Wijze raad? Een kritische analyse van praktische wijsheid van toezichthouders

Wise counsel? A critical analysis of practical wisdom of supervisory directors Summary This dissertation examines wise judgment within supervisory boards and the conditions under which practical wisdom is realized or lacking. It explores the dynamics within board processes, focusing on trust, knowledge, and collectivity as key conditions for collective judgment. The acquisition of the ss Rotterdam by a housing corporation serves as a critical case, demonstrating the consequences when practical wisdom is insufficient. The thesis draws on an Aristotelian perspective, emphasizing that effective supervision requires not only knowledge and intellectual understanding but also ethical considerations, empathy, and the ability to navigate complex situations. By combining theoretical insights with empirical data, the research sheds light on board dynamics and the essential role of practical wisdom in effective governance. The study contributes to board research by offering new insights into judgment processes and their impact on business decisions. It provides a foundation for enhancing both theoretical and practical approaches to effective and ethical governance in complex organizational contexts. The dissertation also discusses the evolution of corporate governance codes, such as ‘comply or explain’ in the UK and the Netherlands, and the increasing emphasis on behavior and culture in the boardroom. Effective governance, according to the thesis, requires a balance of cognitive, emotional, and motivational aspects, along with flexibility and creativity. Through a critical case study approach, the ss Rotterdam case illustrates how deficiencies in cognitive and motivational facets, combined with an overemphasis on emotional aspects, led to poor decision-making. The study analyzes board minutes to trace the evolution of judgment processes, identifying missed opportunities for practical wisdom due to a lack of open dialogue and critical analysis. Despite some efforts toward reflection, the board ultimately failed to address escalating risks, illustrating a governance drift from theory to practice. The conclusions highlight the relevance of the theoretical model of practical wisdom for supervisory boards. The research argues for a more integrated approach to governance, combining ethical and moral considerations with traditional rule compliance. It advocates for an active, ethically focused role for supervisory directors, with a comprehensive approach that balances cognitive, emotional, and motivational facets to serve both corporate and societal goals. This study provides tools for understanding board complexities and navigating uncertainties, laying the groundwork for future research on improving judgment within boardrooms.