About this Committee
In public corporations, owners and lenders invest capital in the expectation of economic returns, while professional managers are responsible for the strategic decisions that yield economic returns and impact various stakeholders. Strategic leaders are the top management teams that formulate and implement strategies to create firm value. Governance refers to the monitoring and incentive mechanisms that align the interests of managers with those of the suppliers of capital. Strategic leadership is shaped by the demographic characteristics and behavioral biases of top management teams and by the discretion afforded by a firm’s characteristics and external environmental context. Governance mechanisms include the incentives and monitoring provided by shareholders and lenders, the boards of directors; executive selection, succession, and compensation; and the market for corporate control. More generally, all organizations, private and public, for-profit and nonprofit, small and large, need strategic leaders that shape strategy, and governance mechanisms that monitor and incentivize strategic leaders. Strategic leadership and governance shape and is shaped by firm strategy and performance in various institutional contexts and regulatory regimes.