Structures and Behaviour: a Cross-Country Comparison of Boards of Directors in SMEs.

Abstract

Prior cross-country governance studies mainly built on agency theory’s governance model. Recently, the use of this theoretical perspective has been criticized from both institutional theory as well as the behavioural perspective. Institutional theory would predict that a significant part of the variation in board behaviour could be attributed to the institutional context of a country. In contrast, the behavioural perspective follows the reasoning that board behaviour is expected to be determined by firm-specific challenges and needs rather than the broader institutional context and hence, predicts that the institutional context of a country does not explain variation in actual board behaviour. The aim of this study is to examine the empirical validity of these opposing predictions about board behaviour. Using a database of SMEs of three countries with a different governance system (Belgium, the Netherlands and Norway), our statistical analyses mainly support the predictions of the behavioural perspective.