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Social capital, board behaviour and governance: evidence from Ugandan banking

Social capital, board behaviour and governance: evidence from Ugandan banking

Nalwanga, Stella (2021) Social capital, board behaviour and governance: evidence from Ugandan banking. PhD thesis, University of Greenwich.

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Abstract

This thesis aims to identify how social capital influences the governance work of Boards of
directors.

Design/methodology/approach – A qualitative analysis of semi-structured interviews with 30 directors from six commercial banks in Uganda were used. The interviews identified directors' perceptions of social capital and practices of governance. A social capital model was used to analyse the data along structural, relational and cognitive dimensions.

Findings – The findings show the mechanisms that foster the creation, development and use of social capital as well the social capital effects on directors’ behaviour in the governance of Ugandan banks. Highlited is need to consider the importance of the processes that exist in the formation of relationships and how these relationships might affect actors’ behaviour. The study finds that it is problematic to study the three social capital dimensions separately from each other.

Aligned with structural dimensions, frequent informal meetings were positively associated with board effectiveness because they increased trust and teamwork. Directors feel powerful because they have access to influential people in their networks. The link and access to influential and powerful people enabled directors to enjoy reciprocal benefits.

Aligned with the relational dimension, good working relationships were characterised by long-term working relationships coupled with norms of reciprocity and conformity. Directors build interpersonal trust through familiarity with one another’s skills, habits and personalities, thereby enabling them to function and make decisions effectively as a group. However, increased familiarity hindered directors’ work because it reduced directors’ openness to outside information, led to avoidance of critical debate and questioning in decision-making processes and development of groupthink tendencies.

Aligned with the cognitive dimension, a lack of shared understanding of the banking business, corporate governance guidelines, short-term focus and unclear individual roles and organisational goals are seen as barriers to directors’ governance work.

Research limitations/implications – The evidence is based on participants' perceptions and may not reflect actual practices or others' perceptions.

Contribution – This study applied social capital theory to advance our understanding of corporate governance. It adds relevant and timely insights into the softer side of corporate governance: the behavioural factors that encourage or impede effective governance, especially in developing countries where regulatory functions and capital markets may be weak. The study is unique because it examines how Ugandan directors build and mobilise social networks in the context of corporate governance, using Nahapiet and Ghoshal’s (1998) social capital model. This approach allows researchers to identify the cognitive, structural and relational issues that either support or impede corporate governance.

Additionally, this study draws on Bourdieu’s theory of social capital. Findings show directors’ networks as strategic investments through which board members devote their effort and resources towards their own benefit, with implications for corporate governance. The results have limitations because by focusing on Nahapiet and Ghoshal’s view of social capital it fails to fully account for the concept of power within organisations and society more generally. This approach is juxtaposed to the holistic and contextual class theory of Bourdieu’s, whose view that social capital cannot be separated from other forms of capital (economic, cultural and symbolic) and his concept of Habitus and Field,- appears to offer a wider analysis of power that helps us better understand the benefits that acrrue to the elite in the boardrooms.

Item Type: Thesis (PhD)
Uncontrolled Keywords: Social capital; corporate governance; board of directors; Uganda
Subjects: H Social Sciences > HG Finance
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Last Modified: 28 Sep 2021 15:19
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
Selected for REF2021: None
URI: http://gala.gre.ac.uk/id/eprint/33976

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