Journal of Business Venturing
Bill Schulze, Jeroen Neckebrouck
Department of Entrepreneurship & Strategy
Abstract
Despite the ubiquity of private firms, questions concerning the influence of owner-management and board oversight on strategic decision-making in private firms have received limited attention. Using longitudinal data from 27,704 U.K. and 7,272 Belgian private firms, we find that private firms with high and low levels of board oversight follow different decision-making logics. Consistent with the behavioral theory of the firm, we find those with high levels of oversight engage in coalition-based adaptation, whereas those with low oversight behave like risk-averse, undiversified investors. We conclude that in private firms, boards play a critical role by promoting collective goals (as identified and enacted by the board) and limiting the influence of owner manager’s personal goals, risk-preferences, and individual economic interests on strategic decision-making.
