Today, governance in boards of private firms and nonprofit organizations is an emerging issue (Daily & Dalton, 2015). Even though several private firm directors always come forth claiming that they are always in constant communication with their firms’ management on issues to do with finances and corporate strategies, there is a significant shortfall in the quality of the kind of governance offered by these companies (Rowley, Shipilov & Greve, 2017).
Related to lack of quality in boards’ governance is the evidence of a number of issues that bring about contention concerning governance in boards on Private and Not-for-profit firms that include: oversight of risk management, the establishment of firm strategies and the assessment of emerging competition and innovation. To begin with, risk management encompasses the identification, assessment, and arrangement in terms of priority and the application of the necessary remedies (Baxter et. al , 2013). The board is tasked with the responsibility of helping align a firm’s enterprise risk management and also sharing the right information with the board members which will go along way in enabling the firm to remain competitive (Beasley, Branson & Pagach, 2015).
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The other vital factor is the establishment of firm strategies in the boards. Autio, Kenney, Mustar, Siegel, and Wright claim that the potential of firm strategies being of significant positive benefit to a company is derived from efficient corporate governance. Moreover, it is an opportunity that is often overlooked in private and Not-for-profit entities. It is very crucial in a firm’s longevity and also the quality of governance by the board.
Lastly, the issue of the assessment of emerging competition and innovation is essential because in today’s digital era, there is need for boards to make sure that they are ready for these emerging digital trends and ensure that they are well aware of their innovation capability in order to increase the companies’ profitability (Balsmeier, Buchwald & Stiebale, 2014). Furthermore, Tassey (2014) contends that it is important that the board understands that these circumstances that bring forth new competitors and should find ways of dealing with this new breed of competitors.
References
Autio, E., Kenney, M., Mustar, P., Siegel, D., & Wright, M. (2014). Entrepreneurial innovation: The importance of context. Research Policy , 43 (7), 1097-1108.
Balsmeier, B., Buchwald, A., & Stiebale, J. (2014). Outside directors on the board and innovative firm performance. Research Policy , 43 (10), 1800-1815.
Baxter, R., Bedard, J. C., Hoitash, R., & Yezegel, A. (2013). Enterprise risk management program quality: Determinants, value relevance, and the financial crisis. Contemporary Accounting Research , 30 (4), 1264-1295.
Beasley, M., Branson, B., & Pagach, D. (2015). An analysis of the maturity and strategic impact of investments in ERM. Journal of Accounting and Public Policy , 34 (3), 219-243.
Daily, C. M., & Dalton, D. R. (2015). Corporate governance in the small firm: Prescriptions for CEOs and directors. Journal of Small Business Strategy , 5 (1), 57-68.
Rowley, T. J., Shipilov, A. V., & Greve, H. R. (2017). Board reform versus profits: The impact of ratings on the adoption of governance practices. Strategic Management Journal , 38 (4), 815-833.
Tassey, G. (2014). Competing in advanced manufacturing: The need for improved growth models and policies. The Journal of Economic Perspectives , 28 (1), 27-48.
