Board Independence and Its Influence on Strategic Decision-Making
DOI:
https://doi.org/10.66348/jbg.26.a67Keywords:
Board Independence; Strategic Decision-Making; Corporate Governance; Governance Quality; Firm Size; Independent DirectorsAbstract
This research investigates the impact of board independence on strategic decision making of Malaysian companies. The study is to explore the impact of board independence, participation of independent directors, independence of board committees and nonexistence of dual positions of CEO on effective strategic decision-making. Further, this study tests the mediation effect of governance quality and moderation effect of firm size in the relationship between board independence and strategic decision-making. A quantitative research approach with a cross sectional survey design was used. The respondents were 270 respondents comprising of board members, senior managers, corporate executives and governance professionals from different industries in Malaysia. The collected data were analysed by Statistical Package for Social Sciences (SPSS) and Partial Least Squares Structural Equation Modeling (PLS-SEM). Results indicate that there is a strong positive effect on strategic decision-making as a result of board independence. Independent directors' participation, board committee independence and no duality of CEO roles also were discovered to positively influence the effectiveness of strategic decision-making. Moreover, the results of governance quality substantially mediate between the relationship of board independence and strategic decision-making, suggesting that board independence contributes to better governance mechanisms that, in turn, lead to better strategic decision-making. The results also show that firm size is a significant moderator in the relationship implying that larger firm sizes reap greater benefits from independent governance structure because of the greater number of stakeholders and complexity of the firms. The study makes a significant contribution to the corporate governance literature because it examines the issue of board independence from an empirical perspective using the Malaysian context and extends the knowledge of the effect of board independence on strategic governance processes in the emerging market context. The results have implications for policy makers, regulators and corporate leaders on the need to enhance independent board mechanisms to enhance the quality of corporate governance, effectiveness in the strategic management of companies and sustainability of business models.
Received: 2026-05-06 | Revised: 2026-08-21 | Accepted: 2026-10-16 | Online Available: 2026-10-16
Declarations
Ethics and Guidelines: The study was conducted in accordance with the Declaration of Helsinki. The ethical approval specifically covers the research procedures and data collection activities conducted for this study.
Consent to participate: Written informed consent was obtained from all participants prior to data collection. Consent was obtained using a standardized written form, signed by each participant before participation in the survey.
Consent to publish: The authors have provided consent to publish.
Competing interests: The authors declare no competing interests.
Data availability statement: Data will be made available on reasonable request from the corresponding author.
Funding: This research received no external funding.
Clinical Trial Number: Not Applicable.
Declaration of using generative AI: During the preparation of this work the author(s) used ChatGPT in order to correct the grammatical errors. After using this tool/service, the author(s) reviewed and edited the content as needed and take full responsibility for the content of the published article.
Author Contributions: F.S.S.: Conceptualization, methodology, writing—original draft preparation, writing—review and editing. All authors have read and agreed to the published version of the manuscript.
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Data Availability Statement
Data will be made available on reasonable request from the corresponding author.
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