Does CEO power moderate the relationship between board leadership and strategy involvement in private firms? Evidence from Kenya

Abstract

Purpose The purpose of this paper is to determine how board leadership affects the board strategic involvement in private firms in Kenya and how CEO power moderates this relationship. Design/methodology/approach The authors used a Kenyan data set to investigate what makes boards in private firms get involved in strategy. Survey data derived from a sample of 186 CEOs of private firms were used, and the hypotheses were tested using moderated regression analysis. Findings The results indicate that board members’ knowledge, board chairman’s leadership efficacy, board members’ personal motivation and board members’ background all have a positive and significant effect on board strategy involvement. The authors also found that CEO power moderates the relationship between board leadership and strategy involvement. The study concludes that when the CEO wields immense power, the board tends to become passive and to submit to the direction of the CEO. Originality/value The study adds value to the understanding of the effect of the board leadership on strategic involvement in private firms and how CEO power influences this relationship, particularly in a developing country like Kenya.

Board independence and internal control quality in Egypt: does CEO duality matter?

“…Our study complements previous empirical literature dealing with ICQ in Egypt (Khlif and Samaha, 2016), as it refines the analysis with respect to a controversial issue concerning the non-significant effect of board independence on ICQ in Egypt. It also extends African studies dealing with the moderating effect of CEO attributes on corporate performance board of directors' compensation (Ntim et al, 2017, in South Africa) and the impact of CEO duality on board strategy involvement (Tuwey and Tarus, 2016, in Kenyan setting). Our findings also suggest that the effect of board independence is conditional on the structure of firm leadership (dual versus unitary) and that the effectiveness of internal control should be assessed in the context of the overall corporate governance environment.…”

“…In a sub-Saharan setting, namely, Kenya, Tuwey and Tarus (2016) test for the effect of CEO duality on board strategy involvement in terms of initiating strategy proposals, making decisions on long-term strategies, implementing strategic decisions and controlling and evaluating strategic decisions. Based on sample of 186 CEOs of private firms, they document that CEO duality has a positive and significant effect on board strategy involvement.…”

Board Antecedents of CEO Duality and the Moderating Role of Country‐level Managerial Discretion: A Meta‐analytic Investigation

“…Board independence was operationalized in primary studies with percentage (or number) of independent (e.g., Mallette and Fowler, ; Miller and Xu, ) and outside (e.g., Sanders and Carpenter, ; Zahra, ) directors, as well as the ratio of outside directors to inside directors (e.g., Behn et al, ). Board human capital was operationalized with measures from primary studies of board diversity (e.g., Molz, ; Nielsen and Huse, ), knowledge and skill (e.g., Tuwey and Tarus, ; Zona and Zattoni, ), tenure and age of board members (e.g., Combs et al, ; Tuggle et al, ), and board educational background (e.g., Atinc et al, ; Daily and Dalton, ). Board ownership was operationalized using measures from primary studies of board equity (e.g., Datta et al, ; Pathak et al, ), board stock holdings (e.g., O’Connor et al, ; Westphal and Zajac, ), outside director ownership (e.g., Joseph et al, ), and inside director ownership (e.g., Bergh and Sharp, ; Peng, ).…”

Effects of founder CEO duality and board size on foreign IPOs’ survival in US markets

“…In essence, the chairperson’s characteristics will influence cognitive conflicts among board members (e.g. actively involving board members in strategy development) (Kakabadse et al , 2006; Ingley and van der Walt, 2001; Leblanc, 2005; Machold et al , 2011; Tuwey and Tarus, 2016).…”