Boards of directors and performance in autonomous public sector entities

ABSTRACT

The adoption of business-like boards of directors in the public sector has to be evaluated in terms of financial and non-financial outcomes. This paper investigates, using a structural equation model, the relationship of certain board characteristics with the performance of English NHS foundation trusts. Larger and more independent boards do not harm performance. Having a woman chairing the board is related to better service quality. Boards seem to be more concerned about service quality issues than about financial problems.

IMPACT

A stakeholder approach when adopting boards of directors in public sector entities does not harm performance. The authors’ results provide a compelling rationale for the adoption of corporate governance mechanisms in the public sector and for improving the representativeness and status of women in the top positions of the governing bodies of public sector entities. Financial performance and service quality are not mutually exclusive in the healthcare sector. The paper provides insights to those public sector entities that have adopted, or are thinking about adopting, boards of directors to improve their governance and management.

KEYWORDS:

• Board of directors
• corporate governance
• gender issues
• NHS foundation trusts
• performance
• public sector

Acknowledgements

This study was carried out with the financial support of the Spanish National Research and Development Plan (project ECO2015-66240-P MINECO/FEDER) and the Regional Government of Aragón (project S56_20R).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The results of the measurement model are not included in the paper because of space limits, but are available from the authors upon request.