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What governs directors’ monitoring behavior in China? The influence of director social identification, learning goal orientation, and avoidance orientation

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Abstract

Drawing together literature on corporate governance, organizational behavior, and educational psychology, and using survey data from a sample of 300 Chinese company directors, this study examines the mediating role of director learning goal orientation in linking two widely-acknowledged director social identifications (identification with the organization and identification with executive-agents) and a key director task behavior, namely the monitoring of executive-agents. We also investigate the moderating role of director avoidance orientation in influencing this mediation since a predisposition to avoid loss of “face” is widely posited as having particular relevance in the Chinese context. Results show, first, that directors with stronger organizational identification monitor executive-agents more diligently than those with stronger executive-agent identification. Second, we find that while learning goal orientation mediates the positive effects of both organizational identification and executive-agent identification on monitoring, the mediated indirect effect of organizational identification on monitoring is stronger than the mediated indirect effect of executive-agent identification on monitoring. Third, results show that the indirect effects are stronger when director avoidance orientation is low. These findings underscore the importance of director social identification and learning goal orientation in inducing director monitoring in the Chinese context, as well as the worth of selecting directors who exhibit a low disposition to avoidance.

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Notes

  1. At present, a board consisting of a minimum of one-third of independent directors is mandated by CSRC (2001).

  2. Since our study is the first to apply the identification scales in an emerging context, we also assessed their criterion validities. Hillman et al. (2008) proposed that organizational identification of a director will incur high level of monitoring behavior, while executive-agent identification of a director will promote resource provision. After controlling for director tenure (month), director type (independence dummy), experience with the firm (month), experience as a director (month), multiple directorship, and social desirability, we found that organizational identification positively predicts monitoring (b = .704, p = .000), and executive-agent identification positively predicts resource provision (b = .326, p = .000). Thus we found evidence for criterion validities of the two identification scales.

  3. Full results available upon request.

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Acknowledgments

This research was funded by the Australian National University’s College of Business and Economics internal research grant scheme. We thank George Chen, Howard Dick, Bill Harley, Amy Hillman, David McKendrick, and Simon Restubog for their valuable suggestions to improve this manuscript.

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Authors and Affiliations

  1. Research School of Management, Australian National University, L. F. Crisp Building (26), Canberra, 0200, Australia

    Alessandra Capezio & Lin Cui

  2. Department of Management & Marketing, University of Melbourne, Level 10, 198 Berkeley St., Melbourne, VIC, 3010, Australia

    Helen Wei Hu

  3. The University of Sydney Business School, The University of Sydney, H03 - Institute Building, Sydney, NSW, 2006, Australia

    John Shields

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  1. Alessandra Capezio
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Capezio, A., Cui, L., Hu, H.W. et al. What governs directors’ monitoring behavior in China? The influence of director social identification, learning goal orientation, and avoidance orientation. Asia Pac J Manag 31, 899–924 (2014). https://doi.org/10.1007/s10490-014-9387-7

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