Final answer:
Lower-level managers are involved in crafting and implementing company strategy to utilize their expertise, foster ownership, improve communication, and balance power dynamics within the company, which is beneficial for the organization's health and relationship with investors.
Step-by-step explanation:
Top executives may involve lower-level managers in crafting and implementing a company's strategy for a variety of reasons. One reason is to leverage the specialized knowledge and expertise that lower-level managers have about their own areas of operation. This can lead to more informed decision-making and a strategy that is practical and considers on-the-ground realities. Another reason is to foster a sense of ownership and commitment throughout the organization. When lower-level managers are included in the strategy process, they are more likely to be committed to its successful implementation because they had a hand in shaping it. Finally, involving lower-level managers can help with communication and alignment throughout the company, ensuring that the strategy is understood and supported at all levels.
Engaging lower-level managers in the strategy of the firm also parallels the concept that while the board of directors is theoretically established to represent the interests of the shareholders, top executives have significant influence on board decisions. Providing lower-level managers with a voice can help balance internal power dynamics and foster a more democratic and inclusive environment, which can be beneficial for the overall health of the company.
Furthermore, as a firm becomes established and its operations are more transparent, the precise knowledge of individual managers becomes less critical to outside investors like bondholders and shareholders. This shift towards a broader base of investors can diminish the need for personal connections with the management team, while internally the collaboration in strategy development can strengthen the company's prospects and trust with its base of investors.