Governance structures in high-growth firms Abstract
This paper addresses the structure of governance systems in high-growth firms. The OECD Principles
of Corporate governance state that ”. The Principles focus on publicly traded companies, both
financial and non-financial. However, to the extent they are deemed applicable, they might also be a
useful tool to improve corporate governance in non-traded companies, for example, privately held
and state-owned enterprises” (OECD p.11). The “extent to which they are deemed applicable” for
high-growth firms is the topic of this paper.
We propose that high-growth firms have specific characteristics and challenges that may warrant
other governance structures than are recommended in the governance codes. In the present study,
we compare a sample of 865 high-growth firms in Norway with a statistically representative sample
of 396 SMEs in Norway, on several general characteristics as well as on their governance structures.
The findings show that high-growth firms do have specific characteristics that distinguish them from
other smal and medium sized enterprises. The high-growth firms in our sample are significantly
younger and smaller than the average SME, and their growth intentions are significantly stronger.
They also face greater difficulties in recruiting sufficient qualified personnel. Further, the high-growth
firms differ in their governance structure on several aspects. They have more owners than the
average SME, and in 81.4 % of the high-growth firms the founder has the three roles of owner,
director on the board, and a top management position simultaneously. The results also show that the
high-growth firms have significantly different board compositions than the SMEs. The boards in this
sample are larger, the proportion of independent directors on the boards is larger, and the boards
are more gender diverse (21 % women) than in the SME sample. We discuss these findings in light of
general OECD governance principles, and whether high-growth firms might represent some “best
practice” examples for SMEs, considering their successful growth histories.
High-growth firms make a huge contribution to employment and value creation in a society. It has
been shown that these firms generate a disproportionately large share of new jobs compared to non-
high-growth firms, even during a recession
. High-growth firms typically constitute 2-5% of the total business population in a country
. Clayton and col eagues found that in the U.S., 2 % of the population of firms in
2012 were high-growth firms, yet they were responsible for 35 % of all gross job gains between 2009
and 2012 . In Norway, the 4% most rapid growing firms contributed
with 50% of al new net employments in the country between 2008 and 2012. Thus, despite the small
number of firms within the high-growth category, their impact on value creation and employment is
substantial. This great economic impact of high-growth firms makes them both important and
interesting to study. How are they different from other firms and how are they managed and
governed? In this paper we shall focus on the corporate governance structures of these firms, and
investigate how these structures are related to the specific characteristics of high-growth firms.
Specifically, we shall investigate whether there might be specific forms of corporate governance that
may fit a high-growth strategy in young firms, and discuss whether these structures may deviate
from the “standard” principles of corporate governance.
The purpose of corporate governance is basical y to direct and control the company so its conduct is
in accordance with the stakeholders’ interests. Although corporate governance codes vary
substantially between countries, there is a general agreement that it is the boards of directors that
are responsible for the corporate governance of their companies. The Cadbury Report, published in
the UK in 1992 and stil the basis of corporate governance codes throughout Europe ,
describes the corporate governance tasks as the following: .” The shareholders’ role in governance is
to appoint the directors and the auditors and to satisfy themselves that an appropriate governance
structure is in place. The responsibilities of the board include setting the company’s strategic aims,
providing the leadership to put them into effect, supervising the management of the business and
reporting to shareholders on their stewardship” . Thus, the main actors involved
in the implementation of corporate governance in a company are the shareholders, the board of
directors, and the CEO . This paper addresses the roles and
structure of these actors, and how the corporate governance is structured and implemented, in high-
growth firms. Corporate governance codes are generally aimed at publicly traded firms, but are
recommended as guidelines also for other kinds of companies, such as privately owned and limited
liability firms. The OECD Principles of Corporate governance state that ”. The Principles focus on
publicly traded companies, both financial and non-financial. However, to the extent they are deemed
applicable, they might also be a useful tool to improve corporate governance in non-traded
companies, for example, privately held and state-owned enterprises” (OECD p.11). The “extent to
which they are deemed applicable” is precisely the topic of this paper.
