Early Venture Boards: A Grounded Theory of Optimising for Growth

Some early boards help startups achieve exponential high growth, whereas others leave founders and shareholders perplexed on how to get any value from them. Whilst over the past ten years the research on ventures and their boards has grown considerably, very little is still known about the inner working of boards, especially during the critical early stages of startup development. What seems to be missing, is the understanding of a complex interplay between directors’ attributes and behaviours, board role and processes, and venture performance in the context of unique challenges faced by high growth early ventures. This study uses a classic grounded theory method to explore the experiences of directors on early boards of investor-backed tech startups in the UK. The investigation is done from the perspective of Venture Capital directors, which is then contextualised by looking more widely at experiences of Founders directors and independent Non-Executive directors. Altogether, data was systematically collected via interviews with 24 directors, representing experiences on boards of an estimated couple of hundreds of the UK early ventures. As a result, the study developed a substantive grounded theory of Optimising for Growth. The findings suggest that directors on early venture boards engage in a complex process of optimising of board and director attributes, such as structures, processes, mindsets and adding value behaviours, against growth performance criteria of the next investment round. This process takes place over two stages: Evaluating and Structuring Stage and Behaving Bigger Stage, transforming the founder, the board and the company from a startup into a high growth venture. The developed grounded theory has also uncovered that the process of optimising is the first step in the boards’ longer-term efforts to professionalise startups into companies capable of delivering exit to investors via Initial Public Offering, thus providing a deeper understanding of what happens on early venture boards in context. Having captured variations and the relationship between director attributes, board roles, board processes, value adding behaviours and company performance, the theory of Optimising for Growth also explains the differences in director experiences on early venture boards. The findings suggest the key differences arise when the early venture boards are fit for the purpose of monitoring as opposed to providing strategic help. This study contributes to the corporate governance literature by proposing a substantive grounded theory as a novel integrative theoretical framework of the relationship between director attributes, board roles, board processes and company performance. The offered contribution integrates previously distinct perspectives from corporate governance, corporate finance and cognition, whilst also enriching the research on venture boards. The thesis also contributes to practice by offering the theory of Optimising for Growth as a diagnostic tool for early venture directors. The tool can be used to understand, reflect and consider how to structure, align and develop the relationship between Founders and their boards

The Perception of Investment Analysts on the Corporate Governance of Nigerian Banks

This study is the first (to the best of this researcher's knowledge) to provide a ranking on features of good corporate governance drivers and how these features influence investment decision making. The study was conducted in a developing country (Nigeria) context with the aim to espouse more relevant empirical and theoretical underpinnings (stakeholder-agency, signaling, and social cognition theories) different from the ubiquitous agency theory Anglo/Saxon corporate governance model. In developing countries, due to the weak institutions, all stakeholders are exposed, even those with contracts. Moreover, developing countries' businesses environment has a prevalence of strong dominant individual or family shareholders presence in firms. Therefore, this study focused on external constituents and differs significantly from the internal focus (on firm performance and organizational power and politics) of prior corporate governance research, and extends the understanding of the features of good corporate governance drivers. The research adopted a mixed method approach. The quantitative models were tested using data obtained from 141 investment analysts who make investment decisions in Nigeria. The quantitative models were assessed using an ordered logit regression analysis approach. Further, the research employed the semi-structured interview technique to examine the psychological reasoning of investment analysts (27 interviews) when firms project good corporate governance drivers' features. The interviews were analyzed using a thematic analysis approach. The study provided conclusive evidences, and the findings were divided into three governance mechanisms; 1. Board structure and composition mechanism, 2. External Ownership Mechanism drivers, 3. Accountability mechanism drivers

Learning during the Transition Period: How Identifying Executives as Designate CEOs Affects their Learning

CEO succession is an important event in organizations. Around 80% of succession events are relay successions, where a CEO successor is identified a few years before the actual succession event takes place. The success of relay succession compared to horse race and outside successions has been credited to the learning that an heir apparent acquires during the transition period. However, to my knowledge, none of the CEO succession research examines the learning process of heirs apparent. This study attempts to fill this gap through empirical qualitative research. Using a combination of learning and sensemaking perspectives, this study builds premises proposing that the designation of executives as heirs apparent affects their learning processes by (1) eliciting a new identity for them, (2) triggering a potential for a future identity, (3) changing their social context, and (4) influencing their enacted environment. The research question guiding this study is: “how the designation of executives as heirs apparent affects their learning and prepares them to become CEOs”. To empirically answer this thesis research question, I use a phenomenological approach. My findings provide a rich basis for analysis and evidence to support the proposed model regarding the impact of designation on executives’ learning during transition period. This study suggests designation elicits a new identity for executives and induces changes in their environment affecting how they interpret cues and adjust their behaviours and cognition accordingly. It also suggests executives, after designation, undergo a deep thinking process to establish the standards for their future identity as CEOs

