Abstract
Academic research in the fields of corporate governance and entrepreneurship has grown considerably in the past decades, and linking both fields has become popular in recent years (Audretsch and Lehmann, 2014). The Handbook of Research on Corporate Governance and Entrepreneurship, edited by Jonas Gabrielsson, contributes to this promising field by providing a useful overview of outstanding issues that broadens our knowledge on corporate governance in entrepreneurial firms, from both a quantitative and a qualitative perspective. The book is divided into five parts, corresponding to an entrepreneurial firm’s life cycle, where each part is dedicated to specific corporate governance issues.
The first part of the book starts with an introduction and addresses general issues in corporate governance and entrepreneurship. While the field is rather new and unexplored, this part sketches the topic of the handbook, summarising and categorising the literature and clearly demonstrating the origins and evolvement of this field. It is the ability of the editor to provide such a focused and concise introduction (chapter 1) which makes this handbook a valuable guideline for academic research. The second chapter, co-authored with Morten Huse, renowned worldwide for his fruitful insights into board composition in small and medium-sized enterprises (SMEs) and entrepreneurial firms, also adds great value to this work. Entrepreneurship is a multidisciplinary field with theoretical roots ranging from microeconomic theory, to business and management, to sociology and psychology. It is indispensable to introduce the strengths of different theories and how and why they may differ or not. Chapter 2 provides just such a state-of-the-art overview, which serves as a helpful guideline and workhorse for the rest of the volume.
The second part of the handbook focuses on corporate governance issues in start-ups and early-stage ventures. The chapters analyse the roles and key tasks performed by advisory boards in start-ups and growth-oriented companies from the perspective of the contemporary corporate governance literature (chapter 3), introduce an input–mediator–output model to analyse and substantiate the effects of various structural arrangements of the organisation of top management teams (TMT) in high-tech ventures (chapter 4), provide an extensive survey of the literature on board composition in high-tech start-ups and present an agenda for future avenues of research (chapter 5), take a closer look at TMT and the impact of outside directors on innovation (chapter 6) and finally focus on private equity investors in governing entrepreneurial companies (chapter 7).
The third part of the handbook is dedicated to specific corporate governance issues in SMEs. Chapter 8 focuses on governance practices in small and privately held firms located in the Rhine Valley Region. The influence of families in controlling and managing SMEs is introduced in chapter 9. The role of the boards’ chairperson within the process of innovation in SMEs is highlighted in chapter 10.
Part 4 focuses on corporate governance issues in fast-growing firms and initial public offerings (IPOs). Chapter 11 introduces a new conceptual framework, the ‘Engagement Theory of Governance’, encompassing relevant stakeholders in the governance process. The role of the founder-chief CEO on short- and long-term performance for a sample of French IPOs is analysed in Chapter 12. Chapter 13 compares differences in the quality of financial reporting between Gazelles and Non-Gazelles in Sweden.
The fifth part of the handbook is dedicated to corporate entrepreneurship. Chapter 14 explores the intertwinement between the two academic disciplines of governance and entrepreneurship and highlights how corporate entrepreneurship can be triggered by different governance mechanisms. Corporate entrepreneurship, the strategy of large and established firms to behave like entrepreneurial firms, is described by three Nokia cases in Chapter 15.
The handbook effectively offers and illustrates some of the main issues in the emerging field of corporate governance and entrepreneurship, and in each chapter the highly scientific and qualitative nature of the topic becomes clear. It encompasses a variety of essays, ranging from conceptual frameworks, to literature reviews, to explorative studies and original empirical studies. However, this heterogeneity comes with its costs. While the plethora of conceptual frameworks are well written, the reader may wish for a deeper discussion and reflection of the main concepts of corporate governance (see Shleifer and Vishny, 1997; Tirole, 2006). Corporate governance is about the protection of relevant interests. Here, the fundamental question to be answered is, ‘Which interests are the most relevant and how and why should they be protected (Zingales, 1998)?’ The reader of the handbook may thus find it helpful to have some definitions about corporate governance and how and why the concepts differ between entrepreneurial and established firms. A theoretically and empirically fruitful literature has been established, analysing and identifying different corporate governance mechanisms at work, such as market mechanisms, hierarchical and contractual mechanisms, and large debt and equity holders (venture capital (VC)), and whether these mechanisms are complementary or substitutes. As for now, identifying the causality and interrelation of the corporate governance mechanisms in general and in entrepreneurial firms remains a central challenge of this promising field of research.
To conclude, the interdisciplinary nature of this book has the effect of introducing readers from the fields of entrepreneurship, sociology and management to ways of thinking about the interaction of corporate governance and entrepreneurship. In addition, the handbook summarises and illustrates some of the research topics and the challenges faced by this field. Therefore, I would highly recommend this handbook to any reader who is interested in this field, either researchers who plan to work within this field or practitioners engaged in governance issues of SMEs.