, Volume 18, Issue 4, pp 929-957
Date: 04 Dec 2012

Beyond the “silo view” of strategic management and corporate governance: evidence from Fiat, Telecom Italia and Unicredit

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While corporate governance and strategic management have for a long time suffered from artificial separation and, therefore, generally been tackled in a secluded manner, their combined organizational impact makes them stringently related to one another in the firms’ evolution. In this paper, we argue that, transcending the “silo view” of corporate governance and strategic management, time has come to acknowledge that, depending on circumstances and time periods, within a firm is possible to detect the relative dominance of corporate governance over strategic management, rather than the leadership of strategic management over corporate governance. Drawing on a contingency approach, we dissect the relationships (and the mechanisms that control it) between the strategic function (i.e., which defines the firms’ strategy and supervisions its implementation) and the governance function (i.e., the congruence assessment between the firm strategy selected and the interests of the ownership and of other relevant stakeholders represented in the board of directors and the effectiveness appraisal of the entrepreneurial action). Then, by performing a thorough retrospective qualitative analysis of three relevant case-histories of Italian firms (Fiat, Telecom Italia and Unicredit) operating in three different industries (automobile, banking and telecommunications), we surmise that, either in corporate governance (board) oriented or in strategic management (CEO) oriented companies, the ‘real’ problems arise when the quality of corporate governance or strategic management is poor. Interestingly, we eventually suggest to adopt a value-based approach to the relationship between corporate governance and strategy that may fruitfully complement the contingency perspective taken at the onset of the work.

This paper is one of the principal outcomes outspreading from a multi-annual research project we are conducting on the relationships between corporate governance and strategic management.
An earlier version of this paper was presented at the symposium “Corporate Governance and Strategic Management in Different Contexts: Fostering Interchange of a Crucial Relationship”, held at the Academy of Management Meeting in Anaheim, CA, in August 2008.