Abstract:

A preponderance of studies has been conducted to investigate the importance of board composition for board effectiveness, particularly in large firms. Nevertheless, little has elucidated how board composition is essential for board effectiveness in SMEs. This article, therefore, purports to explore from the standpoints of SMEs on the components of board composition that help to bring board effectiveness. In doing so, the study employs a qualitative approach in which a series of interviews are conducted as the main instrument of the data collection. There are 18 experts and SMEs directors have been interviewed. Besides, the company profiles of 100 SMEs of which have won E50 awards was analysed to corroborate the interview. The study unfolds two mains findings. First, board size is suggested to be essential for board effectiveness in SMEs. Second, the company profile indicates that gender diversity is vital for board effectiveness as compared to ethnic.