Board Involvement in the Strategic Decision Making Process: A Comprehensive Review
William Q. Judge, Old Dominion University, USA, wjudge@odu.edu , Till Talaulicar, University of Erfurt, Germany, till.talaulicar@uni-erfurt.deAbstract
The board of directors is legally responsible for setting the strategic direction of the firm and for ensuring the firm’s long-term performance in almost all governance environments. However, many boards delegate part or all of the task of creating and executing the firm’s strategy to a group of full-time professional managers. This separation between ownership and control creates many challenges for the modern-day firm, and the board’s role in the strategy formation process is arguably the seminal governance challenge confronting boards today. This study examines this seminal challenge by: (1) Introducing background information on this stream by defining key terms and discussing its importance to the wider corporate governance literature, describing three infamous case studies of firms based in the USA, Europe and Asia where the board was insufficiently involved, and noting situations where the board may become too involved; (2) Exploring previous reviews of this research stream on board strategic involvement, and discussing the evolution of this construct and related studies over time; (3) Analyzing previous research designs used in this research stream while identifying the frequency as well as costs and benefits associated with each; (4) Summarizing what we currently know about the multi-level antecedents of board involvement within single countries; (5) Specifying some of the national-level antecedents of board involvement identified in cross-national studies; (6) Identifying the subsequent multi-level effects of board involvement; and (7) Discussing the implications of this review and outlining future research directions.
Board Involvement in the Strategic Decision Making Process: A Comprehensive Review
The board of directors is legally responsible for setting the strategic direction of the firm and for ensuring the firm’s long-term performance in almost all governance environments. However, many boards delegate the task of creating and executing the firm’s strategy to a group of full-time professional managers. This separation between ownership and control creates many challenges for the modern-day firm, and the board’s role in the strategy formation process is arguably the seminal governance challenge confronting boards today. Board Involvement in the Strategic Decision Making Process: A Comprehensive Review examines this seminal challenge.
