Venture governance and its dynamics: Intraboard relationships and CEO duality

Abstract

In this study, we conjecture that the governance structure matters when it comes to maximizing the growth potential under conditions of fundamental uncertainty. Whereas agency theory is concerned with minimizing potential agency costs, and is concerned with control, stewardship theory, in contrast, relies on trust, and is concerned with maximizing potential joint performance. In support of stewardship theory, we find that intraboard trust (a trusting relationship among board directors, and the incumbent CEO) directly influences the effectiveness of the venturing teams, but also that intraboard behavioural integration mediates this relationship. Intraboard trust and intraboard behavioural integration reflects the less studied board internal social capital (as contrasted to the more studied board external social capital). We also find that CEO duality moderates these relationships in two out of three possible ways. Our approach aligns the ‘flipped’ role of the CEO – which has most recently been argued to represent an innovation in corporate governance – to stewardship theory. Implications for theory and practice are discussed.