Week 6 – Assignment: Develop Public Organizations' Risk Mitigation Practices and Week 7 - Assignment: Critique the Moral Aspects of Strategic Management

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and the upper political levels as it rea�rms its executive authority. Nonetheless, the

study suggests that abolishing or replacing the board with a non-political board may

not improve organisational governance. The study gives insights in politicians’

contribution to strategic public management, an aspect lacking in existing literature.

 KEYWORDS: Board function hospital management local government political board

strategy development

1. Introduction

Literature on public strategic management, where ‘strategy is about purpose, direction

and goals’ (Johanson 2009, 873), usually focus on: plan formulation, content or

implementation, and describe the strategic process in discrete steps, ignoring iterative

processes (Poister, Pitts, and Hamilton Edwards 2010). Studies on how knowledge on

strategy develops are limited, including how di�erent organisational levels interplay in

the strategy development process, for example, how much managers control their

agency´s strategy and how much is imposed on them (Bryson, Berry, and Yang 2010).

This study focuses on how strategies develop in the public sector as a multilevel

process; speci�cally, how political boards contribute to strategic management in the

interplay with senior managers. Remarkably, the politicians’ role is often not

mentioned in strategic management research (Poister, Pasha, and Edwards 2013). New

Public Management(NPM) (Hood 1995), which reinforces public strategy management

(George and Desmidt 2014), even contradicts the interactive strategy function of a

political board. NPM assumes that emphasis on responsibility can lead to

improvements in public activity performance; this assumption requires the use of

formal procedures that establish and maintain independence between boards and

executive management (Fama and Jensen 1983). A theoretical basis for this

assumption is the principal agent, maintaining that board of directors have a control

function (Daily, Dalton, and Cannella 2003). However, after reviewing nearly 300

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function (Daily, Dalton, and Cannella 2003). However, after reviewing nearly 300

research articles, Boivie et al. (2016) concluded it was unrealistic to expect boards to

be e�ective monitors if managers perform adequately because of lack of time,

infrequent board meetings despite the size and complexity of the operations, and

reluctance to challenge top managers. Instead, they argue, board of directors can

provide expert advice. A more realistic expectation may then be that board of directors

can demonstrate such accountability by exercising oversight and by participating in

strategic development. Edwards and Cornforth (2003, 79) de�ne the board’s strategic

function as active participation in ‘discussions that incorporate[d] assessments of

organizations´ overall resource and capability strengths and weaknesses, their relative

performance [in relation to their goals] and their options and priorities for future

development’. This function includes initiating, discussing and making decisions.

Hence, board of directors are strategic partners and advisors to executives, not merely

reviewers and endorsers of o�cial decision-making.

An organisational problem arises if executive boards of public organisations (all

members are politicians) are not perceived as links between the upper level of political

boards and the executives in a chain of control. This is particularly critical when a gap

exists between the board’s formal responsibility and its real in�uence on

organisational activities. This questions the function of the public organisation’s

executive board: in reality, do such boards have control or strategic functions? If not,

should they be expected to exercise such functions?

Previous research mainly focused on private corporate governance and less on public

organisation governance. Few studies examine the functions of, and in�uences on,

public organisation boards. An exception is Svärd´s study (2016) in which he found

that such boards may have clear support and advisory functions, where they often

maintain a distance from the organisation’s strategic work. The board’s participation in

strategic issues is in�uenced by limitations stemming from the decisions and actions

by a superior board. These variables were not directly in�uenced by a particular

exogenous institutional logic (either company-oriented or politically oriented), which

the study claims was the main explanatory mechanism. Instead, these results re�ected In this article

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the study claims was the main explanatory mechanism. Instead, these results re�ected

the rules for appropriate action that endogenous institutions set.

The purpose of this study was to explain why a public organisation board, with

politician board members, has particular functions. Speci�cally, the study addresses

how institutionalised internal procedures, i.e. ‘endogenous institutions’, determine

whether such a board has support and advisory functions and/or strategic function.

Here, a politician on the executive board at a public healthcare organisation was

actively seeking a strategic function for the board.

The endogenous institutions studied (described below) are procedures for:

politicians’ ways of working, including preparation for meetings,

managers’ preparation of issues, including an understanding of the politicians’

role, and

the work of the board according to the presidency model.

Newly appointed board politicians are indoctrinated on these endogenous institutions

that determine which functions an executive board can reasonably be expected to

perform.

2. Previous research

Previous research on-board functions primarily focus on board structure: the number,

diversity, competence of members, members’ independence from board activities and

political associations (Menozzi, Urtiaga, and Vannoni 2012). These studies assume that

board composition will either determine or in�uence board action. Pugliese et al.

