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Nascent Governance: The Impact Of Entrepreneurial Finance On Board Formation And Roles


  • Christophe Bonnet

    () (GDF - Gestion, Droit et Finance - Grenoble École de Management (GEM))

  • Peter Wirtz

    () (Centre de Recherche Magellan - Université Jean Moulin - Lyon III - Institut d'Administration des Entreprises (IAE) - Lyon)

  • Martine Séville

    (COACTIS - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet [Saint-Étienne])


This research is an attempt to make progress in the understanding of the process of board formation and its impact on the functions performed by the board in young entrepreneurial ventures. We study the link between board members' characteristics and the effective accomplishment of monitoring and resource provision functions. Expanding earlier research we argue that the identity of external financiers matters in configuring the board and designing its working mode and roles. This is because different investors (1) may be endowed with different skills and knowledge, and (2) their social identities influence the motivation to accomplish different roles. We present a conceptual framework of the process of board formation in entrepreneurial firms and confront it with an in-depth longitudinal case study of a young venture that has received funding from business angels and venture capitalists. We show that board composition and routines are co-constructed by different (but not all) salient stakeholders who were involved in the first input of external capital. The intended and actual role of the board members depends on their specific capabilities and financial stakes and on processes of social identification. The observation of evolving board routines shows that certain members participate in two parallel processes of interaction with the entrepreneurs. Formal board meetings essentially serve the purpose of regular monitoring, whereas certain board members contribute to resource provision in parallel informal interactions, when they strongly identify themselves with entrepreneurs.

Suggested Citation

  • Christophe Bonnet & Peter Wirtz & Martine Séville, 2013. "Nascent Governance: The Impact Of Entrepreneurial Finance On Board Formation And Roles," Grenoble Ecole de Management (Post-Print) halshs-00850021, HAL.
  • Handle: RePEc:hal:gemptp:halshs-00850021
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    References listed on IDEAS

    1. Daily, Catherine M. & Dalton, Dan R., 1992. "The relationship between governance structure and corporate performance in entrepreneurial firms," Journal of Business Venturing, Elsevier, vol. 7(5), pages 375-386, September.
    2. Gérard Charreaux & Peter Wirtz, 2007. "Corporate Governance in France," Working Papers CREGO 1070201, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    3. Shaker A. Zahra & Igor Filatotchev, 2004. "Governance of the Entrepreneurial Threshold Firm: A Knowledge-based Perspective," Journal of Management Studies, Wiley Blackwell, vol. 41(5), pages 885-897, July.
    4. Wirtz, Peter, 2011. "The cognitive dimension of corporate governance in fast growing entrepreneurial firms," European Management Journal, Elsevier, vol. 29(6), pages 431-447.
    5. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    6. Christophe Bonnet & Peter Wirtz, 2011. "Raising capital for rapid growth in young technology ventures: when business angels and venture capitalists coinvest," Venture Capital, Taylor & Francis Journals, vol. 14(2-3), pages 91-110, December.
    7. Gérard Charreaux & Peter Wirtz, 2006. "Gouvernance des entreprises : nouvelles perspectives," Post-Print halshs-00144927, HAL.
    8. Hambrick, Donald C. & Crozier, Lynn M., 1985. "Stumblers and stars in the management of rapid growth," Journal of Business Venturing, Elsevier, vol. 1(1), pages 31-45.
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    Nascent governance; board of directors; entrepreneurial finance; social identification;

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