GoSMEs (Governance and value-creation in SMEs in a service-dominant logic) focused on an under-researched domain in Small and Medium-Sized Enterprise (SME) research â€“ governance and the board of directors. Specifically, the project aimed to investigate how boards in SMEs...
GoSMEs (Governance and value-creation in SMEs in a service-dominant logic) focused on an under-researched domain in Small and Medium-Sized Enterprise (SME) research â€“ governance and the board of directors. Specifically, the project aimed to investigate how boards in SMEs contribute to value creation and the contextual factors that shape SME boards. The project is highly relevant because whilst SMEs make substantial contributions to European economies through employment, job creation and economic value added, they are also highly susceptible to changes in the business environment and constrained by their resource envelope. Using the theoretical lens of service-dominant logic (SDL), the project articulated a new approach to value creation in SMEs, and the role of boards in being a driver for change as well as a resource that SMEs can activate. The innovative design of the project aimed to investigate SME boards\' internal behavioural processes, thus going beyond traditional board research that relies on board compositional characteristics alone. Further, GoSMEs aimed to examine not only whether SME boards are involved in strategic tasks but scrutinised which tasks, or constellation of tasks, might contribute to a modern perspective on enterprising in regard to SDL and value creation in Europe.
In the first phase of the project, the Fellow developed the research framework using a multidisciplinary perspective by drawing on insights from marketing research and combined these with the research from the corporate governance field. This resulted in a new conceptualisation of value creation by merging ideas behind SDL and its focus on value creation with the research on corporate governance which has multiple and diverging definitions of value and value creation embedded in its body, published in a peer-reviewed book chapter (Yar Hamidi, 2019).
Next in the project, a cross country database using secondary data from Retriever, SCB Sweden and BvD Orbis and Fame over five years was compiled by the Fellow. The database was built with firm and board data on a random representative sample of SMEs for all three countries. The database was used to illuminate structural differences between the boards of SMEs in the UK, Sweden and Denmark. Among other insights, the analysis reveals that SMEs in the UK are generally larger in size (measured by number of employees), and have larger boards, compared to Swedish and Danish SMEs. Further, the data showed that SMEs in the UK have a larger proportion of women on their boards than their Swedish and Danish counterparts. The latter has important implications for initiatives regarding gender diversity on boards, which have hitherto focused mainly on large public-listed firms.
While the overall structure of the boards was interesting to illuminate, the Fellow searched for explanations and insights about the behavioural aspects of boards in SMEs. This was done in a survey study of a cohort of SME directors and owners in the three countries. In doing so, the project has collected data on the inner work of boards in SMEs and contributes to our understanding of how boards of directors contribute to value creation. The analysis of the survey data resulted in the identification of four board categories among SMEs in the cohort - Developing, Boosting, Maximiser and Outward boards. These different board categories are characterised by different compositions along with constellations of competencies among directors and tasks focus towards value creation.
Finally, the project collected qualitative data through a range of methods (interviews, workshops with directors, a longitudinal case study) to provide further explanations behind the quantitative results and to facilitate the transfer of the results into practice (via academic- practitioner dialogues in the workshops). This resulted in the development of the Governance Model Canvas and review and development of an organisationâ€™s governance processes.
The fellow attended 8 academic conferences and workshops, organised 14 workshops with SME owners, directors and managers, and 3 end-of-project practitioner conferences where the results of the project were presented and discussed.
GoSMEs advanced the state-of-the-art knowledge on SMEs and governance in a number of ways. First, we advanced theoretical knowledge by providing a new perspective on value creation. By drawing together insights from a service-dominant logic and traditional corporate governance literature, we developed the concept of value co-creation by multiple actors in a service eco-system, and articulated concomitant board tasks that contribute to value co-creation in SMEs. Second, we provided new insights into different compositional characteristics of SME boards in the UK, Sweden and Denmark. The results brought to the fore the need to also consider initiatives for promoting gender balance in SME boards, since women were shown to be under-represented. Our existing collaborations with director associations, chambers of commerce and their members will be a pathway to promoting future impact regarding gender diversity. Third, we empirically developed a novel typology of SME boards, which helps to identify boards that under-perform in relation to value-creating tasks, as well as those that are more oriented towards economic value creation and those that combine economic and social value creation. The qualitative research also highlighted the need for SMEs to better understand the role of boards within their broader governance systems. As a result, the Fellow developed a Governance Model Canvas that can be used to diagnose governance gaps and provides a roadmap for SMEs seeking to enhance their governance. It was used post-project in a case study with a Swedish SME, and has great potential to be digitalised and made accessible for SMEs as an effective tool to use in pursuing the development of their governance system.
More info: http://www.wlv.ac.uk/GoSMEs.