Correlates of Board Empowerment in Small Companies

Jonas Gabrielsson

100 citations0/0 files storedEntrepreneurship Theory and Practice

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Corporate Finance and Governance Gender Diversity and Inequality Family Business Performance and Succession

Abstract

This study seeks to advance the understanding of board empowerment in small companies. Predictions based on agency and resource dependency theories were used to examine how contingency factors correlate with board empowerment, in this study conceptualized as a larger number of board members, a higher representation of outside directors, and separate CEO and board chair positions. Statistical analyses on a sample of 135 small companies gave ample support for the agency–theoretic prediction that board empowerment in small companies is a response to satisfy the demands from owners not directly involved in managing the company. Other factors influencing board empowerment were younger CEOs, high degree of exports, and past poor company performance. The influence of these contingency factors, however, was not as strong and extensive as the presence of outside owners. The article ends with a discussion of the findings and their implications for understanding boards and governance in small companies.

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References

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