Financing decisions as a source of conflict in venture boards

Daniel P. Forbes, M. Audrey Korsgaard, Harry J. Sapienza

Research output: Contribution to journalArticlepeer-review

44 Scopus citations


Governance scholarship has suggested that venture boards should be structured so as to stimulate internal conflict. However, structure is a weak predictor of board effectiveness. Moreover, conflict can be dysfunctional, especially when it is focused on relationships rather than tasks. We show that venture boards experience more relationship conflict when they make financing decisions that involve devaluation of the venture and that this effect is moderated by whether the CEO is a founder. Our findings should prompt venture governance scholars to reconsider the importance of board structure, the value of board conflict and the behavior of founder- versus non-founder CEOs.

Original languageEnglish (US)
Pages (from-to)579-592
Number of pages14
JournalJournal of Business Venturing
Issue number6
StatePublished - Nov 2010

Bibliographical note

Funding Information:
This research was supported by a grant from the University of Minnesota's Office of the Vice President for Research. An earlier version of this paper was presented at the 2005 Babson–Kauffman Entrepreneurship Research Conference and printed in its proceedings, the Frontiers of Entrepreneurship Research. We are grateful to Doug Johnson, John Mauriel, Phil Phan and Tom Vanacker, among others, for their suggestions and to Hans Rawhouser for his research assistance.


  • Boards of directors
  • Conflict
  • Decision making
  • Founders


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