Introduction
Traditionally, top executives have been responsible for developing and implementing a company’s strategies, while the board of directors has played a monitoring and controlling role. However, there has been a growing trend toward boards taking a more active part in the strategic direction of their firms. This essay will explore how the board’s increased involvement in the selection of strategies could affect a firm’s strategic competitiveness.
Top Executives Roles and Responsibilities
There are several potential benefits of board involvement in strategy selection. Firstly, boards can bring broader perspectives and expertise to the decision-making process (Zaman et al., 2020). While executives may have deep knowledge of the industry and the company’s operations, board members may have a more comprehensive understanding of market trends, regulatory issues, and stakeholder concerns. This can lead to more robust and well-informed strategic decisions. Secondly, increased board involvement can ensure that the company’s strategy is aligned with the interests of all stakeholders, not just shareholders (Zaman et al., 2020). Boards can represent the interests of employees, customers, suppliers, communities, and shareholders. By taking a more holistic view of the firm’s strategy, boards can help to ensure that it is sustainable and benefits all stakeholders in the long term.
Finally, increased board involvement can mitigate the risks associated with executive bias and groupthink. Executives may need to be more focused on short-term performance metrics or reluctant to challenge their assumptions. By involving the board in strategy selection, companies can introduce a broader range of perspectives and ensure that decisions are being made in the company’s best interests as a whole. There is some evidence to support the argument that increased board involvement can improve a firm’s strategic competitiveness. For example, a study by Zaman et al. found that companies with a more engaged and diverse board of directors tended to outperform their peers regarding financial performance and shareholder returns (2020). However, this evidence can still be argued due to the huge number of possible outcomes in this sphere.
Conclusion
In conclusion, while there are potential benefits to increased board involvement in strategy selection, it is essential to ensure that boards have the appropriate expertise and can effectively balance the interests of all stakeholders. If done correctly, however, this increased involvement can lead to more robust and sustainable strategic decisions, ultimately improving a firm’s strategic competitiveness. To achieve these benefits, boards should work collaboratively with executives and other stakeholders to ensure that the company’s strategy is aligned with its long-term goals and competitive landscape.
Reference
Zaman, R., Jain, T., Samara, G., & Jamali, D. (2020). Corporate governance meets corporate social responsibility: Mapping the interface. Business & Society, 61(3), 690–752. Web.