New Insights into Non-Listed Family SMEs in Spain: Board Social Capital, Board Effectiveness, and Sustainable Performance

Abstract

This study proposes an original structural model that analyzes the relationship between sustainable firm performance, and a board of directors’ external and internal social capital. Data collected in 232 non-listed and family-run small and medium-sized enterprises in Spain suggest that the effects of boards’ internal and external social capital on sustainable firm performance were partially transmitted through board effectiveness. However, external social capital influences board effectiveness and sustainable firm performance more than internal social capital. Moreover, interlocks only reinforce the relationship between a board’s external social capital and its effectiveness. Our research offers the following main contributions: (1) A proposed structural theoretical model, (2) a focus on both internal and external social capital, unlike previous literature that emphasized only one perspective, and (3) empirical evidence that supports literature on the interlocking interaction between a boards’ internal and external social capital.

Evolving alliance between corporate environmental performance and financial performance: A bibliometric analysis and systematic literature review

“…Strong and effective corporate governance provides stimulus to sustainable business development. The effectiveness of the Board of Directors (Sanchez-Famoso et al, 2020) and executive compensation of top management (Kartadjumena & Rodgers, 2019) is a driving factor for corporate sustainability, climate, and environmental concerns and, in turn, enhances the financial performance of the firm.…”

Interlocking boards and firm outcomes: a review

“…The first niche theme focuses on the relationship between ownership structure, board interlocks and firm outcomes. This cluster of articles focuses on critical elements of board structure, defined in terms of the board network, but also gender, CEO characteristics, ethnic composition, family or foreign ownership and its impact on such firm outcomes as profitability, business sustainability and board effectiveness (Sanchez-Famoso et al, 2020;Kiel and Nicholson, 2003;Kim, 2005;Dayanandan et al, 2019). Zhu and Chen (2014) find that narcissistic CEOs are more inclined to copy the strategies of the companies where they share board membership than other CEOs.…”

Access to finance, social capital and the improvement of corporate performance: evidence from Southeast Asia

“…Prior studies suggest that access to financial resources, including short and term loans, is associated with higher corporate performance (Fowowe, 2017;Braun et al, 2019;Wellalage and Fernandez, 2019;Demirg€ uç-Kunt et al, 2020;Sanchez-Famoso et al, 2020). Studies report that small firms use long-term loans for investing and short-term loans to meet daily expenditures (Demirg€ uç-Kunt et al, 2020;Sanchez-Famoso et al, 2020).…”

“…Prior studies suggest that access to financial resources, including short and term loans, is associated with higher corporate performance (Fowowe, 2017;Braun et al, 2019;Wellalage and Fernandez, 2019;Demirg€ uç-Kunt et al, 2020;Sanchez-Famoso et al, 2020). Studies report that small firms use long-term loans for investing and short-term loans to meet daily expenditures (Demirg€ uç-Kunt et al, 2020;Sanchez-Famoso et al, 2020). Moreover, Kijkasiwat and Phuensane (2020) state that formal finance accessed from financial institutions, and informal finance accessed from friends, family and money lenders, positively increase the number of sales.…”

“…Specifically, stakeholder theory stresses equal contribution from all stakeholders in providing resources and getting rewards from social involvement that may have a long-term positive impact on a firms' performance (Sen and Cowley, 2013;Boutilier, 2017). Non-listed firms need to connect with diversified stakeholders, including banks and financial institutions, established businesses, suppliers, distributors, manufacturers and customers, to share financial and nonfinancial resources (Singh and Delios, 2017;Sanchez-Famoso et al, 2020). Studies show that these connections help firms in improving business performance, growth and profitability; increasing global trade opportunities; and accessing future collaborations (Islam et al, 2018;Cisi et al, 2020).…”