Revisiting the impact of strategic board involvement on organizational performance

An important stream of research has suggested that there is a significant relationship between the board of directors, through its strategic role, and organizational performance. However, this presumed relationship appears to be more complex, given the conceptual distance between the cause and the effect. This distance is discernible in the omission of intermediate variables explaining the operation of this relationship, that is, (i) a variable reflecting an intermediate-level output, here board effectiveness and (ii) a variable reflecting the mechanisms that enable production of the output, particularly the board’s strategic use of management accounting information (MAI) deriving from the budget or financial and non-financial performance indicators. This study aims to revisit the link conceptually and empirically between strategic board involvement and organizational performance by simultaneously integrating strategic use of MAI and board effectiveness in an integrative model. Using survey data taken from a sample of 185 board of directors, the results suggest that the strategic use of MAI plays a crucial role, particularly in terms of performance indicators, to cement strategic board involvement and improve board effectiveness and organizational performance.