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The board advisory tasks in small firms and the event of crises

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Abstract

In this article we examine what affects the board of directors’ involvement in the advice to management, with emphasis on the influence of crises on the board advisory tasks performance. Based on a survey of 881 small Norwegian firms, we analyse responses from CEOs in order to determine whether and to what extent the board is actively involved in the governance process during crises through providing advice. The study has two major contributions to board research in general and research of into small firms in particular. The first is the go beyond the “usual suspects” of board size, CEO duality, and board independence when looking for determinants of board involvement in advice. The second contribution is a clearer understanding of board involvement during crises. Our results show that board member diversity becomes particularly important during crises, since this provides the CEO and firm access to a more diverse pool of competences and experiences. We also find that crises moderate the effects of incentive on the board’s involvement in advice. This evidence sheds new light on the determinants of directors’ involvement in board tasks, suggesting that directors’ incentive to perform certain board tasks vary according to the contingent situation the firm is experiencing.

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Authors and Affiliations

  1. Strategic Management Department, Bocconi University, Viale Isonzo, 23, 20135, Milan, Italy

    Alessandro Minichilli

  2. Department of Innovation and Economic Organization, Norwegian School of Management BI, Oslo, Norway

    Cathrine Hansen

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  1. Alessandro Minichilli
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  2. Cathrine Hansen
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Correspondence to Alessandro Minichilli.

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Minichilli, A., Hansen, C. The board advisory tasks in small firms and the event of crises. J Manage Governance 11, 5–22 (2007). https://doi.org/10.1007/s10997-007-9014-9

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  • DOI: https://doi.org/10.1007/s10997-007-9014-9

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