Corporate Boards in Start-Up Companies. From Monitoring to Mentoring with Expert Board Members
Ilkka Gramén and
A chapter in 7th International OFEL Conference on Governance, Management and Entrepreneurship: Embracing Diversity in Organisations. April 5th - 6th, 2019, Dubrovnik, Croatia, 2019, pp 11-26 from Governance Research and Development Centre (CIRU), Zagreb
Corporate boards in small and medium-sized companies are a neglected resource. Corporate boards could be used much more to gain access to external resources that are typically inadequately utilized at the initial stage of a company. Customarily, board members are nominated by specific external stakeholders to monitor a company, and as a result, the competences of the board members are not a point of focus during the selection process. It is well established that having complementary competences in the corporate board enhances the success of a company. This possibility will be impeded if the members are selected only with a monitoring aim in mind. In this a multi-case study, six start-up companies are investigated in depth. Each of these companies contains at least one ‘expert board member'. We have coined the term ‘expert board member' to refer to an individual who does not work in the company and who has not been selected to the company's board to represent the interests of a specific external stakeholder or a specific stakeholder group, but rather because of the expertise that the individual possesses. The objective of the study is to increase understanding of the added value that an expert board member can bring to a start-up company. Traditionally, the central role of a board member is monitoring, whereas the essential role of an expert board member is mentoring. Expert members help the start-up gain access to external resources via their social networks. Expert board members can considerably shorten the time that the start-up company needs in order to reach the stage of a sustainable business. Carefully chosen expert board members offer knowledge and objectivity that the company would not get otherwise. They bring sound judgement into the board room. Expert board members are important in building the credibility of a company in the eyes of external stakeholders. The corporate board is a social, collective structure where decisions are made to serve the company in order to secure the survival and success of the company in the long run. Expert board members who are independent of any specific stakeholder or any specific stakeholder group well serve this aim.
Keywords: corporate board; expert board member; governance; shareholder; start-up (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ofel19:196070
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