Abstract:
The role of boards in strategic goal setting and, in particular, the level of board involvement in strategic goal setting has not been extensively researched, primarily because of the difficulty of gaining access to empirical data. Therefore, boards of directors of companies listed on the Alternative Exchange (AltX) of the Johannesburg Stock Exchange (JSE) were targeted for this research by means of a survey questionnaire administered via email. The aim of the research was firstly to understand the level of board involvement in strategic goal setting, secondly to establish the common strategic goals set by AltX companies and how often these goals are reviewed, thirdly to determine whether there is a relationship between independent variables such as organisational size, board size and number of non-executive directors and the level of board involvement, and finally to determine whether the level of board involvement varies between executive and non-executive directors. The research found that the level of board involvement was at mid-level being ‘sometimes involved’ while the board’s involvement is significantly lower in strategic goal formation processes. The most common goal was found to be EBITDA (earnings before interest, taxes, depreciation and amortisation) with Cost being the strategic goal most frequently reviewed. No statistically significant correlation was established between the independent variables and the level of board involvement in strategic goal setting. Finally, non-executive directors prefer to take on more of an ‘agency’ role by not becoming involved in ‘prescribing’ strategy.