Thus, it is often assumed that good governance can be defined across firms and contexts : .”The
‘holy trinity’ of good corporate governance has long been seen as shareholder rights, transparency
and board accountability” . The Norwegian corporate governance codes state that
“Good corporate governance wil strengthen confidence in companies, and help to ensure the
greatest possible value creation over time in the best interests of shareholders, employees and other
stakeholders” (NUES 2012). However, as we shall discuss throughout this paper, the role of the
owners, the board and the CEO is quite different in young and growing firms than in older, mature
companies, and these roles may be manifested in special governance structures. Actually, in Norway,
publicly traded companies, although responsible for a major part of the economic value creation in
the country, constitute a smal minority of the country’s population of companies. Thus, developing
principles of good governance for privately held, small and medium-sized enterprises is an important
task. And within this population, high-growth firms in turn constitute a small minority. In the present
study, we aim to show on what aspects high-growth firms differ from the “average SME” and how
these characteristics may warrant specific governance structures. We investigate this empirically
through comparing a sample of high-growth firms with a statistically representative sample of SMEs
The paper is organized as follows. We start by outlining three general principles of corporate
governance, derived from the published codes in Norway and OECD, and how these are suggested to
be manifested in the governance practices of companies. We then present some examples of
research on these central principles of good governance. Turning to the characteristics of high-
growth firms, we discuss the appropriateness of codes of practice as well as theories of corporate
governance for high-growth firms. Then we do descriptive empirical analyses in three steps. First, we
compare our sample of high-growth firms with previous research on these kinds of firms on several
characteristics, to provide a rich and empirically founded description of the nature of high-growth
firms. Second, we compare structural aspects of corporate governance in the high-growth firms with
the representative sample of SMEs. Finally, we discuss the relevance of the general governance
principles for high-growth firms, and whether high-growth firms might represent some “best
practice” examples for SMEs, considering their successful growth histories.
General principles of corporate governance
The first principle of corporate governance is to protect shareholders’ rights, and the board members
are appointed as the shareholders’ representatives, to serve their interests as owners. Thus, the
number of owners and the owners’ interests will heavily influence board composition, as well as how
the tasks and responsibilities of the board are defined in a company. Regarding the board
composition, the corporate governance codes are focusing on competence and independence of the
board members. Diversity of competences may be required for the board in order to cover the areas
needed for making good decisions. Further, the board’s independence of specific owners is
underscored, the Norwegian codes of practice state: ”.The composition of the board of directors should ensure that it can operate independently of any special interests. The majority of the shareholder-elected members of the board should be independent of the company’s executive personnel and material business contacts. At least two of the members of the board elected by shareholders should be independent of the company’s main shareholder(s)”. (The Norwegian
Corporate Governance Board (NCGB) p. 31). Further, the separation of owners and the company’s
executive management is underscored: .”The board of directors should not include executive personnel. If the board does include executive personnel, the company should provide an explanation for this and implement consequential adjustments to the organization of the work of the board, including the use of board committees to help ensure more independent preparation of matters for discussion by the board” (p. 31). We see that independence of the directors has a crucial role in the
codes; as one of the roles of the board of directors is to control and supervise the executive
management, and so they should operate independently. Further, the recommendation that some
board members should be independent also of owners is intended to reduce possible bias in the
board towards particular owners’ interests. It is underscored in the recommendation that the board
members should act as a col ective body, independent of single owners, and that they should have
the expertise, and time available, to be able to perform its assigned tasks. Thus, we see three crucial
arguments in these codes that we shall address in this paper. The first is independence – that the
board should be independent of specific owners, have independent board members, and act as a
collective. The second is competence and effort – to secure that the directors are both competent
and will dedicate sufficient time and effort so secure board effectiveness. These recommendations
are also related to the fact that historically, many companies have had passive boards with
insufficient strength to carry out good governance. The third principle is the role of the executive
manager – the CEO is not allowed to be a member of a board in Norway, and the Norwegian Code of
Practice actual y recommends that no executive personnel should be a member of the board at all
(the issue of CEO duality is not mentioned in the OECD principles).
