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NASCENT GOVERNANCE: THE IMPACT OF ENTREPRENEURIAL FINANCE ON BOARD FORMATION AND ROLES

Christophe Bonnet (), Peter Wirtz and Martine Séville ()
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Christophe Bonnet: GDF - Gestion, Droit et Finance - EESC-GEM Grenoble Ecole de Management
Martine Séville: COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne

Grenoble Ecole de Management (Post-Print) from HAL

Abstract: This research is an attempt to make progress in the understanding of the process of board formation and its impact on the functions performed by the board in young entrepreneurial ventures. We study the link between board members' characteristics and the effective accomplishment of monitoring and resource provision functions. Expanding earlier research we argue that the identity of external financiers matters in configuring the board and designing its working mode and roles. This is because different investors (1) may be endowed with different skills and knowledge, and (2) their social identities influence the motivation to accomplish different roles. We present a conceptual framework of the process of board formation in entrepreneurial firms and confront it with an in-depth longitudinal case study of a young venture that has received funding from business angels and venture capitalists. We show that board composition and routines are co-constructed by different (but not all) salient stakeholders who were involved in the first input of external capital. The intended and actual role of the board members depends on their specific capabilities and financial stakes and on processes of social identification. The observation of evolving board routines shows that certain members participate in two parallel processes of interaction with the entrepreneurs. Formal board meetings essentially serve the purpose of regular monitoring, whereas certain board members contribute to resource provision in parallel informal interactions, when they strongly identify themselves with entrepreneurs.

Keywords: Nascent governance; board of directors; entrepreneurial finance; social identification (search for similar items in EconPapers)
Date: 2013-06-05
New Economics Papers: this item is included in nep-cwa, nep-ent, nep-ppm and nep-sbm
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Published in BCERC 2013 (2013 Babson College Entrepreneurship Research Conference), Jun 2013, Lyon, France

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Working Paper: NASCENT GOVERNANCE: THE IMPACT OF ENTREPRENEURIAL FINANCE ON BOARD FORMATION AND ROLES (2013) Downloads
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