(2009) claim that how functions are assigned to boards and composed can in�uence

organisational results apart from the actual use of board members’ knowledge,

contacts and powers. In this article

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contacts and powers.

The broad dissemination of results about the board’s functions can a�ect company

results, depending on its composition. Pugliese et al. (2009) suggest that this

explanation does not help us understand how board members actually use their

knowledge, contacts and competences.

Therefore, recent research on board governance takes a process-based perspective

(Gabrielsson and Huse 2004; Leblanc and Gillies 2004), where three categories have

been identi�ed (Huse 2005). The �rst refers to how board members resolve internal

con�icts when they deal with third parties. The second refers to the standards that

govern boards, the use of board member competences (Forbes and Milliken 1999) and

the conduct of board work (Huse 2005). The third refers to the board decision-making

culture that in�uences the initiation of new board members, board decision

preparations and board interaction with executive management (Roberts, McNulty,

and Stiles 2005). However, the boundaries between the three categories are not

sharply de�ned. For example, Forbes and Milliken (1999) also address certain board

norms such as board preparations, participation and contributions (‘the e�ort norms’).

Previous research also reveals interesting correlations in board work. High con�ict

levels and high control abilities are correlated. At the same time, low levels of strategic

contributions to development result because high con�ict levels also lead to the lower

cohesion levels needed for transparent strategy discussions (Forbes and Milliken 1999;

Minichilli and Zona 2009; Zona and Zattoni 2007).

Finally, a few studies have investigated the impact of performance information on

politicians´ decision-making. The NPM paradigm presumes the necessity of

performance information to enhance accountability and the rationality of decision-

making (Hood 1995). However, the starting point for these experimental studies is that

the use of performance measurement is both favoured in public guidelines for public

management and strongly criticised by researchers, despite it being unclear whether

and under what conditions it is used (George et al. 2018). The study demonstrated that

performance information impacts on politicians’ attitudes towards spending when In this article

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performance information impacts on politicians attitudes towards spending when

showing high and low performance, but not average performance, which was

explained by politicians’ strategies to avoid blame (Nielsen and Baekgaard 2013). It was

also demonstrated that knowledge of strategic goals among politicians in�uenced

their decision-making, but not necessarily enforcing the impact of performance

information (George et al. 2017). These studies highlight the need to include politicians

and their interplay with managers in studies on public decision-making and to study

the role of politicians not only in a control function but also in a strategic management

function, since performance information may in�uence their decisions regarding

purpose, direction and goal. Particularly interesting is the �nding by George et al.

(2018) that coercive institutional pressure, to conform to formal and informal rules and

regulations, had a positive impact on purposeful performance use by politicians, but

maybe just because these rules were tied to penalties. This study investigates the

impact of endogenous institutions, which is not tied to a penalising mechanism.

3. Boards of directors’ functions and endogenous institutions

3.1. Boards of directors’ functions

3.1.1. The control function – the principal-agent theory

According to the principal-agent theory, the role of a board is to exercise control over

upper management’s decisions and conduct to protect stakeholders’ interests (Fama

and Jensen 1983). Accordingly, the board has the power to appoint and dismiss the

chief executives (Zahra and Pearce 1989). Most studies on board functions take these

responsibilities and powers as theoretical points of departure in discussions on

corporate and organisational governance (Pugliese et al. 2009).

3.1.2. The support function – the stewardship theory and the resource dependence theory

According to the stewardship theory, the relationship between the board and

management is based on trust and a common interest in the organisation’s success In this article

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management is based on trust and a common interest in the organisation s success

(Davis, Schoorman, and Donaldson 1997). The board should consult with management

and o�er advice in ways to achieve the organisation’s goals (Huse 2007); additionally, it

should take a proactive role in strategic issues and its control role, including evaluating

the results of strategic policies and actions.

According to the resource dependence theory, the board plays a support role by

helping management access needed resources. This assistance may be, for example,

by the board establishing contacts with other organisations that have such resources

or by in�uencing external critics to help neutralise opposition to the organisation’s

various activities. Moreover, the board, by its representation of the organisation to the

outside world, can increase the organisation’s legitimacy and help manage (e.g.

support or repair) its reputation (Pugliese et al. 2009). This theory also encompasses

an advisory role for the board as far as strategic development (Nicholson and Newman

2010).

3.1.3. The strategic function – the managerial hegemony theory and the stakeholder theory

The managerial hegemony theory does not envision a strategic function for the board.

Hence, the board merely approves decisions already made by the organisation’s

managers (Mace 1971). Managers are expected to develop strategies without

participation from the board. In this passive role, the board exerts very little control

although it helps legitimise management’s decisions.

