Owners vs executives and decisions vs control

Abstract

Purpose

Some scholars have claimed that CEOs make decisions, while boards of directors control these decisions by applying the concepts of decision management and decision control. These concepts were suggested more than 30 years ago and are still applied in corporate governance research. They are now challenged on the basis of scholarship on corporate governance and management.

Design/methodology/approach

Corporate governance addresses the authority and responsibility that boards of directors and executives have. Management theory addresses planning and control in corporations.

Findings

The relationship between the owners (the boards of directors) and the top managers is hierarchical. This paper concludes that owners or boards of directors make decisions on main and strategic goals. Decisions cannot be controlled, but the implementation and outcomes of plans can. The latter is managers’ responsibility. The terms “decision management” and “decision control” are undefined and do not describe what takes place in organizations.

Research limitations/implications

This paper does not contain any new empirical data.

Originality/value

Management theory offers clear definitions of decisions, decision-making and control. The concepts of decision management (initiation and implementation) and decision control (ratification and monitoring) neither properly describe who makes major and strategic decisions nor how and who controls the consequences of these decisions.

Citation

Andersen, J.A. (2019), "Owners vs executives and decisions vs control", Corporate Governance, Vol. 19 No. 3, pp. 458-470. https://doi.org/10.1108/CG-04-2018-0158