Boards of directors and entrepreneurial posture in medium-size companies: Putting the board demography approach to a test
Research output: Contribution to journal › Article
A growing body of research suggests that a strong and vigilant board can have a significant influence on the value-creating potential of medium-size companies by favouring change and innovation in strategic decision-making. Yet how best to conceptualize this relationship remains controversial in scholarly circles. The mainstream approach has been to argue for a direct relationship between board demography and company performance. In opposition stands a small but growing number of scholars who argue for a “behavioural approach” where boards’ ability to perform board tasks effectively – their actual behaviour – should be taken into account. Empirical studies comparing the two approaches are however surprisingly scarce. Based on this observation, the aim of the study is to test the mainstream board demography approach by examining the influence of boards of directors on CEOs’ commitment to take an entrepreneurial posture (EP). Both demographic and behavioural board measures are included in the model. Statistical analysis on a sample of 175 medium-size companies in the manufacturing sector gives ample support for the behavioural approach. The behavioural board measure – boards’ actual involvement in decision control – shows a positive and significant relationship with EP. On the other hand, neither board size nor the representation of non-executive directors, both commonly used measures in the demography approach, shows any significant association with EP. The study ends with a discussion of the results and presents suggestions for further research.
|Research areas and keywords||
Subject classification (UKÄ) – MANDATORY
|Journal||International Small Business Journal|
|Publication status||Published - 2007|