Frontiers of Entrepreneurship Research
1997 Edition

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WHAT DO NEW VENTURE BOARDS DO?

Harry J. Sapienza, University of South Carolina
M. Audrey Korsgaard, University of South Carolina
Jeff Hoogendam, Intersouth Partners


INTRODUCTION
ILLUSTRATIVE INTERVIEWS
MODEL DEVELOPMENT

Agency Theory and Board Processes
Procedural Justice Theory and Board Processes
The Focus of Board Discussion
The Strength of Controversies
The Mode of Decision Making

CONCLUSION
REFERENCES

ABSTRACT

This paper builds a model of board interactions in the boards of directors of private, higher potential ventures whose boards consist of inside entrepreneurial managers and outside investors. We integrate agency theory and procedural justice perspectives to develop propositions regarding the focus of board meetings, the nature and strength of controversies, and the manner in which major decisions are made; data from 14 semi-structured interviews are used to illustrate our propositions. Our model suggests that creating desirable board outcomes such as quality decisions, timely decision making, and commitment and cooperation among board members requires the management of both board structure and board processes. We conclude with a discussion of our model and our empirical observations and their implications for research and practice.

 

 

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