Understanding the influence of behaviour on strategic decision-making in an Australian board context

<p dir="ltr">A board of directors is the highest decision-making authority in an Australian organisation from a corporate governance perspective, and as stipulated under Australian Commonwealth Law. Decisions made at board level affect the potency and direction of the organisation’s growth and survival. Despite the wide-ranging power of boards of directors, there is limited research regarding the behaviours associated with strategic board decision-making. This study aims to shed light on board directors’ perceptions regarding behaviour inside the board room, and to increase understanding of the ways behaviour affects the board’s ability to access, use, and boost the board’s collective expertise in pursuit of quality strategic board decision-making. In drawing these threads together, this study contributes to the knowledge about the human elements of board behaviour, rather than the economic aspects.</p><p dir="ltr">Qualitative research was undertaken in the form of two studies investigating the behavioural influences on strategic board decision-making. First, in-depth interviews were conducted with members and chairs of Australian boards of directors to examine the views of current non-executive board directors. These interviews were followed by a three-round Delphi study, designed to elicit the opinions of a panel of experts that included international board and governance academics and practitioners, to establish where consensus might exist regarding the findings of Study 1. A constructivist grounded theory methodology was used to analyse the findings and identify key categories that shape and influence theory and practice in strategic decision-making in an Australian board context.</p><p dir="ltr">This research identified that specific preconditions are necessary to facilitate quality strategic decision-making within Australian boards. Among key findings, participants explained how boards can generate the conditions that facilitate the members’ ability to access, use, and boost the board’s collective expertise in the pursuit of quality strategic decision-making. The results also identified that behavioural influences are important to create board conditions that facilitate the board decision-making process, overcome barriers, mitigate process loss, and improve logic in decision-making. Moreover, the research revealed that certain individual behavioural influences have the greatest effect during specific phases of a board’s decision-making process.</p><p dir="ltr">This research contributes to practice by creating a framework that allows an evaluation of board readiness to engage in behaviours that contribute to quality strategic decision-making. The research then makes recommendations to encourage boards and board members to re-evaluate, and then commit themselves to, how they work together as a board team, boosting the behaviours and processes that can lead to effective decision-making. Further, the study makes additional contributions by exploring some of the long-held assumptions regarding the board environment in Australia, reporting that current board landscape is transitioning, with individual disruptors demonstrating a willingness to challenge conventional board behaviour and break down barriers in a way that could potentially revolutionise the board landscape.</p><p dir="ltr">Recommendations for enhancing board effectiveness are presented for consideration by those with ultimate responsibility for strategic board decision-making: the board members themselves, together with policy-makers and industry associations who support boards in navigating increasing complexity. By acting on the recommendations, Australian boards have the potential to increase their understanding of the context within which quality decisions are made, so that they can build an environment and foster behaviours that enable effective strategic decision-making. While the study has taken place in the Australian context, the recommendations provide insights that have the potential to influence board decision-making in other jurisdictions.</p>