East meets west? Determinants of Chinese firms\u27 response to pressures towards international corporate governance standards

The diffusion of corporate governance standards globally has received special attention from researchers in an increasingly globalized economy. This topic is particularly significant in emerging economies as they encounter both economic pressures to adopt international governance standards and pressures to conform to local institutional resistance to change in governance. Drawing on multi-theoretical perspectives including agency theory, resource dependence theory and institutional theory, this study examines the role of CEO and board characteristics, ownership structure, prior firm performance, and firm’s selection of accounting standards and auditing firms in determining Chinese publicly listed firms’ responses to pressures to adopt international governance standards. This study finds that (1) Chinese publicly listed firms with better prior performance measured by ROA are more likely to be early adopters of international governance model; (2) in general, the antecedents of CEO and board characteristics are not significant predictors of firms’ adoption of international governance standards; (3) direct (ownership) and indirect links to Chinese government play significant roles in shaping firms’ governance standards and practice; and (4) firms’ ownership structure particularly proportion of tradable shares and presence of foreign ownership are significant predictors of firms’ corporate governance orientation, while ownership concentration is not. This research enriches the bodies of international corporate governance literature and contributes to institutional change literature by empirically testing how firms facing similar political pressure, functional pressure, and social pressure (Oliver, 1992) produce heterogeneous strategic responses in an emerging context. It also contributes practically to the development of government business policy and effective management of firm strategies in China

Non-Executive Directors and Corporate Strategy: Theory and Exploratory Empirical Insights from FTSE 350 Companies

The objective of this thesis is to provide exploratory, theoretical, and new empirical insights into Non-Executive Directors’ (NEDs) contribution to corporate strategy within London Stock Exchange’s largest 350 companies (FTSE 350), all of which have the same legal and regulatory duties. This research deploys an interpretivist philosophy, responding to four fundamental research questions, with appropriate ontological, epistemological, and axiological considerations surrounding NEDs’ corporate strategy oversight. This research uniquely applies the constructs of Institutional Theory in conjunction with Instrumental Stakeholder Theory, whilst the empirical examination of NEDs’ oversight contributions into corporate strategy capabilities is considered in terms of their constituents: ‘Shaping’, ‘Conducting’ and ‘Deciding’ appropriate strategies. The research itself employed a mixed-method, parallel-layered, theoretically informed, content and descriptive analysis, including cross-sectional financial data analysis performed during 2019-2020, targeting data covering FTSE 350 NEDs’ strategic oversight role. The theoretical and empirical research provides original and valuable insights into NED’s involvement in corporate strategy. Specifically, it produced no observable evidence of the existence of any Corporate Strategy Committees involving FTSE 350 NEDs. The explicit and implicit contributions to knowledge and policies arising from the research outcomes is the identification of a need for NEDs to show greater strategic leadership and become directly involved in a proposed Corporate Strategy Committee. This would afford the board greater strategic oversight to deliver more meaningful, measurable statements on the long-term sustainability of their company, i.e., over 5 to 10 years, within their Strategic Report. This research identifies the need for further research into theoretical and methodological issues relating to FTSE 350 NEDs’ strategic oversight role

Diversity, merit and power in the c-suite of the FTSE100

This research seeks to contribute to the boardroom diversity debate by examining gender and ethnicity in the c-suite of the FTSE 100, both theoretically and empirically. The research considers the c-suite appointment process through the lens of UK Corporate Governance Code guidance to appoint on merit. From an empirical perspective, the research has two strands. Firstly, it gathers and analyses profile data on the FTSE 100 c-suite, for both 2016 and 2017. Secondly, with reference to the guidance of the Code, it analyses corporate diversity statistics in light of corporate diversity policies provided in the annual reports. Key findings of the research include support for the theory that homosocial reproduction among the FTSE 100 c-suite is still prevalent, and disadvantages women and ethnic minorities. The findings suggest there are higher barriers to c-suite entry, particularly for women. Analysis of annual reports suggests that the majority of the FTSE100 have managerialised the meaning of diversity and most appointment policies create little to no obligation to genuinely consider diversity. The research argues that it is a mis-use of the merit concept and the distribution of power that is perpetuating the c-suite’s lack of diversity