According to the stakeholder theory, the board, as management’s strategic partner,

should be involved in all strategic stages and decisions (Pettigrew and McNulty 1995).

Given their various experiences and contacts with important stakeholders, board

members can o�er guidance on strategic development that balances the

organisation’s varying interests (external and internal stakeholders) and supports the

organisation’s long-term survival (Babić, Nicolić, and Erić 2011).

Table 1 provides a summary of the �ve theories discussed above. In this article

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3.2. Exogenous and endogenous institutions

Institutional logics can explain how rules, both formal and informal, govern the actions

of organisational actors (e.g. executives, board members, managers and others)

(Thornton and Ocasio 1999). These exogenous logics, potentially derived from an

organisation’s environment, are often re�ected in legal texts (e.g. company and

organisation laws). These logics, which determine the practices governing the board

members’ actions, allow for the possibility that individuals may choose their behaviour

(Friedland and Alford 1991). Actors must process these exogenous logics because

other, and partially contradictory, logics also in�uence the organisational environment.

Thus, actors have to choose among these institutional logics in order that their

organisation will meet the requirements of various external institutions (Peters 2005).

Thus, some rules are con�rmed while others are not (Oliver 1992).

This processing of multiple institutional logics can lead to special work procedures,

termed endogenous- or intraorganisational institutions (Elsbach 2002). The latter,

Elsbach claims, consists of cognitive patterns and knowledge that are revealed in

organisation structures and procedures (e.g. standards, habits and routines), all having

a regulatory and normative character. Intraorganisational institutions are ‘taken-for-

granted beliefs and arise within and across organizational groups and delimit

acceptable and normative behavior for those groups’ Elsbach (2002).

Regarding the social construction of reality, Berger and Luckman (1966) state that

when organisational rules are used extensively, actors may forget that other

organisational actors actually created these rules. New actors may want to introduce

new rules. As Elsbach (2002) argues, it is di�cult, however, to replace established rules

Table 1. Various degrees of the board´s strategic function, according to corporate governance theories.

CSV Display Table



In this article

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new rules. As Elsbach (2002) argues, it is di�cult, however, to replace established rules

(standardised procedures and action protocols) due to the intransigent nature of

current institutional structures (e.g. the method of power distribution) and of the

institutionalised values. Making institutional changes requires a combination of

reciprocal agreements, incentive structures and con�dence-building measures

(Woolthuis, Lankhuisen, and Gilsing 2005).

Institutions derived from an organisation’s environment are referred to as exogenous

institutions (Scott 2008). Here, the term endogenous institutions (Jacoby 1990) are

used for these intraorganisational institutions. Theories about endogenous institutions

can help us understand the dynamics between the taken-for-granted rules and actors’

behaviour when organisational actors challenge di�cult-to-change practices and

norms (Kaghan and Lounsbury 2011).

The intention here is to show how the three endogenous institutions in�uence the

functions of public organisation boards. An analysis of these functions reveals how

organisational actors challenge the procedures set by the endogenous institutions and

even proposes changes thereto.

4. The case setting

The setting of this study is a healthcare executive board at a regional hospital in

Sweden. The hospital provides both basic and specialised care for inhabitants in the

region and is country centre for certain specialised care. It is one of the largest

hospitals in Sweden and of six with medical education and research.

Healthcare in this region is governed according to the purchase–provider split model

and objectives and instructions from the Regional Council, the Regional Board (the

Purchaser) and the Health Care Agency (the Owner). These entities have overall

responsibility for strategic healthcare issues, wherein the hospital is the Provider.

The executive political board is responsible for the e�ciency and high quality of the

hospital´s activities, for the preparations and decisions related to investment issues In this article

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hospital s activities, for the preparations and decisions related to investment issues

following the Region’s model, and for addressing human resource issues. The board

consists of nine members and three alternates. All are elected politicians with a 4-year

mandate. The chairperson is from the governing political party and the vice

chairperson from the opposing. Together, they are referred to as the Presidium.

Most board members have comprehensive political experience from decades in

politics. Most have worked in some capacity with healthcare issues. Using these

experiences, they take responsibility for various assignments related to hospital

governance.

Because the hospital board is well known in political circles, board appointment is

considered desirable. Many board members engage in politics only in their spare time.

The chairman and vice-chairman receive a �xed annual compensation. Others are

compensated only for their time when preparing for and attending meetings.

The board holds approximately 10 all-day meetings annually. In 2016, the board

addressed 125 cases that required decisions. On average, 10 politician board

members and 17 hospital managers were present at the meetings.

