In opening the black box of agency theory to consider how shareholders and managers differ among themselves, and in exploring how decisions are made when these actors come to different conclusions about the direction of the firm, we have presented a political picture of strategy. In our view, strategic choices are the outcome of a political process and, in turn, create a new political reality, strengthening some, weakening others, and, if the firm’s ownership and management structures are open, in due course attracting new shareholders and new managers. Such a political picture of strategy would appear to go against the received wisdom of strategy as rational choice: if strategy is the outcome of a political process, then it might be the preferred solution only for a particular group. Some shareholders and managers will benefit, while others may be poorly served or less well off.

For scholars of strategic management as well as for business schools and MBAs, the conclusion that strategic choices obey the logic of particular interests, benefitting different shareholders and different managers unequally, is deeply troubling. If strategy, and by extension, the board of directors, do not always promote the general good, then every strategic decision needs to be reviewed in terms of the question “cui bono.” This means that the idea of one best strategy cannot always be upheld. Strategists and managers have to take the views of different shareholders into account, while shareholders have to think about the perspectives of different managers. In general, stakeholders have to consider the values and methods of the actors involved and recognize the relevance of their substitutability in evaluating the outlook of the firm.