Governance chal enges in the high-growth phase of a firm’s life cycle
In the high-growth phase, a firm typically must create and develop internal structures, increase
coordination and communication, and manage new functions and organizational units
. A life cycle perspective is particularly
suitable for identifying the characteristics and challenges of high-growth firms. Depending on the
model selected, a firm’s life cycle will include three
or four stages; the second stage in both models is
characterized by rapid growth. Firms at the high-growth stage may consider transitioning to public
ownership and may investigate other methods of expansion
. Furthermore, these firms often add new products and markets into their product
portfolios during this phase. A firm in the growth stage of its life cycle thus faces many demands,
some of which conflict with one another. Internal and external complexity rapidly increases during
the growth stage, but formal strategic planning systems seldom develop in tandem with these
In a review of small firm growth, Macpherson and Holt note that “. .growth cannot be
achieved without managerial capabilities to provide specialist functions and processes designed to
support and exploit entrepreneurial actions”. Several studies indicate that the boards of directors are
critical to the development of a growth strategy in young, high-growth firms
. In the early stages of a firm's life cycle, the
separation between ownership and control is proposed to be less relevant than in publicly traded
firms because CEOs (and founders) typically have financial interests that are aligned with those of the
firm owners . High-growth firms may thus have fewer agency problems and less of a
need for ownership control and management monitoring than do larger, mature firms
. However, at this stage, the increased need for external financing may
represent an exchange of power from the CEO (or the founder) to the sources of financing, the
investors or owners. As the founder often has a central role in the management of the firm at this
stage, this may create conflict or power struggle between the new owners and the founder
Thus, the founder and the investors are together the decision makers on board composition
. While there might be a potential conflict of interest between the founder and the new
owners, a crucial criterion for venture capitalist in their investment decisions is their belief in the
founder’s competence, so the founder will probably have substantial power in composing the board
as well. Further, at this stage the issue of the founder’s role in leadership and ownership of the
company will become increasingly present and the governance structure will be affected by this
situation accordingly. Thus, balancing these powers with the principles of good governance is a major
challenge for a successful strategic leadership of the company. Two points can at this point be made
about this: first, that the founder may have many different roles in the company , and, second, that
there are strong indications from earlier research that founder-managed firms perform better than
professionally managed firms . These two points will be discussed
In the next section we shal discuss how the particular characteristics of high-growth firms may have
implications for the corporate governance structure, particularly on the three principles discussed
Research on principles of corporate governance
The principle of independence is central in agency theory, which predicts that outside directors (not
involved in the firm’s operations) wil better monitor management, and hence reduce management’s
propensity to pursue self-interest and to capitalize personally on internal knowledge of the firm
. However, in their meta-study of the relationship between
board composition, board leadership structure and firm performance, Dalton et al. found no overall
correlation between the presence of independent directors and firm financial performance
. This may be related to the fact that outside directors may have many different roles,
and are oftentimes appointed by the CEO . Further, there are
empirical findings indicating that board members with substantial ownership in the firm do improve
the effectiveness of the corporate governance system. Core et al. found that firms with weaker
governance systems had greater agency problems and that the CEO in these companies extracted
greater compensation (the magnitude of the compensation used as an indication of a weak board).
