Board size, board process, and board performance: empirical evidence from Pacific Island Countries

Abstract

This paper argues that board size decisions should be based on a sound understanding of how board size influence board processes which in turn affect board performance. The paper applied mediation analysis to show how the size of boards in Pacific Islands Countries indirectly affects board performance through board processes.

The study found that increasing board size for relatively medium or large-sized boards indirectly reduced board performance through its effect on the processes of effort norms, cognitive conflict, and use of knowledge and skills. Overall, the findings confirm the role of board process as an important mediator in the relationship between board size and board performance, which therefore should be taken into account in board appointment decisions to improve board performance in PICs enterprises.