Breaches in the boardroom: Organizational identity and conflicts of commitment in a nonprofit organization

In recent years, agency theory has substantially influenced research on corporate governance. Organizational sociologists have critiqued the agency theory model of boards as limited and have studied how the functioning of boards is shaped by structural, political, and cognitive contexts. Building on their work, this paper empirically studies the cultural embeddedness of boards in a nonprofit organizational called Medlay. It shows how organizational identity – the members' shared beliefs about the central, enduring, and distinctive characteristics of the organization – influences the construction and enactment of the director's role and shapes interactions among board members and managers. More generally, this study extends the literature on corporate governance by showing how organizational identity influences the construction and enactment of the director's role. It introduces the idea of ‘conflicts of commitment’, a form of intra-role conflict that arises when directors are besieged by conflicting aspects of the organization's identity. When actions occur that breach the expected role performance of board members, latent contradictions in the organizational identity emerge, and directors are faced with the conflict of upholding one dimension of identity while undermining the other.