Boards' involvement in firm strategy : how can a board be effectively involved in strategy formulation and contribute to firm's successfulness

Abstract

The role of the board of directors in firm strategy has been subject of debate for a long time. Many researches have been done from different perspectives particularly on this issue. The purpose of this thesis is to study the role of the board of directors in firm strategy. This study will further investigate on how the board of directors can be effectively involved in strategy formulation for the firms and through this to contribute to the firms' successfulness. Board of directors is a group of individuals who are elected by the shareholders of a corporation and assigned to carry out certain tasks on behalf of the shareholders to govern the corporation. Some of the main tasks of the board of directors are appointing the Chief Executive Officer, issuing additional shares and declaring the dividends. Board of directors are responsible for defining the strategy for the firms and make sure that it is implemented by the management. A case study research method is used and four companies from southern part of Norway have been selected for this research. Two of them are in offshore business, one is an educational institute and the last one is a software company. They all are Small and Medium size Enterprises SME. The research concludes that the boards can be effectively involved in firm strategy if the board directors have relevant knowledge and skills to the firm and have experience from the industry they are in. The board and CEO should have close relations and have frequent meetings. Board diversity is also important because diverse boards will come up with different perspectives, healthy debates and good information for decision making.