Their study showed that in firms that had internal board members with more that 5 % of the shares,
the CEO compensation was lower, which suggests a more effective governance
system. The codes of practice mention two kinds of independence. One is that a board should have
directors that are independent of specific owners, to increase the board’s ability to function as a
collective, working for all shareholders. The other is what is often labeled external directors – i.e.
directors who are not involved in the company’s executive management, nor have any operational
One of the most challenging tasks in young firms is to attract venture capital to secure growth. High-
growth firms have to some degree already succeeded in this, as they have managed to sustain high
growth for several years. Investing in young, entrepreneurial firms that pursue growth is risky, and
high-risk investments will often be accompanied by demands for high returns . Thus, we would
expect the shareholders to be actively engaged in the management of the firm, through the board.
Further, considering the risk, it is plausible to suggest that the larger the number of owners of a firm
in this phase, the more difficult to reach agreements among the owners, and the more the power is
dispersed. Thus, we suggest that investors would prefer to keep the number of owners low. So, in
high-growth firms, we would expect to see a smal number of active owners, with close contact with
the founder or the top manager. The founder, as the initial organizational architect is
a crucial carrier of internal knowledge of the firm, and have considerable investments, both material
and non-material in the firm, and thus, an interest in further success. Hence, the shareholders may
not see the need for board members that are independent of the owners, quite the contrary; we
would expect the board to be smal and having few independent directors. This will secure close
control ease the monitoring of the management.
On the other hand, the role of external directors is directly related to the second principle in the
codes of practice mentioned above, expertise requirements of the boards of directors, as well as
their wil ingness to spend time and effort on board work. According to the resource dependence
perspective on corporate governance, an important function of a board is to provide the company
with resources . And in young, high-growth firms, the role of the board in
providing important advice and access to resources is considered to be particularly important
, because small and young firms often suffer from
scarcity of internal resources and competence on different areas of expertise. Thus, the board may
represent human and social capital that may not yet be available internally within the firm
. Rosenstein et al. (1993) also underscored the directors’ service role. In a study of
high technology firms receiving venture capital backing, they found that CEOs valued outside board
members, particularly during the early developmental stages of their firms. These CEOs especially
appreciated the outside directors’ information and expertise. Interestingly, CEOs reported that they
tended to value outside directors less over time.
There are a number of types of resources and expertise that have been addressed in the literature,
such as building relationships to external stakeholders, facilitating access to capital, strengthening
legitimation in the market, and expertise on the firms’ strategic and operational activities
. The specific resources that have been subject to research are, however, scarcely
mentioned in corporate governance codes, except the general recommendation of sufficient
expertise and time and effort provided by the directors. These are related to the strategy and service
roles of a board, roles that are mentioned in the codes. Empirical findings show support for the
resource dependence theory, for example, firms with strong human capital on the board have been
found to have better subsequent performance, higher pricing at initial public offering, and increased
credibility and legitimacy in the market .
We would thus expect that the boards in high-growth firms would be small, be mainly composed by
direct owners, but may also have external directors, depending on their strategy and internal
resources available. Regarding the recommendation of time and effort provided by the board
members, Vafeas found that frequency of board meetings increased following a decline in
share prices, and that performance increased following this period of abnormal board activity. We
believe that small boards are easier to coordinate and easier to assemble, and few owners with high-
risk stakes would be likely to keep better control through frequent meetings.
The role of executive personnel – the founder
The third principle in the codes of practice, the roles of the CEO and other executive personnel, has
also been subject to extensive research. The Norwegian rule that the CEO cannot be a member of the
board is not common in other countries, and much research has been conducted on the effects of
what is labeled CEO duality – i.e. the CEO is also chairing the board. This research is based
predominantly in the agency perspective, where it is believed that a board with a powerful CEO will
be less able to perform the control role and hence the firm will have weaker corporate governance.
However, the empirical findings are inconsistent on this issue. Dalton et al. in their review
found no relationships between board leadership structure (CEO duality or not) and financial
performance. Pearce and Zahra found that participative boards with high board power and
high CEO power, outperformed boards with weaker boards. Thus, the CEO role duality has been
labeled a “double-edged sword” , in that while it may reduce the control
function of the board, it wil enhance unity of command.
