Defining the strategic role of boards and measuring boards' effectiveness in strategy implementation

Abstract

Purpose – The purpose of this research is to explore the potential role and the measurement of the effectiveness of boards of directors in strategy formulation and implementation – two aspects that have so far been left largely unaddressed by corporate governance research and practice.Design/methodology/approach – Based on insights from strategy process literature, the paper suggests that, by ensuring consistency between resource allocation processes and the firm's intended strategy, boards could fulfil a meaningful role in strategy implementation. The proposed outside‐in analysis of resource allocation decisions is illustrated by a single case study of a major Swiss pharmaceutical company.Findings – The proposed approach enables corporate governance scholars to look at how boards fulfil their role in strategy implementation from a perspective similar to that of financial analysts. It might thus be suited to complement existing methods in empirical corporate governance research.Practical implications – Th...