ABSTRACT
The ways in which boards of directors can create value for SMEs has received a considerable amount of attention in the governance literature. Inconclusive results from input-output studies have asked for another approach, focusing on the influence of contingencies, board processes and actual board task performance. In this article, we examine the effect of the board’s actual task performance on the value that boards create in Dutch SMEs. Because of the two-tier governance system, we distinguish between the value creation of the supervisory board and the executive board. A factor analysis on a wide range of board tasks results in six distinguishable sets of board tasks: 1) operational control, 2) behavioural control, 3) output control, 4) strategy, 5) advice and counsel, and 6) networking. Results show that – from a CEO’s perspective – the supervisory boards mainly create value through their performance on the advice and counsel tasks. Executive boards are found to create value through their performance on the advice, counsel and strategy tasks.
