Board Empowerment in Small Firms:

Corporate governance literature generally suggests that a company’s boards of directors may influence company performance. When the balance of power over strategic decisions and organisational outcomes favour the CEO the board may however have few possibilities to monitor managerial or company performance or influence strategic choices. This paper investigates how boards become activated and empowered by analysing how contingent factors are related to board empowerment in small corporations. It is argued that pressures from various internal and external stakeholders may become reflected in board composition and board leadership structure (CEO/chairperson roles held jointly or separately). The results of a logistic regression analysis of 135 small corporations indicate that these boards are empowered mainly to satisfy the desires of external owners, but also to some extent for the service and resource benefits that a board can provide. The assumption that the composition of a board is a conscious response to the critical contingencies of an organisation is hence supported.