Do private family SMEs really need an empowered board?

Abstract

This article examines the antecedents of board empowerment, based on a multitheoretic approach. By performing an in-depth case study of a private family SME, we suggest that the appropriateness of agency versus resource dependence theory in predicting board effectiveness depends on an interaction between contingencies, perceived governance needs, institutional forces and CEO influence. We also suggest that the direct link that is often made between contingencies and board empowerment, is mediated by the governance needs the firm perceives. This suggestion could explain why some results in current research about the direct links between certain contingencies and board empowerment seem contradictory or illogical.