Does Board Behaviour Matter for Board Effectiveness in Small and Medium Industries (SMEs)?: A Preliminary Observation

Nazir Adi; Wan Fauziah Wan Yusoff; Arifha Mohamad

doi:10.47405/mjssh.v7i2.1276

Nazir Adi Department of Business Management, Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia (UTHM), 86400, Batu Pahat, Johor, Malaysia.
Wan Fauziah Wan Yusoff Department of Business Management, Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia (UTHM), 86400, Batu Pahat, Johor, Malaysia.
Arifha Mohamad Department of Business Management, Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia (UTHM), 86400, Batu Pahat, Johor, Malaysia.

DOI: https://doi.org/10.47405/mjssh.v7i2.1276

Keywords: Corporate governance, Board behaviour, Small and medium-sized enterprises

Abstract

The issue of corporate governance affects big corporations and small businesses. Maintaining a well-functioning board of directors in small and medium-sized enterprises (SMEs) is one of the most effective ways of increasing the efficacy of the board. This article examines previous studies on board behaviour that are critical to the effectiveness of boards of directors in small and medium-sized enterprises (SMEs). Previous literature found several attributes of directors that need to be nurtured. Having a different view relating to the task in a boardroom, preparedness, involvement, use of specific knowledge and skills are among them. In short, more empirical studies relating to these antecedents are recommended to understand board behaviour better, especially when making a decision.

Downloads

Download data is not yet available.

References

Amason, A. C. (1996). Distinguishing the Effects of Functional and Dysfunctional Conflict on Strategic Decision Making : Resolving a Paradox for Top Management Teams. The Academy of Management Journal, 39(1), 123–148. https://doi.org/10.2307/256633

Babic, V. M., Nikolic, J. D., & Eric, J. M. (2011). Rethinking board role performance: Towards an integrative model. Economic Annals, 56(190), 140–162. https://doi.org/10.2298/EKA1190140B

Barroso-Castro, C., Villegas-Periñan, M. M., & Dominguez, M. (2017). Board members’ contribution to strategy: The mediating role of board internal processes. European Research on Management and Business Economics, 23(2), 82–89. https://doi.org/10.1016/j.iedeen.2017.01.002

Bradley, B. H., Anderson, H. J., Baur, J. E., & Klotz, A. C. (2015). When conflict helps: Integrating evidence for beneficial conflict in groups and teams under three perspectives. Group Dynamics: Theory, Research, and Practice, 19(4), 243–272. https://doi.org/10.1037/gdn0000033

Companies Commission of Malaysia Annual Report (2019)., https://www.ssm.com.my/bm/Pages/Publication/Annual_Report/Annual-Report.aspx

De Dreu, C. K. W., & Weingart, L. R. (2003). Task versus relationship conflict, team performance, and team member satisfaction: A meta-analysis. Journal of Applied Psychology, 88(4), 741–749. https://doi.org/10.1037/0021-9010.88.4.741

de Wit, F. R. C., Greer, L. L., & Jehn, K. A. (2012). The paradox of intragroup conflict: A meta-analysis. Journal of Applied Psychology, 97(2), 360–390. https://doi.org/10.1037/a0024844

Ees, H. Van, Gabrielsson, J., & Huse, M. (2009). Toward a Behavioral Theory of Boards and Corporate Governance STUDY OF BOARDS AND CORPORATE. Corporate Governance: An International Review, 17(3), 307–319. https://doi.org/10.1111/j.1467-8683.2009.00741.x

Eisenhardt, K. M., Kahwajy, J. L., & Bourgeois, L. J. (1997). How Management Teams Can Have a Good Fight How Management Teams Can Have a Good Fight. Harvard Business Review, 75(4), 77–86.

Ensley, M. D., Pearson, A. W., & Amason, A. C. (2002). Understanding the dynamics of new venture top management teams: Cohesion, conflict, and new venture performance. Journal of Business Venturing, 17(4), 365–386. https://doi.org/10.1016/S0883-9026(00)00065-3

Forbes, D. P., & Milliken, F. J. . (1999). Cognition and Corporate Governane ; Understanding Boards Directors As Strategic Decision-Making Group. Academic of Management Review, 24(3), 489–505.