The political parties instruct board members on political participation in the board

work, based on an apprenticeship model in which mentors support the newly

appointed members as they learn how to build networks, seek broad knowledge, and

represent their party’s values and ambitions. They are acquainted with the board’s

assignments and with previous issues that have arisen. They also make study visits,

meet key people, and interact with various board members as they learn how the

board functions. The new members then receive assigned board responsibilities.

5. Method

5.1. Participants and data collection In this article

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Seven of the nine board members and two of the three alternates (chairman

(majority), vice chairman (opposition), four board members and one alternate from the

majority and one board member and one alternate from the opposition) were

interviewed so that all parties in the board were represented. Below, one of these

board members, representing the majority, is identi�ed as ‘the Strategist’, who

attempted to involve the board in the hospital’s strategic work. Interviews were related

to: (a) political and healthcare background, (b) board appointment and (c) preparation

for board assignments. Additionally, four senior hospital managers were interviewed

on decision preparations and on communications with the politicians. These managers

shared other observations about the role of the politicians and the parties in the work

of the board. All interviews, which were semi-structured and lasted for 50–60 min

each, allowed for follow-up questions and were audio-taped. When transcribed, the

interview data comprised about 300 pages of text.

Also, a board meeting, led by senior hospital managers who presented the supporting

documents behind their proposed decisions, was observed. Following this

presentation, the board announced its decisions.

5.2. Data analysis

In Step 1, following transcription the interview transcripts were grouped into the

mentioned themes guiding the data collection, and the most signi�cant viewpoints

were noted in �rst-impression commentaries. In this stage of interpreting and sense-

making, the transcripts were sorted after their descriptive content (Kvale 1996).

Section 6 is structured according to these �rst-order categories. In Step 2, the

theoretical framework was used for second-order theoretical categories (Kvale 1996).

Four questions guided the analysis of the �rst-order categories. Does the board have a

strategic function? Does the board have a passive control function? Does the board

serve a support function and contribute in some capacity to the strategic work? Is the

board an active partner with management in the development of long-term,

sustainable strategies for operations? Section 7 is structured according to responses

on these questions, resulting in second-order categories. In this article

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on these questions, resulting in second order categories.

5.3. Validity and reliability

The validity of data depends on its authenticity. It is problematic if interviewees and

observed meeting participants narrate what they think the researcher expects, instead

of lived experiences (Yin 2003). This can be avoided by blending in Czarniawska (2007).

In observations, this would likely happen very soon after the discussions have started.

In interviews, asking for concrete examples allows the respondent to recollect lived

experiences, according to Van Manen (1997).

Reliability was ensured by transcribing the taped interviews verbatim and by reading

and rereading the transcripts several times.

6. Influence of endogenous institutions

6.1. Procedures for politicians’ ways of working

A general observation in this study is that politicians think they have relatively little

in�uence on hospital activities. One explanation is that the hospital operates in a

healthcare system with an established framework for the management of various

property and personnel issues. Another explanation is that a central (political)

mandate exists regarding the hospital’s activities and budget. Yet another explanation

is the variability in the hospital’s activities, e.g. it is impossible to predict patient �ows

or epidemics with certainty.

An analysis of the politicians’ participation in the decision-making processes reveals

the limited extent of their involvement. They prepare for board meetings, where

decisions are made, by reading supporting documents on discussion issues.

Sometimes, they seek additional information from party contacts or, more rarely, from

hospital representatives. These supporting documents can be extensive, e.g. 220

pages in preparation for the initial board meeting in 2017. Most of the politicians �nd In this article

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pages in preparation for the initial board meeting in 2017. Most of the politicians �nd

the supporting documents su�ciently informative and the preparation adequate.

If more information is needed, the politicians pose their questions to hospital

managers or to the hospital director (who may then refer to other hospital

employees). The politicians prepare their questions carefully to avoid repetition and to

ensure e�cient �ow of the meeting agenda. The hospital managers, who value good

relationships with the politicians, respond quickly to these questions.

Nevertheless, while these supporting documents and the managers’ responses may

explain the motivations for the decisions under consideration, they do not re�ect in-

depth analyses and issue problematisation. The politicians really need to understand

the history and the complexity of numerous relationships, especially when the

supporting documents are incomplete. Although the board members realise that the

supporting documents may be insu�cient, they generally trust in the knowledge and

competence of the hospital managers. They are conservative in respecting the

communication structures of the hospital’s decision-making processes.

We can go directly to the o�cials, we have a right to, but it can be perceived as

undermining the director’s position, that you don’t have trust. (Alternate

Opposition Party Board Member)

I am hesitant about building a contact network more systematically to gain

views from citizens and patients. It can create expectations that we can’t live up

to. (Opposition Party Board Member)

The Strategist, however, actively seeks information about decision issues from

independent sources.