In the high-growth stage of a firm’s life cycle, the founder is most likely central in the firm’s
operations as a manager or a director on the board. Labeling a firm in the high-growth phase a
“threshold firm”, Daily and Dalton discuss this phase as a transition from an entrepreneurial
to a professionally managed firm, during which the entrepreneur is supposed to yield control of
operations to professional managers. Theorizing on this transition process, Gedajlovic asserts
that founder-managed firms tend to reach a knowledge and resource crisis, where founders should
cede control to professional managers. It is suggested, however, that founders tend to be possessive
of their property rights, and are reluctant to share control. Thus, founder-managed firms may be
incapable of successfully negotiating the transition to a professionally managed firm
. In line with the theory of the “threshold firm”
, we argue that probably the most crucial question regarding
executive personnel’s roles in the corporate governance structure of a high-growth firm is the role of
the founder. The founder may have a position in the top management of the firm, may be a director
on the board, be a substantial owner, or have all three or none of these roles. At a certain point of
time in the life cycle of the firm, the shareholders will probably want to exert more control through
appointing a new, professional CEO. However, what roles the founder should occupy in the firm’s
further life is not a clear-cut issue. There may be many advantages of having a founder with a strong
position in the high-growth firm. For example, the dual role of the founder-director may decrease the
cognitive heterogeneity of the board and contribute to aligning conflicting views in strategic decision
making. Founder-directors can drive director selection processes because of their greater influence in
the board, and secure that crucial expertise not available internally is acquired
. Founders are often the embodiment of the firm’s culture, and they typically
possess unique networks and have exclusive knowledge about the firm . In founding a
firm, founders typically develop the firm’s strategy, and they often continue to have strong
psychological attachment and involvement over time
. Further, active founders are the longest-serving members of the organization, and their
presence on the board may lead to increased strength within the board’s col ective mindset
As mentioned earlier, in young SMEs, the founder and owners will have interests that are more
aligned than those of larger, public firms. The likelihood that founder-managers will misuse
shareholders’ trust is smaller because of these firms’ small size and resource base . The
founder also typically owns a significant share of the firm. Aligning the interests of the founder-
manager with those of the board members further reduces the possibility that the board will
challenge the growth focus of the firm. Consistent with this line of reasoning, Brunninge et al.
find that closely held SMEs typically face less pressure from outside investors to engage in strategic
change than their larger counterparts do. Further, Hambrick and Crozier find that founders
can help growing firms overcome challenges that arise in that stage of the firm's life cycle. Having
founders on the board ensures that the culture of the firm is preserved and provides goal clarity for
the entire organization. Furthermore, founders typically prefer flat structures and ensure that
management stays "close to the action".
Thus, while there are no clear solutions to the question of the founder’s role, the characteristics of
the high-growth firm suggest that the founder may have an important role to play in the strategy of
the firm, however, the challenges of power delegation and power sharing should be addressed in a
governance structure of these firms. While theorists of the threshold firm argue that the founder
should at one point of time be replaced by professional managers
, there is empirical evidence suggesting that founder-managed
firms consistently perform better than professionally managed firms. For example, Fahlenbrach
found that founder-CEO firms had higher valuation, better stock market performance, and
more actively pursued active growth strategies than did professionally managed firms. Villalonga and
Amit found that Fortune 500 family firms had higher valuation if they had active involvement
by the founder, either as a CEO or as a chairperson of the board.
The above discussion shows that there are no straightforward answers to what constitutes an
effective governance system in high-growth firms. In the fol owing, we present an empirical analysis
of the high-growth firms in Norway, focusing on their characteristics as well as how they have solved
The leading Norwegian business newspaper, Dagens Næringsliv (DN), publishes a list of high-growth
firms (labeled gazelles) each year, and their list, as published in 2010, 2011, and 2012, provides the
population for our data set. If a company is on the list once (or more) during these three years, it is
included in the population. To be defined as a high-growth firm, six requirements must be fulfilled:
The firm must have completed approved accounts.
