The Literature On Boards Of Advisors

Some scholars have written papers and made presentations on the benefits of having a Boards of Advisors. Much of that work is anecdotal and dated (written in the early and mid-80's). Most of the works deal with topics such as the guidelines for establishing the board, specific ways in which boards can be used and, to a lesser degree, some of the disadvantages of having a Board of Advisors.

A review of the relevant literature shows that very little empirical work has been done with respect to Boards of Advisors. Morkel and Posner (2002) is the only empirical study that we found. They conducted interviews with 22 individuals to obtain information about the composition and disposition of advisory boards. The study was limited to individuals in the Silicon Valley. Five Chief Executive Officers, twelve previous corporate officers and five university professors who were serving on a Board of Advisors or Board of Directors. Interviewees rated their experiences as board members as follows:

  • Mostly effective or very effective                 46% 
  • Average effectiveness                                    26% 
  • Somewhat or not very effective                   28%

Other than the above statistics on effectiveness, there were no descriptive data on Boards of Advisors from the Morkel and Posner study.

Morkel and Posner found that the CEO was the most important factor in the effectiveness of advisory boards. The attitude and the time and effort of the CEO was crucial to board effectiveness. In addition, the CEO must display qualities of leadership and provide direction, the willingness to open up with problems, to seek advice and to listen. The CEO should not try to "sell" or "sandbag" the board. Based on those interviews, Morkel and Posner concluded that Boards of Advisors could play a useful function.

Morkel and Posner had a few other interesting findings. Most of the advisors who were interviewed in the study said they were on the board because of specific interest in the company or the field (industry). The advisors were recruited to the board through personal acquaintances within the firm and through networking.

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