When does good governance lead to better business performance?

Research by Dr Robert Kay and Dr Chris Goldspink on the relationship between governance and business performance.

While it is commonly accepted that boards add considerable value to the organisations they govern, surprisingly little research had been undertaken to ascertain when, in practice, good governance actually drives better performance.

In 2014, the AICD commissioned Drs Robert Kay and Chris Goldspink to undertake research into the relationship between governance and business performance.

The research involved interviews with 100 senior chairs of Australian listed companies, not-for-profits, private companies and public sector organisations. The methodology differed from previous research on this topic, which focuses on proxy measures or data from annual reports to draw conclusions.

The Kay/Goldspink research challenged conventional thinking about the relationship between boards and management. It also suggested that some of the metrics by which boards have been assessed in the past fall short of the mark when it comes to understanding the real relationship between good governance and organisational performance. 

Importantly, the research drew attention to the complexities and nuances in governance practice.