Boardroom Strategic Decision‐Making Style: Understanding the Antecedents

Abstract

AbstractManuscript TypeEmpiricalResearch IssueThe purpose of this study is to develop an understanding of the antecedents that lead to boards embracing either procedural rationality or political behaviors as a particular style of strategic decision making.Research FindingsSemi‐structured interviews with 29 directors and officers of eight publicly‐tradedUScompanies were conducted. Of the eight boards analyzed, there were clear differences in the predominant style of decision making operationalized by each. More importantly, however, the variance between boards that tended towards procedural rationality versus political behaviors as the predominant style of strategic decision making was explained by three primary factors. These included: (1) shared mental models; (2) balanced power relationships between the board members andCEO, as well as amongst individual board members; and (3) board chair leadership skills. Our data allow us to identify important antecedents of these factors.Theoretical ImplicationsWe add to the work seeking to understand the processes associated with board level strategic decision making. We augment decision‐making theories relating to procedural rationality and political behaviors with board‐specific factors and their characteristics.Practitioner ImplicationsWe isolate a number of antecedents relating to the conduct of boards and the environment of board decision making. We also highlight the roles of the board chair and theCEOfor creating a boardroom environment conducive to engaging in quality decision‐making processes.