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| Internal Corporate Governance of Science-based Firms: A Literature Review and Future Research Agenda |
| Fang Shuai,Li Xinrong,Lei Jiasu |
| (School ofEconomics and Management, Tsinghua University, Beijing 100084, China) |
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Abstract Science-based firms refer to those firms which are engaged in science-based innovation, make or rely on scientific exploration and discovery and further commercialize scientific achievements. Over the past 20 years, the number of science-based firms which serve as a bridge for the transformation of basic scientific achievements, has increased, finally driving innovation. So far, research on science-based firms has made significant progress. However, in view of the particularity of science-based firms, the governance structure of such firms has become an urgent topic to be studied, especially their internal governance. Based on Web of Science core collection database, this paper searches the literature on science-based firms published on some important journals from 2000 to 2020 and collect some classical literature by Google Scholar.#br#Different from internal corporate governance literature on traditional firms, research on science-based firms should consider not only board governance, shareholder governance and executive governance, but also the role of entrepreneurs (the imprinting effect) and scientist team governance. According to the above logical framework,this paper is divided into several sections. The first section defines science-based firms and distinguishes them from similar concepts such as “technology-based (engineering) firms”, “university spin-off firms” and “high-tech firms”, so as to clarify the connotation of science-based firms. The second to third sections review the unique elements of internal governance (the entrepreneur role, the scientist team governance) in science-based firms. The fourth to sixth sections summarize the traditional elements of internal governance (board governance, shareholder governance and executive governance).#br#In the second section, the governance structure of a science-based firm depends on the stage of firm life cycle.In the early stage of start-up, the characteristics of entrepreneurs and the role they play canbring the imprinting effect, and then have an impact on the choice of governance structure and subsequent firm performance. Therefore, this section specifically reviews the literature on the role of entrepreneurs, including scientist entrepreneurs and surrogate entrepreneurs. #br#In the third section, the paper reviews the literature on team governance of scientists. The composition of team members is an important concern of the firm governance structure. In science-based firms, scientists occupy a high proportion of the team, comprising an important part of corporate governance. They undertakes the mission of transforming scientific knowledge from academia to the real economy. It plays a unique role in the internal corporate governance. This section discusses the knowledge contribution role and resource contribution role of the scientists team, and also introduces the limitations faced by them in governance.#br#In the fourth section, this paper reviews the board governance literature on science-based firms discusses the evolution of board functions and board structure. As the core of internal governance structure, the board of directors is not only the agent of shareholders, but also the principal and supervisor of managers. As the key node connecting shareholders and managers, the function and structure of the board of directors directly affect the board effectiveness and then the level of internal governance. Especially in science-based firms, the function and the composition of the board affect the strategic decision-making process, mechanism and outcomes of such firms. #br#In the fifth section, this paper reviews the literature on shareholder governance, discusses the ownership structure, the influencing factors of equity financing and the evolution mechanism. Ownership structure has the influence on the formation, operation and performance of internal governance mode. In science-based firms, the reasonable arrangement of equity structure between R&D teams with technological advantages and investment institutions with business knowledge advantages affects the internal governance effectiveness of such firms.#br#In the sixth section, this paper reviews the literature on executive governance and discusses how to select and motivate top executives. During the establishment and subsequent development of science-based firms, they often face internal and external challenges.For such firms, it is of great significance to build an effective top management team and enhance their motivation to provide resources, knowledge and skills. #br#Based on the above analysis, this paper proposes a future research agenda from the perspective of corporate governance, including how to allocate power, design incentive mechanisms, and implement staffing. The future research directions proposed in this paper can enrich and expand the theoretical framework of science-based firm governance research, and bring enlightenment for understanding and guiding scientific-based corporate governance practices in the Chinese context.#br#
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Received: 29 November 2021
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