I arranged a meeting with the head of the ambulance care hospital. I also meet

with a few hospital sta� members during breaks. […] I listen to the doctors I

know and follow the media that describe the current healthcare situation,

including both good and bad elements. […] We do not receive all the information

we need. Hospital managers know their worlds and can describe them to us. But In this article

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we need. Hospital managers know their worlds and can describe them to us. But

we need insights into their worlds. We also need to know what patients think.

(The Strategist)

The Strategist is critical of how decisions are made and how board members rarely

question or challenge these decisions.

It is not possible to identify the essential information in the documents. […];

What are the fundamental issues, risks, opportunities and economic

consequences? Instead, the documents drown one with information that is too

detailed to evaluate thoroughly. It’s a serious problem. We agree it is important

to devote ourselves to strategic issues rather than just to the areas the hospital

managers want us to address. (The Strategist)

The Strategist opposes the role that most board politicians assume. He seeks

additional and independent information on decision issues as he strives to engage the

board in more strategic discussions. However, he still has not succeeded in changing

the board’s approach to decision-making.

6.2. Procedures for managers’ preparations of issues

The hospital managers want to provide the information requested by board members.

However, sometimes the relevant information is extremely detailed. The managers

explain that because the issues are very complex, they cannot easily summarise and

present such information. They agree, however, to submit additional relevant data if

requested.

The managers agree their assignment is to present supporting documents that justify

a particular decision rather than to present detailed analyses with more decision

options. They think politicians should have con�dence in their professional knowledge

and competence.

Sometimes the politicians address the issues from a perspective derived from their

experiences or contacts and o�er suggestions on the decision-making processes, In this article

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experiences or contacts and o�er suggestions on the decision making processes,

which managers tend to regard as interference.

I imagined that if you are in an executive board, you have the opportunity to

in�uence, but it has proven to be only partly true. (Opposition Party Board

Member)

They think the politicians’ knowledge and experience are too limited to be useful.

The politicians may think their particular expertise is relevant and useful … for

example, they may have expertise in IT- or human resource issues, etc. To some

extent, this expertise may be advantageous in that it may increase their cultural

understanding of issues or add technical competence to decision-making. […]

But it’s very easy for them to overestimate their contribution. (Hospital

Manager)

6.3. Procedures for the work of the board, according to the presidency model

The board follows the presidency model in which the chairperson and vice-chairperson

(i.e. the Presidium) have a dominant role, while other board members have a more

passive role. The tasks of the Presidium are explained by the chairperson:

The Presidium prepares the issues for discussion at the board meetings, meets

with the hospital management to discuss which issues require more analysis,

what can be postponed, and what can be decided by the managers. (The

Chairperson)

The Presidium also represents the board before other political bodies in the Region.

Therefore, because of their external and internal roles, the Presidium is more

informed about the issues than other members.

The chairperson admits that some board members �nd this information incomplete.

The best opportunity for board members to suggest changes or additions to the

decisions is prior to the board meetings. Otherwise, it is di�cult to change the In this article

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decisions is prior to the board meetings. Otherwise, it is di�cult to change the

decisions. While the board members may still make suggestions before decisions are

�nalised, generally they avoid doing so, except in the unusual situations when political

party con�icts arise. However, even the opposition party board members understand

that party politics have a limited role in decision-making. Newly appointed board

members soon learn this unwritten rule.

The opposition party’s role in an executive board is special. However, many

important decisions are not partisan. We, in the opposition, tend to take the

majority position in an executive board. Such a board is generally not an arena

for political division. (Vice Chairperson)

The dividing line on the board is not between the political parties. Rather, it is between

the Presidium and the other board members. These members are expected to

approve the Presidium’s decisions, which are not expected to be challenged or

debated. However, some board members who are uncomfortable with procedures

want greater transparency and more opportunities to participate in the decision-

making.

Everything goes through the Presidium. We only receive verbal feedback, never

written. (Majority Party Board Member)

The Strategist is quite critical of the situation that limits the board members’ in�uence.

The managers make the decisions. The chairperson approves the decision

formulations in advance of the board meetings, in theory after a discussion.

However, it is really not possible to change the decisions that have been made

[…] We have morning meetings just prior to the board meetings to discuss the

decisions, but they are mere formalities. I have asked to meet earlier, without

success. (The Strategist)

In order to exert some in�uence, the Strategist attempts to circumvent this decision-

making structure by contacting the chairperson directly. In this article

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making structure by contacting the chairperson directly.

Occasionally, I have raised issues that are not on the agenda. More often, I have

mentioned them to the chairperson since he is the ultimate decision-maker. I do

not always think the chairperson listens to me. (The Strategist)

The Strategist opposes the formal board structures and divisions of labour among the

board members that reduce their ability to in�uence board decisions. The Strategist

sees the chairperson and vice chairperson as party leaders, mainly interested in

defending their political positions.

