Background
Small family-owned limited liability company board composition is usually characterized by an overlap between the family and the company. Small businesses often can’t afford the number of qualified board members that they have in need and can thus miss important information, expertise and experience as an external board member can contribute. Furthermore, previous research has shown that outside directors can bring a foreign element in the family business which can give a sense involving loss of control. Finally, it is considered to be flaws in previous research when small companies have been investigated to a lesser extent.
Research questions
What is it that determines why small family businesses choose to appoint outside directors, or not?
Purpose
The purpose is that through qualitative interviews explain small family companies appointment of external board members.
Method
The study has been built on a qualitative approach with semistructured interviews conducted with ten CEOs of ten small, familyowned companies.
Theory
The theoretical framework is based on a threecircelmodel that describs the overlapping systems in family business. Finally it is an overwiev of boards and a explanation about the agency theory's and stewardship theory’s relation to the external board members.
Empiricism
The ten completed interview results are presented under four themes and tables.
Analysis
The analysis chapter has been implemented with the support of the theoretical framework different parts
Conclusion
Our conclusion is that the main feature of an external director is its expertise and experience. Another important factor that determines the choice is to get a so-called input, an external view of the business and someone to bounce ideas with. After the appointment many boards have worked in shift from passive to active and the interviwed businessowners only look positive on the appointment.