Insiders vs Outsiders: Director Relationships in Small, Entrepreneurial Companies

Abstract

The paper provides an analysis of the role of 'outside' or non-executive directors and their relationship with Chief Executive officers (CEOs) and entrepreneurs in small growth companies. In a European context, literature on the role of outsiders in the Board of Directors is beginning to emerge through recent studies into relationships between insiders and outsiders on Boards, especially on the importance of trust in relationships and on Board members' roles. In the USA, partly due to the more advanced nature of the venture capital sector, research has focused on the value-added that may result from the addition of 'outside' directors to the entrepreneurial team. This paper discusses findings from a matched sample of 46 interviews with a core sample of 23 companies with matched entrepreneurs/CEOs and non-executive directors to unlock the black box of director relationships. Findings are placed in a European SME context where greater attention has been placed for future development in developing longer-ter...