one is not in the CVs. It is in the chair's ability to draw out dissent, the norms that make it safe to challenge the CEO, the quality of the information pack and whether directors actually prepare.
This has practical implications worth noting. Many directors who meet every formal criterion of independence share social ties with the CEO − the same schools, the same clubs and the same professional circles. This quietly reduces their willingness to challenge. A director recruited through the CEO's personal network may not be truly independent, regardless of what the governance report says. Formal independence can coexist with conditioned behavior.
Consider a revealing contrast. Private equity boards are small, expert and deeply engaged. Their directors have skin in the game and treat governance as a value-creation tool, not a compliance exercise. Listed-company directors often sit on multiple boards, are time-constrained and operate within a system built more for accountability than for contribution. Which model sounds closer to what good governance should look like?
Family businesses make the point even more clear. With no proxy advisors, no activist investors and no market for corporate control, everything depends on internal quality: the board itself, the chair's leadership and the owner's commitment to substance over form. The best results tend to come not from boards dominated by the family, nor from boards dominated by outsiders, but from boards that combine family presence with genuinely independent voices.
The lesson for every board − listed or private, family or PE-backed − is the same. Keep assembling well-composed boards. Independence, diversity and the right mix of skills all matter. But invest at least as much energy in how the board works: the culture of challenge, the quality of information and the willingness to confront uncomfortable truths.
Composition creates potential. Process is what turns it into performance.
NEWS&TRENDS.
Boards are entering the second half of 2026 facing persistent uncertainty, geopolitical tensions, and rapid technological change. A recent KPMG report highlights the growing importance of resilience, scenario planning, cybersecurity oversight, and board engagement in strategy as directors recalibrate their priorities for an increasingly volatile environment. Read the report here.
The 2026 European Corporate Governance Barometer, published by ecoDa and Ethics & Boards, finds that European boards continue to make progress in diversity and board independence. At the same time, the report highlights gaps in areas such as technology oversight, and geopolitical risk, suggesting that board capabilities are not evolving as quickly as the external environment. Read the report here.
A recent series of articles published as part of ECGI’s special blog edition on the 2026 IESE - ECGI Corporate Governance Conference, Family Firms: Purpose, Economic Performance and Social Impact, summarizes some of the conference's key insights. The articles highlight how family firms’ long-term orientation, concentrated ownership, and strong identity can create governance advantages, particularly during periods of uncertainty. At the same time, balancing family influence with professional management and effective board oversight is essential to sustaining performance across generations. Read here.
A recent PwC and The Conference Board survey shows improving executive confidence in boards, while also identifying areas for improvement, including board refreshment, AI expertise, and closer alignment with management on strategic priorities. Read here.
IESE's recent research.
ORMAZABAL, G. (2026). Trust and credibility in sustainability reporting. Accounting and Business Research.
DAI, J., ORMAZABAL, G., PEÑALVA, F., RANEY, R. (2026). Mandatory investor disclosure, sustainability commitments, and portfolio decarbonization. Journal of Accounting and Economics, 81 (1), Article 101817.
BOULONGNE, R., YOUNG-HYMAN, T., BERRONE, P. (2026). Short-term demands and long-term commitments. A Temporal model of stakeholder governance. Academy of Management Journal.
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