How digital are Dutch boards?

Several institutions, such as the Dutch national register, suggest that supervisory boards become more digital. Indeed, firms are exposed to the digitalization of their environment. That leads to increasing strategic relevance of ‘digital’. But how digital are the boards of large Dutch firms?

We were interested whether Dutch firms in 2019 already responded to this call for more digital expertise in the boardroom, and if yes, how they did so. We asked, (1), how many firms have digital experts on their supervisory boards, how many have a digital chairman, and how many use them in the crucial committees for nomination and compensation, and (2) which digital board members firms appointed so far. Our analysis of the supervisory boards of the 25 firms that were listed in the AEX on 31.12.2018 gives answers to these questions (Oehmichen & van Ees, 2019).

Our empirical results show that, overall, AEX-firms do good – 19 of the 25 AEX firms (76 percent) have at least one digital expert on their board. However, we also see that firms do not yet use these experts where they are needed most – in critical committee positions or as chairwomen/chairmen. Only 24 percent of the firms (6 firms) have a chair with digital expertise. Only 52 percent of the firms (13 firms) have at least one digital director on the nomination committee. 64 percent of the firms (16 firms) have at least one digital director on the compensation committee.

Furthermore, our director-level analysis indicates that digital and non-digital board members in average differ with respect to gender (41 percent of digital board members are female, but only 32 percent of the non-digital board members), but seem to be rather similar when it comes to age or nationality. When looking at the sources of digital expertise, we find out that only 2 of the 44 digital board members on AEX boards has some entrepreneurial digital expertise. Hence, the younger generation of successful digital entrepreneurs could be an interesting additional source for additional digital board members.

We conclude with two recommendations for firms, which are facing the digital transformation:

1) Make more use of the digital experts on boards. By appointing them to essential committees, you provide these experts better opportunities to actually shape firms’ strategic decision-making.

2) Think out of the box when it comes to finding digital experts. Especially, the younger generation as well as directors with entrepreneurial digital expertise seem to be an interesting yet underexplored source of digital board members.

Jana Oehmichen, University of Groningen, Nettelbosje 2, 9747 AE Groningen, j.d.r.oehmichen rug.nl

Hans van Ees, University of Groningen, Nettelbosje 2, 9747 AE Groningen, h.van.ees rug.nl

References

Nationaalregister.nl. 2019. Commissarissen overschatten hun kennis over digitalisering. https://www.nationaalregister.nl/kennisbank/commissarissen-overschatten-hun-kennis-over-digitalisering.

Oehmichen, J., & van Ees, H. 2019. Over de digitale expertise van de Nederlandse RVC. In M. Lückerath-Rovers, H. van Ees, M. Kaptein, & I. Wuisman (Eds.), Jaarboek Corporate Governance 2019-2020: 91–103. Deventer: Wolters Kluwer.