At least doubled their revenue during the previous four years.
Earned revenues of at least one million NOK (137000 EUR).
Is incorporated (i.e., is registered as a corporation or limited liability company).
If a company fulfills all six criteria, it is considered a gazelle; otherwise, it is considered a "regular"
company. Criterion 2 requires that the companies in our sample are at least five years old. By
applying all six criteria, we were able to obtain a sample of firms with a stable pattern of high growth
A questionnaire was administered to the CEO of each company. A total of 2116 gazelles were
identified for 2012, 1996 for 2011, and 2579 for 2010. The interviews conducted were computer
assisted telephone interviews (CATI). The questionnaire was originally written in English and was
then translated to Norwegian. A total of 1000 responses were obtained from the gazelles, including
459 responses from the 2012 list (a response rate of 21.7 percent), 268 responses from the 2011 list,
and 273 responses from the 2010 list. To correct for possible selection bias caused by non-
respondents, the sample was compared to the population of gazelles on basis of the number of
employees. A mean comparison test showed no significant differences between the groups (p<0.05).
In addition, a comparison group for the analysis was randomly sampled from the total population of
Norwegian SMEs to compare the high-growth firms in our sample of analysis with the general
population of Norwegian SMEs. This step yielded 501 responses.
No publicly listed companies were included in our sample. There are several international definitions
of SMEs. We fol owed the definition used by the EU and defined SMEs as companies with fewer than
250 employees. Furthermore, we excluded acquisition growers, as recommended by Mckelvie and
Wiklund , such that only organical y grown companies were included in the sample. Companies
with no board members were also excluded from the sample. The final sample consists of 1261
respondents, 865 high growth firms and 396 SMEs in the comparison group.
Based on earlier literature on high-growth firms, and the principles of corporate governance, we
selected a set of variables that wil give us indications not only of the governance structures of the
high-growth firms, but also data on some crucial characteristics of these firms. In order to obtain an
understanding of the high growth firms in the sample, a number of descriptive variables are listed in
table 2: Foundation year, number of employees, growth intentions, revenue growth, access to capital
resources and access to labor resources.
A two-item, seven-point Likert-type scale (1 = completely disagree, 7 = completely agree) was used to
measure growth intentions. The two items used were adopted from the scale developed by Kolvereid
; they indicate whether the company intends to grow in terms of revenue and
number of employees during the upcoming five years. The scale showed satisfactory reliability, with
a Cronbach’s alpha of 0.75. Revenue growth was measured by subtracting the revenue in 2010 from
the revenue in 2007. Access to capital and access to labor are measured on a seven-point Likert-type
scale through two single items indicating if the companies experience problems in attracting qualified
personnel and capital. Thus, the higher score on this variable the less access to personnel and capital.
Independent directors were defined as board members who are neither owners nor employees of the
company. To capture the effect of independent directors, we measured the number of independent
directors on the board and used the share of independent directors. In order to capture the roles of the founder, we apply three dummy variables. The first is a measure of the founder also being a
member of the board (founder-director). The second indicates if the founder is a part of the top
management team (founder-manager). The third measures whether the founder is an owner of the
company (founder-owner). Combining these three dummy variables provide eight groups of founder
role possibilities. The groups are shown in figure 1.
Gender diversity was measured as the number of women on the boards relative to the total members, computed as the percentage of women.
Characteristics of high-growth firms.
Table 1 shows the distribution of type of industry and location of both subsamples.
Insert Table 1 about here
The table shows a fairly similar distribution between the two samples, both for geographical location
and for type of industry. Thus, it appears that no industry or geographical location is particularly are
more beneficial than others for high-growth firms.
