Working Papers, Hanken School of Economics
No 549:
Board Effectiveness in Small Firms
Anette Söderqvist ()
and Karolina Wägar ()
Abstract: Purpose: This study investigates boards of directors in
small firms and explores the link between board effectiveness and the
composition, roles and working styles of the boards.
Design/methodology/approach: The study analyses data from a telephone
survey of boards in 45 small firms. The survey included both the CEO and
the chairperson of the board. Findings: The study identifies three groups
of small firms: ‘paperboards’, ‘professional boards’, and ‘management lead’
boards. Results show that board composition, board roles and board working
style influence board effectiveness in small firms. Research
limitations/implications: Although the present study has found a link
between board effectiveness and the role, composition and working style of
boards of small firms, other potentially influential factors are also
worthy of investigation; for example, the personal characteristics of the
individuals involved, generational factors in family firms, and the
situational circumstances of various firms. Practical implications: The
study reveals that, in practice, the management team and the board are
substantially intertwined in small firms. Originality/value: The main
contributions are that the study explores how boards in small firms
actually function and gives a detailed account of their composition and
roles.More insight into this issue is important given the overemphasis
within the governance literature on input-output studies using samples of
large publicly listed firms.
Keywords: board of directors; small firms; board effectiveness; (follow links to similar papers)
25 pages, March 2, 2010
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