Board Processes, Board Strategic Involvement, and Organizational Performance in For-profit and Non-profit Organizations

Although corporate governance researchers have devoted considerable attention to the role of boards of directors in monitoring management and providing resources, less attention has been paid to whether and how they affect the strategic actions of firms in response to changing environments. Taking a process-based perspective, we examine how several prevalent board processes (i.e., board meetings, outside-board-meeting reviews and information utilization) affect the involvement of boards in strategic decision-making and how such involvement shapes organizational performance. Moreover, we offer an initial attempt to compare the strategic role of boards in for-profit and non-profit organizations. An investigation of 217 for-profit and 156 non-profit organizations in Canada indicates that different processes lead boards to different levels of strategic involvement, and that such effects are contingent on the types of organizations concerned. Moreover, boards that are active in strategic decision-making enhance the performance of their organizations. Our findings have implications for board research and practice.