Heemskerk, E. M., Heemskerk, K., & Wats, M. M. (2017). Conflict in the boardroom: a participant observation study of supervisory board dynamics. Journal of Management and Governance, 21(1), 233–263. https://doi.org/10.1007/s10997-015-9339-8

Huse, M. (2005). Accountability and creating accountability: A framework for exploring behavioural perspectives of corporate governance. British Journal of Management, 16(SPEC. ISS.). https://doi.org/10.1111/j.1467-8551.2005.00448.x

Jansen, P., & Raita, G. V. (2021). Macro-Level Determinants of Board Effectiveness in UK and Romanian Listed Companies: A Conceptual Approach. CECCAR Business Review, 2(10), 60–72. https://doi.org/10.37945/cbr.2021.10.08

Jaskyte, K. (2018). Board Attributes and Processes, Board Effectiveness, and Organizational Innovation: Evidence from Nonprofit Organizations. Voluntas, 1–14. https://doi.org/10.1007/s11266-017-9945-y

Kerwin, S., Doherty, A., & Harman, A. (2011). “It’s Not Conflict, It’s Differences of Opinion.” Small Group Research, 42(5), 562–594. https://doi.org/10.1177/1046496411398395

Machold, S., Huse, M., Minichilli, A., & Nordqvist, M. (2011). Board leadership and strategy involvement in small firms: A team production approach. Corporate Governance, 19(4), 368–383. https://doi.org/10.1111/j.1467-8683.2011.00852.x

Maharaj, R. (2009). Corporate governance decision-making model: How to nominate skilled board members, by addressing the formal and informal systems. International Journal of Disclosure and Governance, 6(2), 106–126. https://doi.org/10.1057/jdg.2008.27

Mallin, C. A. (2013). Corporate Governance (4th edition, Vol. 1). Oxford University Press. https://doi.org/10.1017/CBO9781107415324.004

McGrath, R. G., & MacMillan, I. C. (1995). Defining and Developing Competence: A Strategic Process Paradigm. Strategic Managemenet Journal, 16(July 1994), 251–275.

Minichilli, A., & Hansen, C. (2007). The board advisory tasks in small firms and the event of crises. Journal of Management and Governance, 11(1), 5–22. https://doi.org/10.1007/s10997-007-9014-9

O’Neill, T. A., Allen, N. J., & Hastings, S. E. (2013). Examining the “Pros” and “Cons” of Team Conflict: A Team-Level Meta-Analysis of Task, Relationship, and Process Conflict. Human Performance, 26(3), 236–260. https://doi.org/10.1080/08959285.2013.795573

Obgbechie, C. I. (2012). Key Determinants of Effective Boards of Directors - Evidence From Nigeria (Issue September). Brunel University.

Roy, M. J. (2009). Linking board types to key board roles. International Journal of Business Governance and Ethics, 4(3), 298. https://doi.org/10.1504/IJBGE.2009.023334

van Ees, H., van der Laan, G., & Postma, T. J. B. M. (2008). Effective board behavior in The Netherlands. European Management Journal, 26(2), 84–93. https://doi.org/10.1016/j.emj.2008.01.002

Wageman, R. (1995). Interdependence and Group Effectiveness. Administrative Science Quarterly, 40(1), 145–180. https://doi.org/10.2307/2393703

Wan, D., & Ong, C. H. (2005). Board structure, process and performance: Evidence from publiclisted companies in Singapore. Corporate Governance, 13(2), 277–290. https://doi.org/10.1111/j.1467-8683.2005.00422.x

Wirtz, P. (2011). The cognitive dimension of corporate governance in fast growing entrepreneurial firms. European Management Journal, 29(6), 431–447. https://doi.org/10.1016/j.emj.2011.06.004

Zattoni, A., Gnan, L., & Huse, M. (2012). Does Family Involvement Influence Firm Performance? Exploring the Mediating Effects of Board Processes and Tasks. Journal of Management, 41(4), 1214–1243. https://doi.org/10.1177/0149206312463936

Zona, F., & Zattoni, A. (2007). Beyond the black box of demography: Board processes and task effectiveness within Italian firms. Corporate Governance, 15(5), 852–864. https://doi.org/10.1111/j.1467-8683.2007.00606.x