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“Outside” directors in SME boards: a call for theoretical reflections

På svenska

Author

  • Jonas Gabrielsson
  • Morten Huse

Summary, in English

Good governance for SMEs is critical for economic development and growth in both developed and developing economies. In this paper we focus on boards and governance in small and medium sized enterprises (SMEs) by investigating the role and contribution of “outside” directors in this setting. By contrasting board role theories against different types of SMEs, firms are expected to recruit “outside” board members for various reasons. Illustrated by 53 empirical studies of “outside” directors in SMEs we show how agency theory, resource based view of the firm, and resource dependence theory can be applied to understand the multiple roles of “outside” directors in family firms, venture capital-backed firms and other SMEs. The illustration shows that the concept “outside” director is not the same in different theories and in different empirical settings. Based on this finding, we argue for the need to have a conscious and balanced use of theories when understanding the role and contribution of “outside” directors in SMEs.

Department/s

Publishing year

2005

Language

English

Pages

28-37

Publication/Series

Corporate Board: Roles, Duties & Composition

Volume

1

Issue

1

Document type

Journal article

Publisher

Virtus Interpress

Topic

  • Social Sciences Interdisciplinary

Keywords

  • family firms
  • outside directors
  • Boards of directors
  • SMEs
  • venture capital

Status

Published