Transcript Document
Inside perspectives of Board of Directors in SME Family Businesses Rebecca Fakoussa (SBRC, Kingston Business School) Context and aims • Board of Directors, ‘fountain of power’ (Sundaramurthy&Lewis 2003) are the highest point of a company and the strategic leadership of the company (Institute of Directors, 2011). • Roles of the Board include define, review and articulate the vision, mission and core values of the organisation. • 65% of all businesses are family businesses in the UK. Guiding research question: How effective is the Board of Directors, as a unit, in a family business in the decision making process? - Define the legal roles of Directors - Examine Directors role on individual Board - Discover underlying dynamics on Boards - Create a family business Board model Analysis and Discussion Different Board Lenses Agency Theory Stewardship Theory Resource Dependence Theory Types of Boards Stakeholder Theory -controlling agent (i.e. manager) acts on behalf of the principal (i.e. shareholder) -separation between ownership and -Board’s main function is control of management in order to protect ownership interest - management and Board goals aligned - to improve of company performance - Board is mainly made up of insiders, and its primary role is to define the organisational strategy -importance of controlling critical environmental resources -control company resources through social and professional networks including strategic ‘interlocking Directorates’ - importance of consensus among all stakeholders regarding organisation activity. - resolve conflicting interests among stakeholders - achieve climate of cooperation between all parties involved for the success of the company Different Family Board Models Phantom Rubber Stamp Minimal Review Never knows what to do, if anything; no degree of involvement Permits officers to make all decisions. It votes as the officers recommend on action issues. . Formally reviews selected issues that officers bring to its attention. Key areas: Diversity: gender, non-family member and non-executives Conflict of interests: Ownership, management, family and individual Implications • Case Study • (Yin, 1993) • Examining each Board Qualitative, semi structured interviews • Interviewing the Board of Directors • executives, non-executives Takes the leading role in establishing and modifying the mission, objectives, strategy, and policies. It has a very active strategy committee. Mumford et al (2006), Benne and Sheats (1948), Bales (1950), Belbin (1993), Ancona and Caldwell (1992), McCann and Margerison (1995), Barry (1991), DuBrin (1995), Parker (1996) • Narrative enquiry • Connelly and Clandinin (2006) Catalyst Different Role Theories Implications and Impact exploring the story Active Participation Approves, questions, and makes final decisions on mission, strategy, policies and objectives. Performs fiscal and management audits Poutziouris et al., ( 2006) Methods • Nominal Participation Involved to a degree in the performance or review of selected key decisions, indicators, or programs of management. Deeper understanding of the ‘black box’ boardroom dynamics, influences Directors and their decision making process Impact Improved best practice models, better training and awareness for Directors, practitioners and policy makers, and potentially ultimate improvement for the bottom line through in-depth understanding of Board processes. • family members, non-family members FACULTY OF BUSINESS AND LAW