The impact of ownership and board governance on firm-level entrepreneurship in small technology based firms

Research output: Contribution to journalArticle

Abstract

A growing body of research suggests that a firm’s governance system can significantly impact the long-term value creative potential of an enterprise by disciplining and encouraging organizational efforts to pursue risky entrepreneurial projects. Following this stream of research, we present a study of the impact of ownership and board governance on entrepreneurship in small technology-based firms. Entrepreneurship was measured by the firms’ emphasis to take an entrepreneurial strategic posture (EP), encompassing a risk-taking, innovative and proactive competitive orientation. Statistical analysis on a sample of 135 small technology-based firms shows that the level of executive ownership has no significant effect on the emphasis on EP. However, controlling for the level of ownership held by the founder of the firm reveals a significant and negative influence on firms’ commitment to EP. With respect to board governance, we find support for that a higher board involvement in networking activities by board members encourage EP efforts, while there was no significant effects of higher board monitoring. In all, the findings give ample support for the argument that variations in ownership and board governance have a significant influence on the entrepreneurial strategic posture of small technology-based firms.

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Subject classification (UKÄ) – MANDATORY

  • Economics and Business
  • Social Sciences Interdisciplinary
Original languageEnglish
Pages (from-to)43-60
JournalIcfai Journal of Corporate Governance
Volume6
Issue number3
Publication statusPublished - 2007
Publication categoryResearch
Peer-reviewedYes