Role of the board of directors in strategy process: A study of private hospitals in Nairobi

Abstract

The purpose of this study is to examine the role of the private hospital board of directors in strategy process. The investigation is conducted primarily from a theoretical point of view. The theoretical analysis considers three dimensions of strategy. The first dimension is concerned with strategy formulation, which has a direct influence on the overall corporate strategy. It focuses on the role of the board in developing the vision, mission and values. The second dimension deals with the strategy implementation and focuses on issues relating to capacity to implement strategy, allocation of resources, institutional and governance framework to support strategy and capacity of the board to plan, manage and implement strategic initiatives. The third dimension deals with strategic evaluation and looks at a set of key performance indicators available to the board members to track success of strategic initiative, attention paid to abandoning, adjusting and developing new initiatives. By applying these different perspectives of strategy, we explored the role that boards play in the strategy process. We used a cross sectional descriptive survey and collected primary data through interviews with board chair persons. From the survey, we found that boards of private hospitals spend 33% of their time discussing strategy. The results also show that 89% of the board chair are either moderately or considerably satisfied with the firms overall strategy. Overall, only 66.7% of the board chairpersons are happy with the level of involvement and participation in strategic management process. From the results of this survey, the most common areas of board involvement are formulation of the mission, vision, and value statement. The boards of private hospitals also play a very limited role in strategy implementation and evaluation. viii Although the study provides useful results for policy makers, academicians and practitioners, we found one limitation which must be acknowledged. The data for this study was gathered using a questionnaire. Research based on questionnaires depends on the voluntary cooperation of the participants. Participants can differ from non-participants, compromising the interpretation and generalizability of the results (Isaac & Michael, 1990). Since we relied on subjective data provided by the respondents it was also not possible to externally validate these responses. Due to difficulty in finding board chair persons, it was difficult to get return questionnaires and the research assistants had to make several trips to the hospitals. Out of the targeted 11 hospitals, we managed to get duly filled questionnaires from board chair persons in 9 hospitals. The response rate was therefore good. To a good degree, the results of the survey can be generalized for the studied population. We recommend that future studies on the role of the board focus on differentiating roles of the faith based and privately funded board’s in corporate strategy. In this case, the studies will need to define privately funded hospitals verses charity (religious) funded private hospitals. It would also be interesting to conduct studies on the board of directors as strategic resource to private hospitals. The researcher will need to discuss from a wide variety of perspectives, the role of board’s of private hospitals as a strategic resource or even whether they are considered to be a strategic resource. This should be able to give an interesting picture of board’s contribution to strategic growth and leadership of private hospitals.