Understanding and Managing Strategic Governance. Wei Shi

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Understanding and Managing Strategic Governance - Wei Shi


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      The book is dedicated to our parents, Xiangsheng Shi, Shimei Hui, Claude W. Hoskisson, and Carol B. Hoskisson, for their constant love and support.

      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.

      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).

      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.

      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.

      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.


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