In the literature, high-growth firms are frequently categorized as young and small. As we are only
including SMEs in our sample, no large firms are included. Still, Table 2 shows that the high-growth
companies are generally half the age of the average SME firm in Norway. An independent samples T-
test revealed that both age, size and growth intentions were significantly different between the two
groups of firms. Thus, consistent with earlier findings from other countries, Norwegian high-growth
Insert Table 2 about here
It is also interesting to note that the standard deviation of the age variable in the comparison group
of firms is double as high as in the group of high-growth firms. Thus, high-growth firms have less
variation in age than the general population of firm, which is consistent with the life cycle
perspective. Regarding size, measured as number of employees, the differences are smaller, but the
mean size of an SME in Norway is still 30% larger than the average high-growth firm. Similar to the
results for age, there is considerably more variation in size between the general SME population of
firms than between high-growth firms. These results, together with the careful selection criteria for
our sample of high-growth firms, confirm that these firms are special – they are significantly different
on several criteria – the most central, of course, being previous growth, and future growth
intentions. We also ran a correlation analysis on future growth intentions and age, and the younger
firms have significantly higher growth intentions than the older ones. From table 2, we also observe a
difference in access to labor, indicating that the high growth firms find it harder to recruit qualified
persons. Since the high growth firms also have high growth intentions and thereby plan to hire new
persons, the results indicate that the problem in attracting qualified labor is more relevant for the
Characteristics of governance structure
Table 3 shows the corporate governance structure characteristics that we included in the study.
Insert Table 3 about here
The results show that high-growth firms have a greater number of owners that the general
population of SMEs. The difference is not large, but it is significant. However, there are few owners in
both groups of firms. The larger number of owners in high-growth firms may indicate that firms in
the high-growth stage need investors, and as the firms in our sample has grown rapidly the last
years, it indicates that the entrepreneur has been successful in the efforts to find additional
investors. This is also reflected in the size of the board, as it is significantly larger in high-growth firms
The table also shows that the proportion of independent directors on the boards is on average 26%
in the high-growth firms, not significantly different from the comparison groups. This indicates that
the high-growth firms have succeeded in acquiring investment capital, that the owners are directly
represented on the board, and that the boards have on average one independent director out of four
in total, which is a substantial proportion. The proportion of women on the boards is 21 %. This is 2 %
less than in the comparison group, but the difference is not significant. However, the average
proportion of women on the total limited liability firms in Norway is 17 %, so it appears
that high-growth firms have more gender diversity on their boards.
Regarding the roles of the founder, Table 3 shows large and significant differences between high-
growth firms and other SMEs, on all three types of role combinations. The founder has 30 % larger
probability of being also a top manager or a director than in the SME group of firms. In Figure 1, we
show a more detailed analysis of the founder roles. We see that the far most common position for
the founder in high-growth firms is to have a role triality- i.e. being owner, board member and top
leader simultaneously. 81.4 % of the companies have a founder occupying al three roles, while in the
comparison group, 56.6 % of the companies have founder role triality.
