Boards of Directors' Contribution to Strategy: A Literature Review and Research Agenda

• Author: Pieter‐Jan Bezemer,Henk W. Volberda,Alessandro Zattoni,Morten Huse,Frans A. J. Van den Bosch,Amedeo Pugliese
• DOI: http://doi.org/10.1111/j.1467-8683.2009.00740.x
• Date: 01 May 2009
• Published date: 01 May 2009

Boards of Directors’ Contribution to Strategy:

A Literature Review and Research Agenda

Amedeo Pugliese*, Pieter-Jan Bezemer, Alessandro Zattoni,

Morten Huse, Frans A. J. Van den Bosch and Henk W. Volberda

ABSTRACT

Manuscript Type: Review

Research Question/Issue: Over the last four decades, research on the relationship between boardsof directors and strategy

has proliferated. Yet to date there is little theoretical and empirical agreement regarding the question of how boards of

directors contribute to strategy. This review assesses the extant literature by highlighting emerging trends and identifying

several avenues for future research.

Research Findings/Results: Using a content-analysis of 150 articles published in 23 management journals up to 2007, we

describe and analyze how research on boards of directors and strategy has evolved over time. We illustrate how topics,

theories, settings, and sources of data interact and inf‌luence insights about board–strategy relationships during three

specif‌ic periods.

Theoretical Implications: Our study illustrates that research on boards of directors and strategy evolved from normative

and structural approaches to behavioral and cognitive approaches. Our results encourage future studies to examine the

impact of institutional and context-specif‌ic factors on the (expected) contribution of boards to strategy, and to apply

alternative methods to fully capture the impact of board processes and dynamics on strategy making.

Practical Implications: The increasing interest in boards of directors’ contribution to strategy echoes a movement towards

more strategic involvement of boards of directors. However, best governance practices and the emphasis on board inde-

pendence and control may hinder the board contribution to the strategic decision making. Our study invites investors and

policy-makers to consider the requirements for an effective strategic task when they nominate board members and develop

new regulations.

Keywords: Corporate Governance, Business Policy and Strategy, Board of Director Issues, Board Policy Issues,

Governance Theories

INTRODUCTION

Over the last few decades, corporate governance

systems have undergone profound changes world-

wide. The globalization and liberalization of f‌inancial

markets, corporate governance scandals, and stronger

demands for accountability and transparency have placed

the duties and functioning of boards of directors at the

center of the corporate governance debate (Kiel and Nichol-

son, 2003; Ingley and Van Der Walt, 2005). The societal call

for an increasing involvement of the board of directors has

raised the question of what the appropriate role of boards

should be. While scholars and practitioners have generally

acknowledged the importance of adequate board control

and independence (Baysinger and Hoskisson, 1990; Jensen

and Zajac, 2004), boards’ involvement in their strategic role,

or the lack thereof, has been widely debated (Zahra and

Pearce, 1989; Golden and Zajac, 2001; Daily, Dalton and Can-

nella, 2003).

The discussion of boards’ strategic involvement has been

fueled by a combination of contextual factors, alternate theo-

retical perspectives, and inconclusive empirical results.

First, in the 1970s, it was observed that US boards of direc-

tors had been rather passivein the wake of corporate failures

and more strategic involvement was necessary to restore the

public conf‌idence (Clendenin, 1972; Heller and Milton, 1972;

Mace, 1976; Machin and Wilson, 1979; Vance, 1979). More

recently, corporate governance reforms (Aguilera and

*Addresss for correspondence: University of Naples “Federico II”, Department of

Business Economics, Monte Sant’Angelo, 80122, Naples, Italy. Tel: 0039 (0)81675066;

Fax: 0039 (0)81 669987; E-mail: amedeo.pugliese@unina.it

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Corporate Governance: An International Review, 2009, 17(3): 292–306

© 2009 Blackwell Publishing Ltd

doi:10.1111/j.1467-8683.2009.00740.x