The role of social and human capital in assessing firm value: A longitudinal study of UK firms

This study examines the role of board social and human capital in assessing the market value of firms in the UK context. As the world economy has shifted from manufacturing to service and knowledge-based economies, attributes such as knowledge, expertise, skills, ability and reputation are increasingly fundamental to the success of business enterprises. There is a growing consensus that these attributes are an increasingly valuable form of capital, asset or resource, despite their intangibility. In accounting, there are a number of problems arising from the accountability of non-physical, non-financial capital. Firstly, some forms of capital and certain assets are neither recognised nor presented in the statement of financial position. Secondly, some accounting practices relating to intangible assets are very conservative, resulting in undervalued assets and overstated liabilities. Consequently, there is an increasing gap between the book value and market value of firms. This gap restricts the relevance of information presented in financial statements and suggests that there is something missing in financial statements. This is the research problem being addressed in this study. While prior literature demonstrates that it has proven difficult to operationalise intangible forms of capital, there has been significant empirical attention and theoretical development in social and human forms. This thesis aims to contribute to accounting theory and practice by exploring the impact that board social and human capital have on firm market value. In light of extant research, it is hypothesised that social and human capital possessed at board level are positively related to the market value of firms. This study employs the Ohlson’s (1995) residual income valuation model to test the impact of social and human capital using a sample of UK firms listed on the FTSE All Share index for a period of 10 years (2001-2010). Social and human capital measures are derived from interlocking directorate ties and detailed biographic information of board directors. This study benefits from Pajek and Ucinet network packages to generate network maps and calculate positional metrics such as centrality and structural hole measures.University of Exeter Business Schoo

Hawkish or Dovish: The Effect of Female CEO Leadership on Strategic Conformity, Organizational Innovation and Strategic Change

The U.S. female labor market participation rate has significantly improved in the last 50 years (Bureau of Labor Statistics, 2007). Along with the broader female labor participation rate, the level of female representation at the executive and director-level positions has shown some improvement in the last 24 years, albeit at a much slower pace than it has been in recent years (Pew Research Center Report, 2018). For example, while the number of female Chief Executive Officers (CEOs) leading Fortune 500 companies was zero in 1995, it rose by 7.4% by 2020. Despite some improvement, a mere 7.4% increase in the last 24 years suggests that women’s representation in corporate America’s top leadership positions is still lagging. Given these trends, research has primarily focused on understanding the ‘glass ceiling’, which has been defined as the conspicuous and persistent gap in female representation in senior corporate leadership positions (Morrison, White & Van Velsor, 1987), as well as the performance consequences of female CEO appointments. Despite the important insights generated from this line of research, less is known as to whether and how female CEOs, compared to their male counterparts, systematically differ in their choices of corporate strategies. The significance of unpacking this issue lies in the fact that female CEOs, despite holding top roles, often face a dilemma between conforming to the socially sanctioned gender roles of consensus-seeking and risk-averse leadership behavior (which I term in this study as a “dovish” posture) and demonstrating counter-stereotypical, risk-taking, and aggressive behavior (which I term in this study as a “hawkish” posture). Additionally, because the organizational socialization process for female leaders is often harsher and less supportive (McDonald, Keeves, & Westphal, 2018; Eagly, Makhijani, & Klonsky, 1992) it is reasonable to expect that the decision-making process and subsequent strategic choices may differ when a firm is run by a female CEO instead of a male CEO. To address this research gap, I explore three research questions in this dissertation. First, drawing insights from stereotype threat (Hoyt & Murphy, 2016; Inzlicht & Schmader, 2012) and expectancy violation (Jussim, Coleman, & Lerch, 1987; Burgoon, 1985) theories, I explore whether and why female CEOs, compared to their male counterparts, initiate more firm-level strategic change (i.e., hawkish leader behavior). Additionally, to better understand the complex boundary conditions and contingencies that shape this relationship, I examine various executive, organizational, and industry-level moderators. Second, using the hawkish leader behavior perspective, I also explore whether and under what conditions female CEOs, compared to their male counterparts, pursue organizational innovation. Finally, using the tenets of socialization theory, I investigate whether and under what conditions firms led by female CEOs, compared to their male counterparts, engage in strategic conformity (a lack of deviation from an industry’s central norms) in line with my dovish leader behavior predictions. I empirically examine these relationships using data from U.S.-based publicly traded corporations listed in the Standard & Poor’s 1500 (S&P 1500) index. The findings suggest that female CEOs, compared to their male counterparts, engage in more strategic change and less strategic conformity. Further, the relationship between female CEOs and strategic change is negatively moderated by past firm performance whereby female CEOs engage in less strategic change following strong firm performance. Additionally, the findings suggest that compared to their male counterparts, female CEOs engage in more organizational innovation (as measured in new product introductions or NPIs). Upon a closer examination of the conditions surrounding this relationship, the findings show that female CEOs launch more NPIs when there is a higher proportion of female directors on the board. Similarly, I found that the condition that affects the relationship between female CEOs and NPIs is the nature of predecessor CEO exit (i.e., voluntary vs. dismissal departure). In particular, the findings indicate that female CEO-led firms launch more NPIs when the predecessor CEO was dismissed. Furthermore, the results of a supplemental analysis reveal that female CEOs engage in more strategic change (and less strategic conformity) when they are in their later stages of tenure. In addition, female CEOs engage in less strategic change (and more strategic conformity) when the board is composed of more independent directors. Overall, the findings in this study make a number of contributions to both research and practice. In particular, this study contributes to research on the organizational consequences of female corporate leaders by investigating whether the strategic choices of female CEOs differ significantly from their male counterparts. Further, the findings advance research in this area by specifically examining the organizational and environmental contingencies that shape female CEOs’ gender role expectations as they pertain to the choice of corporate strategies. Regardless of whether female CEOs respond to socially sanctioned gender roles in the form of conforming (i.e., dovish posture) or violating expectations (i.e., hawkish posture), their strategic choices have important implications for corporate outcomes. Thus, understanding the risk-taking (or risk-averse) behaviors of female CEOs is very important for ensuring robust corporate governance and subsequently, firm performance. Finally, the findings also provide practical insights regarding female CEOs’ risk-taking behaviors in the context of their strategic choices (such as pursuing strategic change and organizational innovation). These insights are expected to help boards of directors improve the effectiveness of their oversight and advice roles, including CEO succession decisions

