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The Role of the Board in Firm Strategy: integrating agency and organisational control perspectives

Kevin Hendry and Geoffrey C. Kiel

Corporate Governance: An International Review, 2004, vol. 12, issue 4, 500-520

Abstract: The role of the board of directors in firm strategy has long been the subject of debate. However, research efforts have suffered from several deficiencies: the lack of an overarching theoretical perspective, reliance on proxies for the strategy role rather than a direct measure of it and the lack of quantitative data linking this role to firm financial performance. We propose a new theoretical perspective to explain the board's role in strategy, integrating organisational control and agency theories. We categorise a board's approach to strategy according to two constructs: strategic control and financial control. The extent to which either construct is favoured depends on contextual factors such as board power, environmental uncertainty and information asymmetry.

Date: 2004
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Citations: View citations in EconPapers (48)

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https://doi.org/10.1111/j.1467-8683.2004.00390.x

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