The cognitive dimension of corporate governance in fast growing entrepreneurial firms

SummaryThis article explores the specific morphology and functioning of the governance system of fast growing entrepreneurial firms. Corporate governance is conceptualized as a complex system composed of different mechanisms and various actors, reaching beyond the corporate board and its members. To explain the link between the governance system at large and growth, I build on a general model of corporate governance first proposed by Charreaux (2008), where governance potentially influences managerial behavior through two levers: financial discipline and cognition. I argue that, in the specific case of entrepreneurial firms, corporate governance may play a central role in sustaining high levels of growth through the extensive use of the cognitive lever. Beyond its theoretical implications, the model is also instrumental in providing a consistent framework for an exploration of existing empirical research. I review research specifically devoted to the governance of entrepreneurial firms which experience strong growth and find support for the rationale underlying the proposed model.

► I apply an integrative model of corporate governance to the entrepreneurial firm. ► I make theoretical propositions on the cognitive role of governance for fast growth. ► I review empirical works linking growth and governance mechanisms.