Board members' contribution to strategic decision-making in small firms

This article explores how the boards of small firms actually undertake to perform strategic tasks. Board strategic involvement has seldom been investigated in the context of small firms. We seek to make a contribution by investigating antecedents of board strategic involvement. The antecedents are “board working style” and “board quality attributes”, which go beyond the board composition features of board size, CEO duality, the ratio of non-executive to executive directors and ownership. Hypotheses were tested on a sample of 497 Norwegian firms (from 5 to 30 employees). Our results show that board working style and board quality attributes rather than board composition features enhance board strategic involvement. Moreover, board quality attributes outperform board working style in fostering board strategic involvemen

Reassessing the link between risk aversion and entrepreneurial intention: The mediating role of the determinants of planned behavior

Purpose: Entrepreneurial intention is regarded as a useful and practical approach to understanding actual entrepreneurial behavior. Planned behavior has been widely applied to examine entrepreneurial intention. Nevertheless, how risk aversion affects entrepreneurial intention using the model of planned behavior is not well understood. The purpose of this paper is to develop an integrated model based on planned behavior to examine the direct and indirect effect of risk aversion on entrepreneurial intention concurrently. Design/methodology/approach: The paper first uses factor analysis to study the latent constructs underlying determinants of planned behavior, risk aversion, and entrepreneurial intention. Then, it applies the technique of structural equation modeling to explore relationships among latent constructs. There are 306 survey responses collected from dental school students to run the analysis. Findings: The determinants of planned behavior are positively associated with entrepreneurial intention. There is no direct relationship between risk aversion and entrepreneurial intention. Risk aversion only indirectly reduces entrepreneurial intention through determinants of planned behavior. Research limitations/implications: The results of the integrated model may be constrained by the sample context of dental students. Replicating the model by using other samples with various educational backgrounds can strengthen the implication of the study. Another limitation is the weakness of the cross-sectional study design, leaving room for improvement by using longitudinal data in the future. Practical implications: Risk aversion only indirectly reduces entrepreneurial intention. To establish an environment with a strong entrepreneurial intention, a focus on developing a positive attitude and strengthening entrepreneurial skills are perhaps more fruitful than lowering risk aversion. This study also suggests that non-business students may need additional business education to improve the perception of self-efficacy. Originality/value: The integrated model of this paper is original. The development of the model draws support from planned behavior adjusted to the context of starting a business

The impact of family CEO’s ownership and the moderating effect of the second largest owner in private family firms

This study explores two ownership issues in private family firms. First, we investigate the relationship between the ownership of family CEOs and firm performance, and postulate that this relationship in private family firms is more complex than the inverted “U” relationship found in public family firms. Second, we predict a potential moderating effect of the second largest owner, who may exert a monitoring role on family CEOs. We focus on private family firms as recent studies show that private family firms have distinct features compared to public family firms, and that findings documented in public family firms may not apply to the ubiquitous, but much less studied, private family firms. We have applied agency theory to develop the two hypotheses, used secondary data on a large sample of private family firms, utilized an adjusted conventional quadratic technique to test the hypotheses, and validated the findings using a second method of piecewise linear specification. The results show that the non-linear relationship between the ownership of family CEOs and firm performance is more complicated than the often-documented inverted “U” shape from public firms. Meanwhile, the second largest owner with a high enough ownership stake can impose a positive moderating effect by mitigating potential agency problems caused by family CEOs

Transactional distance revisited: Bridging face and empirical validity

Implementation of e-learning, whether in academic institutions or in the corporate world, is fast growing. While there has been a plethora of research in the field of e-learning, most empirical results remain inconsistent. One problem with such inconsistencies is the lack of clear takeaways that can guide practitioners on the best practices of e-learning. In this paper, we propose an overarching theoretical framework based on Moore\u27s transactional distance theory to examine e-learning. While this theory has existed for some time and has face validity, it has not received empirical support. We re-examine the core tenets of the theory, and test them in a manner that is ontologically consistent with the focus of the theory on learners\u27 perceptions, thereby bridging the gap between the theory\u27s face and empirical validity. We find strong support for the influence of transactional distance factors on our outcome of interest, i.e. individuals\u27 intentions to return for another e-learning experience. Our results help us arrive at contributions to research and practice, which include suggestions to enhance the success of e-learning initiatives. © 2012 Elsevier Ltd. All rights reserved

How board gender and knowledge-based diversity influence firm process innovation

The paper aims to concurrently examine effects of knowledge-based diversity and gender diversity on firm process innovation. It also investigates board chairpersons' gender effect on these relationships using the categorization–elaboration model (CEM). The paper benefits from the survey method and applies structural equation modeling (SEM) to examine responses of 462 CEOs of publicly listed firms and private firms. We find that knowledge-based diversity has a more substantial impact on process innovation than gender diversity. Meanwhile, it is more likely for female board chairpersons to utilize gender diversity to improve firm process innovation. For male chairpersons, they are more likely to use knowledge-based diversity to improve process innovation. The finding suggests that social categorization processes based on gender matter to some extent. Practitioners should pay particular attention to the skills and quality makeup of boards while being cognizant of the varied support to gender diversity between female and male chairpersons

Job-related diversity: the comprehensiveness and speed of board decision-making processes—an upper echelons approach

Strategic decision-making processes influence firm-level outcomes. Using the theory of upper echelons, this study investigates how diversity in directors’ skills, knowledge, and industry experience influence board decision-making processes that may impact overall strategic decision-making processes. Such diversity has been commonly accepted to be a ‘double-edged sword’—enhancing comprehensiveness but hindering the speed of decision-making. On the contrary, we used an existing large survey database to show that directors’ diverse educational background, functional background, and industry experience (job-related diversity) have a positive effect on comprehensiveness as well as the speed of board decision-making. In addition, our results indicate that board processes (directors’ use of their knowledge and skills) play an important role by transmitting the positive effects of diversity. The study is in a tradition of exploring how boards may influence firms’ strategic decision-making processes. Our findings provide additional arguments for adding job-related diversity to boards of directors

Understanding board-ceo power dependency perspective under symbolic management

Purpose – The purpose of this paper is to better understand dependency issues between the CEO and the board as well as the between the board and CEO through Emerson’s power dependency framework. Design/methodology/approach – A symbolic management approach is integrated with a board-CEO power dependency model to study the dependency issues. Findings – According to the symbolic management perspective, uncertainty increases the likelihood of symbolic actions. A high level of uncertainty in CEO dependency issues suggests a high likelihood that board power over the CEO is manifested on a symbolic level, whereas a low level of uncertainty in board dependency issues suggests otherwise for CEO power over the board. The core of board-dependency issues is information provision. Practical implications – A focus on improving board control over CEO performance, compensation and strategic proposals is likely to generate symbolic actions without an effective result. Originality/value – The paper advocates that an effective approach to enhance board power is through reducing board information dependency on the CEO