One of the main purposes of corporate governance is to protect shareholders rights, and confidence
in a country’s ability to protect investments is a prerequisite for a healthy economy. Publicly traded
companies, for whom the governance codes primarily apply, mostly have many shareholders, and
the composition of the board of directors is intended to contribute to balancing their interests and
power. From Table 3 in our analysis, we see that on average, high-growth firms (and SMEs as well)
have one more person on the board than the number of owners. This shows that al the shareholders
have a direct representation on the board, which should secure the protection of their rights,
without any arrangements or rules regarding the composition of the board. Further, the low number
of owners may ease coordination and transparency between owners, provided there are few
conflicts of interests. Our results show that the high-growth firms have more owners than the
average SME, however. We interpret this as an indication that a strategic focus on growth requires
increased investments, and thus recruitment of additional financers. As the high-growth firms in our
sample have succeeded in obtaining fast growth the previous years, they have obviously succeeded
Our data show that board independence may be a different issue in high-growth firms than in
publicly traded companies, as indicated by the governance structure. First, the principle that the
board should function as a collective that does not favor any single owners is somewhat irrelevant as
al the owners are represented on the board. However, one fourth of the board members in the high-
growth firms are independent, i.e. neither owners nor executive personnel. For the majority of the
firms, this equals one out of four board members. As a single person, independent director hardly
would have sufficient power or authority to balance any conflicts of interests or power issues
between the owners on the board, and we consequently interpret the role of this independent
director as being an extra resource – i.e. having been recruited for expertise. Thus, we may conclude
that a strategy for growth is consistent with a smal group of owners (although large enough to
secure investments) that are active on the board, supplied with external expertise that is scarce
The other aspect of the independence principle, the independence of the executive personnel vis-à-
vis the board, appears neither to be relevant in high-growth firms. An overwhelming majority of the
founders in the high-growth firms are owners, directors, and members of the top management team
simultaneously – we label this role triality. First, this is an indication of support to the assumption
that founders and managers in young firms have interests that are aligned with those of the firm
owners . These common interests may also play an important role in the firms’ ability to
pursue a persistent growth strategy. Second, it is an indication of a resource dependence argument
for board composition in these firms. The founder has unique competence, and as an owner
probably strong interests in further growth, and consequently plays a crucial role in offering both
knowledge and efforts towards the growth strategy. And – contrary to what is predicted in the
theory of the threshold firm , an overwhelming
majority of the high-growth firms have the founder in top managerial positions. It could be argued
that this is because the threshold stage is not yet reached. However, these firms are well beyond the
entrepreneurial stages, both in age and size, and our findings raise the question as to when it would
be preferable to replace the entrepreneur. As we have shown earlier in the paper, there are
empirical results indicating that the answer to this question could be “never”
So, what are the implications of our findings? We should be careful to draw any firm conclusions as
to what kinds of governance structures that may contribute to high growth, as our research design
does not allow for causal inferences. However, we see some clear patterns in the data that fits well
with existing theory and research that may contribute to further theory building on corporate
governance in SMEs in general and for strategies for growth in particular.
One of the most prominent theories of corporate governance, agency theory, is based on the
assumption that separation of ownership and management in a company creates conflicts of
interest, and, hence, a need for monitoring of executives by the owners. It appears that young firms
that have succeeded in growing fast do not have this conflict of interest, because they have not
total y separated ownership and management. On the contrary, the founders’ role triality is an
indication that ownership and management is closely tied together, and supplemented with some
external expertise. If a company is able to minimize this fundamental conflict of interests over quite a
long period of time (the average age of the high-growth firms in our sample is 15 year), it allows for a
governance structure that strengthen the unity of command and enables the firm to pursue a growth
strategy. However, it is worth noting that despite this unity, the high-growth firms do have
independent directors on the board, and they have larger gender diversity than the average
Norwegian limited liability company. Thus, a strong core of owners and managers, together with a
focused strategy, is combined with diversity and inclusion of external expertise, which may reduce
the propensity for narrow-mindedness in the leadership of the company.
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Anesthésie et analgésie chez le toxicomane (1) Unité de traitement de la douleur - DAR CH de Mâcon Boulevard Louis Escandre 71018 MACON [email protected] (2) SAR hôpital Foch – SURESNES 75 Paris [email protected] L'accueil d'un patient toxico-dépendant en milieu chirurgical reste toujours difficile, mais l’évolution du regard porté sur les addictions a cependant profondéme
Jonathan Moulin Professionnal particular interest in lighting and physically plausible shading/rendering 2007 – 2008 Institut des Arts de Diffusion (IAD) 2004 – 2007 Institut des Arts de Diffusion (IAD) Bachelor of Arts & Communication Technics « CGI/Multimedia » Vine ( July 2012 - Current ) Lighting TD - Maya/Arnold Look Development (Creatures & Environment),