Preface

      Corporate executives are responsible for making a myriad of strategic decisions that shape a firm's competitiveness and performance. Yet, executives' strategic choices are constrained by governance actors, such as the board of directors or institutional investors, who can directly or indirectly influence corporate decisions. Although much has been written about corporate governance, there is no systematic analysis of how governance actors can influence strategic decisions. A company's strategic decisions such as R&D investment and business expansion determine its competitive position and ability to care for its stakeholders. Meanwhile, governance actors can influence these important decisions through deliberate involvement but also through unintentional means. Thus, understanding and managing how governance actors shape strategic decisions is crucial to both corporate executives and governance actors.

      This book explains the impact of governance actors on strategic decisions, which is referred to as strategic governance, and provides suggestions on how corporate executives can leverage governance actors to make effective strategic decisions. To facilitate our discussion, we classify governance actors into internal and external governance actors and analyze their respective influences on a myriad of strategic decisions, including corporate strategy, competitive strategy, global strategy, innovation strategy, stakeholder strategy, and corporate political strategy. Internal governance actors refer to governance actors who have direct employment relationships with a firm and include the board of directors, peer executives, and employees. In contrast, external governance actors are those who do not have direct employment relationships with a firm and consist of investors, customers, suppliers, and external information intermediaries, such as financial analysts, rating agencies, and government regulators.

HOW TO USE THIS BOOK

The book is organized as follows. Chapters 1 and 2 introduce internal governance actors and external governance actors and discuss the channels through which they can play a governance role and influence executive decisions. From Chapters 3 to 8, we explain the influence of internal and external governance actors on a given specific strategy. We also provide our recommendations on how corporate executives can manage their relationships with governance actors to design effective strategies. In Chapter 9, we offer our evaluation of new trends in the governance landscape and our recommendations on how corporate executives and governance actors can work together to navigate these trends successfully.

      In formulating each chapter, we carefully studied the most recent academic research to ensure that the content about strategic governance is up to date and accurate, as evidenced by the detailed endnotes for each chapter. In addition, we continuously read articles appearing in many different business publications (e.g., Wall Street Journal, Bloomberg Businessweek, Fortune, Financial Times, Fast Company, Forbes, and Harvard Business Review, to name a few). By studying a wide array of sources, we have identified valuable examples of how companies across the world are affected by governance actors and their consequences on managerial strategic decisions.

      Each chapter begins with a boxed example labeled Strategic Governance Challenge, and there are breakout examples within the body of each chapter (labeled Strategic Governance Highlight) to illustrate critical governance issues of concern or provide more in-depth understanding of critical strategic issues resulting from governance activities in each chapter.

      Although the book is written so that it can be read from cover to cover, each chapter also stands on its own. Readers can select and read the chapters most relevant to their interests (corporate strategy, competitive strategy, innovation strategy, global strategy, and so on).

AUDIENCE AND APPROACH

      The book will be suitable for three groups of readers. First, corporate executives who directly get involved in making strategic decisions may find it interesting to learn how governance actors can affect their decisions. Managerial guidance provided by the book can help them capitalize on governance actors to make effective, viable strategic decisions. Second, governance actors such as board members and institutional investors may find the book valuable. This book will devote much attention to revealing some unintended consequences of governance actors on strategic choices, which is critical for governance actors to avoid or alleviate their negative implications. Third, this book covers a comprehensive list of topics at the interface of strategy and corporate governance. In this sense, it can benefit a general audience that seeks to understand the role of corporate governance in critical strategic decisions. Likewise, it might be useful as a textbook for strategic management or corporate governance courses. In particular, the book is apropos for board of director training, graduate university courses, and executive education programs.

To maximize your opportunities to understand as you read and think about how actual companies are managing the strategic governance challenges, we emphasize a lively and user-friendly writing style. Collectively, no other book on corporate governance presents you with the understanding of how salient current corporate governance trends are affecting major strategic decisions using a combination of useful and insightful research and applications in a variety of local and global companies as does this book. We provide managerial guidance on leveraging governance actors and managing conflicting interests to achieve sustainable competitive advantages. The interests of governance actors are often not aligned with each other in the short term, and governance actors may impose conflicting demands on corporate executives. Therefore, it is important for executives to understand and manage such conflicting demands and avoid strategic pitfalls that can harm a firm's long-term competitiveness. Thus, no other book provides managerial suggestions to facilitate ways of dealing with the salient governance issues of the day for both top managers as well as involved governance actors.

      We believe that this book not only helps corporate executives and governance practitioners better understand their roles in shaping firm strategic decisions and how they can leverage governance actors to make more effective strategic decisions but it also offers an overview for a general audience to understand the current trends in corporate governance and how they influence key strategic decisions on which corporate executives and governance actors must accommodate each other to implement such decisions.

ACKNOWLEDGMENTS

      We would like to thank Sheck Cho of Wiley for his belief in our work, and we appreciate the financial support of Miami Hebert Business School, University of Miami, and Jones Graduate School of Business, Rice University. In addition, we would like to thank Haicao Zhu and Kim Kijong for their research assistance and Cibeles Duran for her careful copyediting of the entire book. We would also like to thank Claudia Kolker for her feedback on the book's introduction.

We would like to acknowledge the many collaborators and colleagues who have made this book possible. Although many other sources are cited in the book, our direct collaborators whose work is described or reflected in the book include: Ruth Aguilera, Jay Barney, Berry Baysinger, Juan Bu, Lowell Busentiz, Bert Cannella, Guoli Chen, Tao Chen, Shih-Chi (Sana) Chiu, Kubilay Cirik, Brian Connelly, Marie Dasborough, Parthiban David, Mark DesJardine, Fabrizio Ferri, Igor Filatotchev, Eni Gambeta, Orhun Guldiken, Abhinav Gupta, Cheng Gao, Javier Gimeno, Colby Green, Wayne Grossman, Jeff Harrison, Matt Hersel, Charles Hill, Mike Hitt, Duane Ireland, Fuxiu Jiang, Jing Jin, Richard Johnson, Dave Ketchen, Heechun