Boards and governance in SMEs: An inquiry into boards’ contribution to firm performance

Sammanfattning: The board of directors is often described as a valuable resource for small- and medium-sized enterprises (SMEs) that can contribute to the direction and performance of the firm. Mainstream research and literature on boards and governance has however mainly been concerned with how the board of directors best can monitor and restrain managerial action in large widely held corporations, and there is not much guidance for individuals interested in how boards can be effective instruments of governance in privately held SMEs. The main focus in research on boards and governance has moreover been on the direct relationship between observable board characteristics and the financial performance of the firm. How contingencies and stakeholder influences, and how the working style in the boardroom influence a board’s ability to contribute to firm performance in SMEs are hence largely unexplored issues, and few attempts have been made to integrate various streams of research in empirical research on boards and governance in SMEs. Based on this background is the overall purpose of this composite dissertation to apply and empirically test an integrated theoretical framework that explains boards’ contribution to firm performance in SMEs. The theoretical framework is developed by a review and analysis of relevant research and literature on boards and governance. The empirical part of the dissertation consists of four individual papers, and each empirical paper addresses a distinct research objective in order to deal with the theoretical problem and meet the overall purpose of the dissertation. The main contribution of the dissertation is that it identifies, develops and empirically tests concepts related to contingencies, stakeholder influences and the working style in the boardroom to better understand what might enable (or hinder) boards to perform their tasks and contribute to firm performance in SMEs. The overall findings in the four empirical studies suggest that the extent to which the board of directors in SMEs provide the firm with differential benefits and contribute to firm performance is not as simple and direct as many past studies assume. There consequently seem to be a need to go beyond the assumptions of simple and direct relationships between observable board characteristics and firm performance to better understand how boards contribute to the direction and performance of an enterprise, and future research should continue to develop theory of how contingencies, stakeholder influences and the working style in the boardroom can moderate the potential value-adding effect of a board of directors in SMEs.