The chairperson and vice chairperson could mix with us a lot more […] In reality,

we have very limited in�uence. They seem to fear competence. When people fear

their positions are at risk and that others who are more skilled or

knowledgeable are available, they feel threatened. (The Strategist)

The Strategist, as the one dissenting voice on the board, resents the fact that he is

limited as far as his participation in the board’s work.

7. Strategic or control role?

The three endogenous institutions are described separately, although together they

create a network that harmonises the functions of the hospital board. This study

reveals that the board has control, support, and advisory functions but not a strategic

function.

7.1. The control function

The politicians may request supplementary information about proposed decisions.

The managers, who expect such requests, have preparation procedures that allow

them to respond as needed. Beginning with their initial preparations for a decision

under consideration, the managers focus on making documentation available. Good

preparation should anticipate external reviews. Trust in hospital management In this article

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preparation should anticipate external reviews. Trust in hospital management

depends on the quality and accuracy of the documentation. However, although the

documentation may be extensive, it is not always relevant.

This focus often results in more background material on proposed decisions but at the

expense of relevance. With the board’s insistence on complete information, it may be

assumed that the board exerts stronger control over hospital management. However,

this focus actually weakens the board’s participation in strategic issues. The Strategist’s

attempt to insist on relevant data and the reasonableness of the managers’ claims

does not lead to change. The chairperson, in his dominant role under the presidency

model, ensures that the managers are in control.

Other individuals may provide support for, and advice on, the board’s decisions (e.g.

other hospital professionals, service providers or party members). However, assistance

from such sources appears to be of minor importance. The managers are disinclined

to �nd such information as being relevant.

The hospital director arranges hospital study visits for the politicians to increase their

understanding of hospital activities. The motivation for such visits is that an in-depth

understanding of these activities can supplement supporting documents without

provoking challenges to the decision-making processes. The Strategist organises his

own study visits, intended to provide alternative information and to evaluate whether

the supporting documents are really relevant. He has been unsuccessful in changing

other board members’ opinions.

The politicians �nd it somewhat problematic to evaluate the decision support by

reference to their own experiences and to the information provided to them by

outside sources. Such evaluations suggest that the members are trying to use their

professional competences and political ideologies to make decisions. A politician who

takes this approach may easily be marginalised as far as the work of the board. To be

e�ective, board decisions require majority approval. The ‘lone wolf’ approach is

unlikely to produce a change in the managers’ decisions. In this article

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unlikely to produce a change in the managers decisions.

Ultimately, the majority party board members may, in agreement with the opposition

party members, try to introduce another form of decision preparation within the

framework of the decision-making processes. This preparation, which occurs at the

Presidium meeting, is intended to counteract the managers’ non-disclosure of

information. Majority approval by the board is required for this process to go forward.

The presidency model is intended to promote e�ciency and speed in decision-making

processes. Here, the model is intended to reconcile the views of the chairperson with

those of other board members so that questions and challenges are avoided at board

meetings. The model, however, allows for clari�cations on the decision-making

processes such as the prerequisites for decisions. The model also o�ers guidance to

the managers on the kinds of supporting documents needed for future cases.

Nonetheless, it appears there is never really an appropriate time to challenge the

managers’ decisions or to propose alternative measures. A board member who raises

an objection is typically regarded as interfering with the decision-making process. It is

more or less implicitly accepted that while the politicians may request additional

information, they have no real in�uence in changing decisions. Given this tradition on

how board decisions are made, any substantive changes in decision-making are

di�cult.

The board’s control function apparently extends only to ensuring that the supporting

documents are all-inclusive to withstand external review. Such control requires the

functional cooperation of the hospital director and of sta�ng continuity among the

hospital managers who prepare the supporting documents. Lack of continuity in the

contacts between the politicians and the managers hampers the e�ectiveness of the

control function.

7.2. The support and advisory functions

The endogenous institutions explain which type of control is appropriate and e�ective.

Moreover, they provide a space for the politicians to exercise their support and In this article

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Moreover, they provide a space for the politicians to exercise their support and

advisory functions. The politicians typically are in powerful party positions, with good

contacts in the regional government and with other political committees. Hence, they

can advise hospital management on regional decision-making processes and the

projected economic consequences of the board’s decisions, including but not limited

to the results of major investments.

The hospital director’s close cooperation with the Presidium facilitates the informal

transfer of information from relevant board members. Thus, politicians can convey

comments, including criticism, on hospital management that they hear at regional

council meetings. Through the Regional Council, a wide network of individuals can

express their opinions on how the hospital handles its assignments.