Risk Governance: Examining its Impact Upon Bank Performance and Risk

This study examines the emergence of risk governance arrangements in US bank holding companies (BHCs) and tests for their impact upon performance and risk profiles. Following the financial crisis, regulators introduced several new risk governance processes, including the adoption of Risk Appetite arrangements and the establishment of Risk Committees, both board level features. In this study, a research gap is unearthed with respect to risk governance practices and their impact upon BHC performance and risk measures. The motivation of this research is to validate the adoption of these board-level practices in an evidence-based framework. The empirical research method relies on the collection of a unique data set. The sample covers a significant dollar-weighted portion of the US banking system. Multivariate analysis facilitates the testing of risk governance mechanisms to outcome variables, while controlling for firm-specific and standard corporate governance variables. The practical implication of this study with respect to Risk Appetite is clear. BHCs that practice Risk Appetite arrangements exhibit improved performance and lower realised loan losses. In contrast, while some limited evidence is presented that the marketplace may reward BHCs for certain composition aspects of the Risk Committee, the overall results suggest that the requirement for a Risk Committee has little impact to BHC’s operating performance and risk measures. In terms of academic contribution, this study examines two major risk governance mechanisms within a common framework, presenting evidence of a significant and positive impact of the board level articulation of Risk Appetite arrangements to a suite of BHC performance measures and a negative association to loan losses. As the first known empirical research study of Risk Appetite, it confirms that this board level mechanism should be included as an explanatory variable in bank or risk governance related empirical research studies. These findings provide industry practitioners (including BHC chief executive officers and board members) convincing arguments for the immediate adoption of Risk Appetite arrangements. US Regulators, who introduced Risk Appetite requirements in 2014 for larger BHCs, are presented with validation by this study for wider adoption of this risk governance mechanism, even if such practices are voluntarily adopted by BHCs. As signs begin to emerge in the United States of the possible relaxation of the regulatory requirements of certain aspects of the Dodd-Frank Act, this study contributes to this debate in a timely fashion by testing the veracity of two key supervisory-driven risk governance practices aimed at the boardroom in an evidence-based evaluation