Top management team and board of directors as the strategic leadership system: The effect of behavioral integration on strategic decision-making quality

Abstract

Research on the actors involved in firms' strategic decision-making moves towards the principle that both the top management team (TMT) and the board of directors should be considered more as one interdependent collective. In this study, we view firm governance from a multiteam systems perspective and consider the TMT and board as the strategic leadership system (SLS). Our main goal is to examine whether a higher level of behavioral integration (i.e., interdependence) within the strategic leadership system (SLS BI) leads to higher levels of strategic decision-making quality. Simultaneously, we consider the moderating role of the firm's industry competitiveness (i.e., environmental complexity) as a factor that may increase the cruciality of board-TMT interdependence to reach high quality strategic decisions. Based on a unique multiple respondent sample of 375 SLS members from 47 Belgian private family firms, we find that SLS BI positively affects strategic decision-making quality. Additionally , results indicate that higher environmental complexity strengthens the positive effect of SLS BI on strategic decision-making quality.