Perhaps the board’s most important support and advisory function is exercised when

the chairperson represents the hospital in meetings with the Regional Board (the

Purchaser). The Presidium attends these meetings, together with the hospital director

and representatives from the medical profession. The Presidium explains the

hospital’s existing and future capabilities at these meetings to in�uence the hospital’s

assignments. The chairperson also represents the hospital on study visits that are

intended to support the hospital’s reputation.

Under the presidency model, the chairperson has a very important position that, to

some extent, excludes other board members from power. The advantage of the

model, however, is that it facilitates and speeds up decision-making in a way that

strengthens the board’s support and advisory functions.

7.3. The non-strategic function

One explanation for the politicians’ limited support and advisory role is that the

decision-making processes for major areas (e.g. new construction and other large

investments) are very complicated and resistant to change. However, the non-strategic

function should be viewed in terms of how Edwards and Cornforth (Edwards and

Cornforth 2003, 79) de�ne the strategic function (quoted in Section 1): ‘active

participation in discussions and decisions that revolve around the company’s overall In this article

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participation in discussions and decisions that revolve around the company s overall

resources, its strengths and weaknesses in relation to the goals, and the opportunities

and priorities that will be made for the future of the company success’. Thus, the three

endogenous institutions primarily limit the board’s strategic function.

One limitation derives from the endogenous institution that relates to the managers

who initiate decision preparation. Their motivation is to separate their professional

judgment from their political judgments. The goal of the preparation procedure is to

present complete (to the extent possible) supporting documents and to propose one

decision.

The managers’ decision proposals should be supported by facts, be relevant to the

current conditions and be based on their professional opinion. It is not expected that

their decisions will necessarily satisfy all board politicians. When the politicians do not

readily accept a decision, then time-consuming revisions may be required because,

with only one proposed decision, an alternative decision is unavailable. In such cases,

when the Presidium and the senior managers have not discussed the issue thoroughly

enough to reach a consensus, the chairperson tries to reach an agreement with these

managers prior to the board meeting. If no agreement is reached, the work of the

board is threatened.

When only one decision proposal is o�ered for a particular case, there is little room for

board members to exercise a strategic function.

The decision preparation by the managers for presentation to the Presidium aims at

stability and predictability in the decision-making process. The Presidium’s preparation

also pre-empts the interaction between the other politicians and the hospital director

and senior managers. Thus, the decision preparation means these politicians, for the

most part, do not participate in discussions and decisions based on an overall view of

the hospital’s needs and conditions.

8. Discussion and conclusions In this article

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This study examines the reasons that the politicians on a public hospital board have

limited in�uence on the hospital’s activities. The three endogenous institutions –

procedures for how the politicians work, how the managers prepare and present the

issues, and how the presidency model works – explain this limitation. Together, these

endogenous institutions create a powerful force on board activities that inhibits the

presentation of decision proposals, criticism and alternatives. Consequently, the

politicians have little opportunity to engage with strategic issues.

The results of this study support the idea of the executive board’s limited strategic

function as concluded by other studies (e.g. Huse 2005; Pugliese et al. 2009; Svärd

2016). However, the three endogenous institutions primarily explain the phenomena

that Svärd’s (2016) study on the in�uence of exogenous institutions does not. The

hospital managers use endogenous decision-making processes that lead to decisive

and timely actions. They initiate and drive the decision-making process.

A di�erence between earlier studies and this study concerns the public organisation

board’s control function. In studies based on the principal-agent theory (e.g. Daily,

Dalton, and Cannella 2003), the independence of boards is regarded as problematic

because it is di�cult to take a creative and interactive role when the organisation is

under tight control by executive leadership. Boivie et al. (2016) reached similar

conclusions, mentioning that boards avoid challenging the top managers; accordingly,

it may be assumed that the board avoids challenging the executives’ strategy

development. Here, the leadership somewhat protects the organisational activities

from external criticism. This aspect of control, which emphasises the board’s

independence, is diminished by the endogenous institutions’ regulation of control

considered appropriate. The idea of control is perhaps better understood using

stewardship theory. It is therefore unlikely that the control function will con�ict with

management’s strategy development. The importance of the control function in this

study is that the board uses it to con�rm the managers’ actions and thereby to take

responsibility for how citizens view the hospital’s management. In this article

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responsibility for how citizens view the hospital s management.

Regarding the support and advisory functions, the public organisation board members’

specialist knowledge, (e.g. in IT or logistics), unlike that of private company board

members (Nicholson and Newman 2010), does not appear to have much relevance in

their work. The endogenous institutions rather limit these politicians’ ability to use

their various skills and knowledge in their work.

