A MULTI-THEORY APPROACH OF THE STRATEGIC ROLE OF BOARDS

Boards’ involvement in the decision process has been reported in different ways in accordance with corporate governance theories. Several scholars postulates that both resource dependence and stakeholder theory emphasize board involvement in decision management through boards’ service roles; the legalistic perspective describes boards’ involvement in decision control through the execution of control roles; whereas stewardship theory reflects boards’ involvement in both decision management and decision control through boards’ strategic roles. Other theoreticians split the way in which boards get involved in the decision process into two phases and make comments on the contractual approach associated with agency theory, managerial theory, legalistic theory, stakeholder theory within which boards are known for their limited involvement and on strategic approach linked to stewardship theory and resource dependency theory which recognize the strategic role of boards. Unlike board’s control task which is grounded in the agency theory, the strategic task of boards is believed to have a multi-theoretic basis. The paper makes a comparative analysis of different corporate governance theories that are linked to the strategic role of boards.