Corporate governance has evolved significantly over recent decades, with increasing attention placed on the role of Non-Executive Directors (NEDs) in enhancing board effectiveness and organizational performance. While NEDs have traditionally been viewed as mechanisms for monitoring management and ensuring regulatory compliance, contemporary governance frameworks increasingly emphasise their strategic and value-creation roles. Despite this shift, there remains limited empirical and conceptual clarity regarding how NEDs contribute to organizational value beyond compliance functions. This study addresses this gap by examining the mechanisms through which Non-Executive Directors influence strategic decision-making, risk oversight, and long-term firm performance. The primary objective of the study is to explore and synthesise existing theoretical and empirical evidence on the value-creation role of NEDs and to propose a structured framework that explains their strategic contributions within modern boardrooms. Adopting a conceptual and integrative literature review methodology, the study draws on corporate governance theories, including agency theory, resource dependence theory, and stewardship theory. The findings suggest that NEDs create value through independent challenge, strategic guidance, experience transfer, and the enhancement of board dynamics, thereby improving decision quality and organizational resilience. The study contributes to governance literature by shifting the focus from compliance-oriented perspectives to value-oriented governance. Practically, the findings offer insights for boards, policymakers, and firms seeking to optimise the effectiveness of Non-Executive Directors in achieving sustainable performance.
Anya Lawrence (Thu,) studied this question.