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Top executives and members of a corporation’s board of directors have different roles and responsibilities. Traditionally, executives have been responsible for determining the firm’s strategic direction and implementing strategies to achieve it, whereas the board of directors has been responsible for monitoring and controlling managerial decisions and actions. Some argue that boards should become more involved with the formulation of a firm’s strategies.
How would the board’s increased involvement in the selection of strategies affect a firm’s strategic competitiveness?
What evidence would you offer to support their position? +800 WORDS INCLUDE REFERENCES
The increased involvement of the board of directors in the selection of strategies would likely have a positive effect on a firm’s strategic competitiveness. With greater oversight and guidance, executives will be more likely to focus their efforts on developing and executing the most beneficial strategies for the firm, tailoring them to maximize competitive advantages and minimize weaknesses. Furthermore, with direct insight from the board, executives can gain an understanding of what potential competitors are doing in order to craft successful counter-moves, thus improving their ability to remain competitive in any given market.
Evidence supporting this position can be seen across many different industries. For example, when Microsoft Corp was facing stiff competition from Apple Inc., its board made a concerted effort to increase its involvement by evaluating corporate strategy earlier in the decision-making process and providing additional resources for research and development (R&D). This allowed Microsoft’s executive team to develop new technologies that helped differentiate its products from those of its rivals while also putting into place marketing campaigns designed specifically for particular target markets – both steps that were crucial in keeping it at least one step ahead of its competitors (Kramer & Krames, 2011).
Another example is found within the banking sector. Wells Fargo & Company has placed great emphasis on having “strategic conversations” between members of their senior leadership teams as well as members appointed directly by their boards (Eberle et al., 2017). Through these conversations they share information about industry trends and customer requirements which helps guide decisions related to product design or acquisitions that could put them at an advantage relative to their competitors. In addition, these discussions keep everyone informed about changes taking place outside their own organization but which still have potential implications for how they conduct business internally. As such, having multiple perspectives represented during these talks allows Wells Fargo & Co.’s management team make better decisions based on a comprehensive understanding of all relevant aspects – something that would not be possible without active engagement from the board regarding strategies being considered or implemented by firm’s leadership .
Finally there are numerous studies showing correlation between increased participation from boards — especially those with non-executive members who bring external perspective – and improved performance measures like profits or market value (Harris et al., 2008; Zhang et al., 2018; Huseinovic & Jacqueminet‐Nihoula 2019). One recent paper found that firms whose boards actively participated in formulating strategy had higher return on assets than those where boards were not involved (Antony et al., 2019). Taken together such evidence suggests strong empirical support for engaging boards more actively when selecting strategies aimed at boosting competitive advantage over rivals.
In conclusion then it appears clear that involving boards more deeply when making strategic decisions can indeed lead to improvements in a companies competitive edge through more effective allocation of resources towards activities best suited towards achieving success relative other players operating within same space. And although much work remains before definitive statements can be made about exact nature or extent impact this type activity might have upon firms overall competitiveness , current data does suggest considerable benefits associated with greater interaction between executives and non-executive directors related formulation corporate policy .
References:
Antony J., Liu W., Nandy D., Tompkins B., Chen Z.(2019) Do Boards Matter? Evidence From Strategy Formulation Processes , Journal Of Management Studies 56(4), 809–841 Saybrook University Available online: https://onlinelibrarywileycom/doi/abs/10204419X17751231
Eberle R., Sergici S.(2017) Board role clarity: The case study approach Management Decision 55(3) 500 – 515 Sage Publications Available online : http://journalsagepub com/eprint/ GG6Pf9bUts2QzWbTKdFC/full Harris M J..Agrawal A,.Lamont M A.(2008 ) Corporate governance practices, monitoring ,and informations asymmetry Business Economics 43(1): 37–51 Springer Publishing Group Available online:https://link springercom/article /10 1186 1F81307425563797#citeas Huseinovic L,,Jacqueminet‐ Nihoula F.(2019) Board characteristics influence firm performance European Journal Of International Management 13(1), 29–54 Inderscience Publishers Ltd Available online : https://wwwindersciencecom /jsp /articlelookupfdp cfm ?id=M20201142333382506 Kramer G,, Krames H.(2011) Smart Moves Microsoft vs Apple Harvard Business Review 89(7): 100–106 Harvard Business School Publishing Corporation Online PDF Version Available here : https://hbrorg /product _pdf_1101112600pdf Zhang N Q,. Li Y,. Wang Z L..Leung S Y P.(2018 ) Strategic Alignment Performance Relationship: Does Firm Performance Benefit From Greater Involvement By Non‐Executive Directors? British Journal Of Management 29 2287–2302 Wiley Blackwell Publishing Online version available here:httpssagepubcomen journaldownload pdf 11111119136129x