The possible pitfalls of boards’ engagement in the strategic management process

Dmitry Khanin (), Ofir Turel (), Chris Bart (), William C. McDowell () and Marianne Hock-Döpgen ()
Additional contact information
Dmitry Khanin: Alfaisal University
Ofir Turel: California State University Fullerton
Chris Bart: McMaster University
William C. McDowell: Bradley University
Marianne Hock-Döpgen: COO Digitales Gründerzentrum

Review of Managerial Science, 2021, vol. 15, issue 4, No 8, 1093 pages

Abstract: Abstract Scholars endorsing the embeddedness outlook call for directors’ greater engagement in the strategic management process. In contrast, scholars endorsing the control outlook argue that directors should focus on fulfilling their fiduciary duty of supervising top executives. Based on the behavioral-agency theory, this paper outlines a conduct outlook on boards. Recognizing the benefits of directors’ participation in the strategic management process, we hypothesize that it may boost directors’ satisfaction with firm’s performance, strategic planning, and strategy. This could lead to cognitive entrenchment and spur inertial tendencies. Structural equations modeling analysis of the data from a survey of 367 Canadian directors supports the hypotheses. These findings add knowledge to latest research on the advantages vs. disadvantages of activist boards.

Keywords: Boards of directors; Strategic planning; Firm performance; Firm strategy (search for similar items in EconPapers)
JEL-codes: M12 M14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11846-020-00386-0

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