Boards of Directors in New Ventures

Board independence is an important element in the perception of the quality of a firm's governance. This issue, however, can be exacerbated for new ventures because the CEOs are often the founders. For the new venture, then, it is possible that (i) the founder is the CEO , (ii) the founder is also the board chairperson, and (iii) the board is not independent. Importantly, the perceived lack of independent governance in a new venture can adversely affect its relationship with external constituencies – constituencies that may be critical for the new venture's growth and success.

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