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Board configurations and firm performance in North-American healthcare: A fuzzy-set QCA study
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School of Business |
Master's thesis
Electronic archive copy is available via Aalto Thesis Database.
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en
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40
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Abstract
Corporate governance research on how board attributes affect firm performance remains inconsistent. Major frameworks, such as agency theory and stewardship theory, offer valid perspectives, but empirical research often yields contradicting or situational results when examining such factors as board size or succession dynamics – corporate governance has not been sufficiently researched as a complex system. Addressing this gap, this thesis applies a configurational perspective to examine whether distinct combinations of board characteristics are associated with high and low return on assets (ROA). Using fuzzy‑set Qualitative Comparative Analysis (fsQCA) on a hand‑collected panel of 60 North‑American healthcare firms (board data 2021; ROA 2022‑23), four governance conditions – board size, manager ratio, wealth delta, and succession factor – were calibrated and analysed. Two high‑performance configurations emerged: (1) a “diversity & oversight” path combining large boards, high non‑executive representation and strong equity incentives; and (2) an “agility” path with small, executive‑dominated boards but equally strong incentives, observed in a single large firm. Conversely, the absence of wealth‑linked pay alone was sufficient for low performance, demonstrating causal asymmetry. The findings suggest equifinality in board design in the healthcare industry – albeit equifinality remains a speculative suggestion – and reinforce the primacy of incentive alignment, thereby supporting agency and stewardship logics within a complexity‑theory framework. Practically, healthcare boards must focus on optimizing their equity‑based pay systems, and consider an oversight‑diverse configuration (larger boards with higher managerial representation). Additionally, boards may consider agility‑focused configuration (smaller boards, younger members, executive-focused).