Knowledge sourcing: how board intellectual capital improves organisational performance via the executive
Based on anecdote, the board’s collective and individual ability to add value to the organisation it governs can be summarised as being a function of the depth and breadth of its directors' skills, experience and knowledge - that is, their intellectual capital. Therefore, if the board’s intellectual capital determines the value that directors add how is this value translated into organisational perfor-mance? We suggest that board value is linked to organisational performance through the executives'. Executives’ access the board’s intellectual capital by as-similating the tacit and explicit knowledge of directors’. This is conveyed mainly through interactions between the board and executive teams in the boardroom. Executives may apply their increased knowledge to solving organisational issues through processes of replication, innovation or adaptation, as classified by Gray and Meister (2004). We argue that not all executives apply such acquired knowledge in the same way and that the differences in their application of this knowledge may contribute to the differences between high performing and poor performing organisations. Nicholson and Kiel (2004) described intellectual capital as a collection of knowledge, information, experience, relationships, routines, 24 procedures and culture that a board can employ to create value (that is, to influ-ence organisational performance). It is this knowledge that executives access from the directors of their boards, to guide and assist them with sense-making and organisational decision making. Termed knowledge sourcing, Gray and Meis-ter (2004) described this process as a precise construct indicating an individual’s intentional efforts to search out and access expertise, experiences, insights and opinions produced by other key individuals, which is not available elsewhere. Gaining knowledge is one thing; however, learning without application is essen-tially a wasted act. How executives use the new knowledge is critical if the knowledge gained is to add value to organisational performance. Gray and Meis-ter (2004) highlighted the cognitive change which must occur in executives if they are to maximise the benefit of the knowledge. These authors found that the ex-tent to which individuals’ cognitive structures have improved over time was an important indicator of the learning outcomes. Using fuzzy set qualitative compar-ative analysis which we applied to data from a set of corporate and not-for-profit organizations, we identified key differences in the cognitive profiles of executives of high-performing organisations compared to executives in poor performing or-ganisations. This indicates that in practice the executive teams in high-performing organisations applied their acquired knowledge effectively in their roles within the organisation, whereas the executive teams in poor performing organisations were markedly less effective in applying such knowledge.