Determinants of Board Participation in the Strategic Decisions of Small Corporations

Abstract

Agency, strategic choice, and cognitive perspectives are used to examine the conditions under which chief executive officers (CEOs) of small private corporations involve the board of directors in strategic decisions. Logistic regression results (2,382 respondents to a cross–industry mail survey) indicate that board strategic participation is not the dominant practice in these firms but that boards are more likely to participate in strategic decisions when the firm is larger, the board has a critical mass of outside directors, the strategic issue under consideration involves an organizational transition or potential downturn, or CEO power (ownership) is low.