Strategic governance: how to assess board effectiveness in guiding strategy execution
Journal
Corporate Governance : An International Review
ISSN
0964-8410
ISSN-Digital
1467-8683
Type
journal article
Date Issued
2006-01-06
Author(s)
Abstract
Subsequent to a host of corporate corruption scandals, boards of directors are facing amplified pressure from investors, creditors and shareholders in a bid to ensure effective corporate governance of their investments. In previous research and public debate, the effectiveness of corporate governance structures has come under close scrutiny. However, boards' effectiveness in fulfilling their strategic role by guiding strategy execution mostly has been left unaddressed. Due to the high degree of secrecy and sensitivity of strategy issues, boards' effectiveness in guiding strategy execution is much more difficult to assess externally compared to structural governance issues. Against the backdrop of these difficulties and based upon insights from strategy process research, we suggest taking "strategy consistency" between a firm's resource allocation and its announced strategy as a proxy for boards' effectiveness in guiding strategy execution. In doing so, the paper contributes to extant research by going beyond structural governance issues and paying direct attention to strategic governance issues. Specifically, the paper develops a new approach and set of standard measures to assess boards' effectiveness in strategy execution.
Language
English
Keywords
Corporate governance
board effectiveness
corporate strategy
strategy consistency
rating agencies
HSG Classification
not classified
Refereed
Yes
Publisher
Blackwell
Publisher place
Oxford
Volume
14
Number
1
Start page
13
End page
22
Pages
10
Subject(s)
Division(s)
Eprints ID
30422
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06_Strategic governance - how to assess board effectiveness (CorpGovIntRev).pdf
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89.58 KB
Format
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