Original Research

Boards of directors in SMEs: An empirical evidence of board task performance

T. Iturralde, A. Maseda, B. Arosa, R. García-Ramos
South African Journal of Business Management | Vol 47, No 4 | a74 | DOI: https://doi.org/10.4102/sajbm.v47i4.74 | © 2018 T. Iturralde, A. Maseda, B. Arosa, R. García-Ramos | This work is licensed under CC Attribution 4.0
Submitted: 23 March 2018 | Published: 30 December 2016

About the author(s)

T. Iturralde, Departamento de Economía Financiera II, University of the Basque Country, Spain
A. Maseda, Departamento de Economía Financiera II, University of the Basque Country, Spain
B. Arosa, Departamento de Economía Financiera II, University of the Basque Country, Spain
R. García-Ramos, University of Cantabria, Spain

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Abstract

This paper seeks to provide a better understanding of what makes boards effective. We analyse the relationships between board demography and company performance and between working structures and board tasks in small and medium-sized enterprises (SMEs). We test our hypotheses on a sample of 307 Spanish SMEs. The main empirical result is the negative impact that the proportion of outside directors and the board size have on firm performance. We also find a negative impact of outsiders’ presence and a positive impact of director tenure on the board’s service role. Our analysis of the role of board control highlights the negative relationship between this variable and CEO tenure.


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