Premium partners
categories

7 August 2017
Board Leadership and Innovation in SMEs

Photo: Complete Interior Design

In my dissertation I have identified, developed and empirically tested concepts associated with chairpersonship in entrepreneurial firms. The focus of his work has been on value creation in entrepreneurial firms and the contributions of board leadership in the board of directors as an internal governance entity in small and medium sized enterprises (SMEs). The dissertation presents four main conclusions.

First, the findings suggest that research on board leadership needs to develop into a more context-conscious manner. Contingencies seem to be an important part of the sense-making process in research on board leadership. This has not gained due attention in the extant research when most of the prior research engages itself with large, public corporations and the structural aspects of board leadership,that is, whether the CEO also holds the chairperson position in the firm. To understand how board leadership can contribute to the development of entrepreneurial firms, we need to consider each context’s specific conditions and needs. There is also a need for new theoretical perspectives when researching board leadership in contexts other than the large, publicAnglo-American corporations. I suggest a team production approach as a possible and intuitive alternative to the prevailing agency theory when examining board leadership in entrepreneurial firms.

Second, I identify a set of chairperson tasks in owner-managed entrepreneurial firms using a new vocabulary. This has resulted in the identification of a set of tasks that differ from what has been discussed in prior research on boards and board leadership. The set of chairperson tasks identified in this dissertation includes scrutinizing, mediating, gap minding and alibiing, and considers the specific challenges of owner-managed entrepreneurial firms when recruiting external chairpersons to their boards. These tasks have implications for both theory and practice around the field of board leadership.

Third, the findings suggest that innovation-driven board leadership builds on two different sets of critical factors. First, a sound base for the work of the board of directors is needed to carry on with the board’s task completion (i.e.the board must have the prerequisites for effective board work in place). This is about having the so-called hygiene factors of board work in place. In the context of board of directors, these are about having appropriate structures for the board work;developing effective processes for the board’s work and information to flow well and proceed smoothly; and nurturing a culture of cohesiveness and generosity in the boardroom for all board members to participate in the board work with integrity.

However,while this will build the necessary conditions, it is not sufficient for the board to develop into an innovation-promoting board of directors. There will also be a need to add a crucial cognitive aspect to these hygiene factors (structures, processes and culture) to further the board work to promote innovation in the firm. That is what I refer to as energizers. Energizers are the cognitive aspects of board work. These are prerequisites to advance the board to the level of an innovation-driven board and they call for all board members to have appropriate knowledge in relation to the firm and be willing to share their knowledge with the board. Board directors also need to engage in constructive cognitive conflicts and participate in strategy development within the firm. In this context, the role of the chairperson differs greatly from the traditional and prevailing perspective of shareholder primacy, in which focus has been on the control function of the board, engaging in the protection and distribution of value and thus reducing the chairperson’s task to monitoring CEO and seniormanagement decisions and conduct. By nurturing and adding the cognitive aspects of board work, the chairperson will draw the board’s attention to the value-creating potential of the board and thus contribute to the development of the entrepreneurial firm.

Fourth,this dissertation’s results suggest that chairperson leadership and prior board experience, as well as firm-specific knowledge, contributes to boards’ strategy involvement in firms. A board of directors’ involvement in strategy is proven to be of great importance for growth and innovation in firms. At the same time,the chairperson’s extensive industry experience shows a moderate reverse relationship with the board’s strategy involvement in the firm. Chairpersons’ extensive industry experience, especially from successful firms, may limit the use of boards’ knowledge when the industries’ taken-for-granted measures are accepted by the chair and affect the discussion of the board by posing as “the rules of the game”.

These findings will have implications for the theory and practice of board leadership and provide practical direction for how the recruiting of chairpersons may affect firms’ tendency to innovations and development of entrepreneurial firms.

The findings of this dissertation will have implications for the practical governance of entrepreneurial SMEs. Entrepreneurial firms often operate in complex and turbulent environments, which in turn call for a need for responsive governance structures that can aid their development and growth.This work provides actionable knowledge for practitioners and policymakers to create a fertile ground for the formation of entrepreneurial firms. For SME owners, this study will bring about some straightforward arguments for why they should employ external chairpersons with relevant knowledge and board experience in their firms and furnishes practitioners with advice on the qualifications and processes that would help them to develop their board work to the level of innovation-promoting boards. Identifying the right individuals for the position of chairperson in entrepreneurial firms is often a delicate task with hitherto no scholarly assistance. The findings in this work might shed some light on what to search for and how to establish effective and innovation-promoting board work in SMEs.

Reference:

Yar Hamidi, D.2016. Governance for Innovation -Board leadership and Value creation inentrepreneurial firms. PHDthesis, Halmstad University.

Find the thesis: http://urn.kb.se/resolve?urn=urn:nbn:se:hh:diva-31676

Written By
Popular
Society
22 August 2016
Earned Citizenship: Migrantsí Views on the Welfare State
Medicine
2 May 2017
Hearing loss makes your brain work overtime
Health
14 June 2016
Studies of physical activity in the Swedish population
Written By
Popular
Society
22 August 2016
Earned Citizenship: Migrantsí Views on the Welfare State
Medicine
2 May 2017
Hearing loss makes your brain work overtime
Health
14 June 2016
Studies of physical activity in the Swedish population
Related Articles