They can link the organisational leadership with the Purchaser, neutralise criticism

from superior political bodies and improve the reputation of the activities (Pugliese et

al. 2009).

Other explanations may help us understand why the politicians on public organisation

boards lack a more strategic function. However, one may exclude the idea that con�ict

among board members hinders strategic work (Minichilli and Zona 2009; Zona and

Zattoni 2007). Here, opposing party ideologies did not obstruct the work of the board.

Rather, they are amenable to the majority party ideas, including budget proposals. The

opposition politicians are quite cooperative in ful�ling the hospital’s assignments as

well as possible.

Previous studies (e.g. Mace 1971) have addressed the importance of boards of

directors’ practical conditions such as access to information and time availability. Much

of board work consists of extensive preparation in the decision-making processes

(especially document review). The amount of time that such preparation takes

necessarily limits the time available for strategic thinking, external meetings and

internal discussions. However, it is notable that the politicians in this study did not

blame lack of time for their limited strategic contribution.

The study has implications for public management theory on how strategy develops in

the public sector as a multilevel process, by demonstrating how boards of politicians

contribute to strategic management in the interplay with their senior managers, as

requested by Bryson, Berry, and Yang (2010) and Poister, Pasha, and Edwards (2013).

The board of a public organisation strengthens the decision-making process by its

support of the completeness of the managers’ supporting documents. Its main role is In this article

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support of the completeness of the managers supporting documents. Its main role is

as an advisor on, and supporter of, a series of operational decisions. While this role is

essential, in itself, it does not seem to ful�l the role in a chain of control that is

expected in government reforms. Following the theories that support such

government reforms, politicians on boards of public organisations should maintain a

distance from organisations when they are responsible for their management.

The signi�cance of the endogenous institutions demonstrated here supports previous

�ndings by George et al. (2018) that coercive institutional pressure has an impact on

the politicians’ function, and furthermore answers their question that this is not

necessarily due to a penalising system tied to the formal and informal rules.

Finally, the �ndings in this study have implication for management practice. It is

di�cult to see how a non-political board with a strategic function could o�er the

protective support that a political board can. A political board has an important role in

legitimising managers’ decisions for society and in shielding them from the media’s

frequently negative spotlight.

It is also di�cult to see how the purchase–provider split model can in�uence the

performance of the executive board if the endogenous institutions remain intact. This

situation is unlikely to change if any other governance models are adopted that do not

reject or adapt the three endogenous institutions described here.

A possible solution would be to abandon the political board and, in its place, allow the

Regional Council to exercise more distant control functions. Consequently, the

managers’ accountability might increase. The control functions, which would probably

be limited to budgetary and certain key management issues, however, might be

insu�cient to stabilise management’s activities. Another consequence is that the

superior political board’s accountability might also increase. Thus, the executive board

absorbs the responsibility of the managers and of the superior political board.

However, this study suggests that another paradigm governance model is worthy of

investigation. This alternative model might establish zones of ‘regulated freedom’, in In this article

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investigation. This alternative model might establish zones of regulated freedom , in

which the actors are encouraged to follow certain managerial ideals (Rose 1996).

8.1. Suggestions for further research

The board members in this study were observed as they worked in crisis-free

conditions. It is conceivable that a political board in the midst of a crisis would act

di�erently, e.g. take a more proactive role in the decision-making and become more

involved in the strategic function. Therefore, researchers should study how hospital

board members (i.e. politicians) act in emergencies (e.g. malpractice hospital crises or

�nancial resources crises).

Furthermore, it is true the board members in the studied hospital are probably more

experienced politicians than board members in general in smaller hospitals, but the

complexities in the assignment of smaller hospitals are probably also less. Therefore,

the strategic contribution of politicians in such hospital boards should be studied.

Moreover, public boards, in which independent and critical voices (e.g. like that of the

Strategist) are heard, should be identi�ed and studied, with emphasis on the

importance of observations at board meetings and at Presidium meetings.

Acknowledgments

The author would like to thank Karen Nowé Hedvall and Rolf Solli for their

contributions to data collection and helpful comments on earlier versions of this

article, as well as the anonymous reviewers for their constructive comments.

Disclosure statement

No potential con�ict of interest was reported by the author. In this article

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Additional information

Notes on contributors

Roy Liff

Roy Li� is an Associate Professor of Business Administration at the

University of Borås and senior Research Fellow at Gothenburg Research

Institute, University of Gothenburg. His main research areas are public

management, multi-professional teamwork and risk management. He has

recently co-authored articles in Accounting, Auditing and Accountability

Journal, Journal of Professions and Organization and Journal of Knowledge

Management.

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