Wildenauer, Michael (2019) Angels, Entrepreneurs, & Board Effectiveness in Australian Startups: the Influence of Board Member Interactions on Cohesiveness and Task Performance. PhD thesis, Victoria University.

Abstract

There have been numerous calls for more research on the dynamics of boards to help open the ‘black box’ of the board, and to situate studies in specific board contexts. These interpersonal dynamics include intra-group conflict and power dynamics. The model of board effectiveness offered by Forbes and Milliken (1999) comprises two group criteria, cohesiveness and task performance, that between them are responsible for effectiveness, and subject to influence from effort norms, use of knowledge and skills, and task conflict. This research extends this model to include relationship conflict, process conflict and power dynamics. Early stage ventures founded by entrepreneurs are an important feature of developed economies, responsible for creating a significant percentage of new jobs in countries such as Australia (Hendrickson et al., 2015). Furthermore, little research has been undertaken on the lived experiences of Angel investors on the boards of startup businesses, particularly outside of the US and Northern European contexts. These directors have ownership stakes in the business, but often also have non-economic motivations, in contrast to institutional venture investors (VCs), and in common with founders. Drawing these threads together, this research project sought to understand the way that Angels on startup boards experienced conflict and power in their boardroom interactions with founders; the way they understood the effects these processes had on the effectiveness via task performance and cohesiveness; and to undertake a comparison of these results with the predictions of theory, and to results obtained in other contexts. Data was collected by semi-structured interview from Angel directors of startups, and analysed using interpretive phenomenological analysis (IPA) and critical discourse analysis (CDA). Findings from this research project include the fact that Angels, in common with VCs, have a relatively high tolerance for task conflict, and welcome it as a decision-making tool. Angels also tolerate low levels of relationship conflict. This research suggests that tolerance may reflect a perceived power differential between Angels and founders, a fact reinforced by findings of discourse analysis. The emergence of the importance of the control and monitoring role to Angels on Australian boards was contrary to expectations and to previous findings, and suggested causes are discussed. Additional contributions to knowledge from this thesis include contributions to the literature by extending Forbes and Milliken’s model of board effectiveness to include additional conflict types and power dynamics, and adding to understanding of power in the boardroom. This thesis has also made a contribution to knowledge in the area of practice, in understanding how certain actors experienced interpersonal process, in suggesting certain cultural modes for startup boards in order for them to be more effective, and suggesting structural considerations when forming or changing a board, or for Chairs implementing internal processes. Finally, the research has presented a novel approach to understanding startup boards through the use of critical discourse analysis to triangulate findings from phenomenological analysis, which adds both to the methodological literature, and demonstrates the value of discourse analysis to research in the field of corporate governance.

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