Role of boards of directors of family SMEs in balancing tradition and innovation

Boards of directors (BoDs) of family small and medium-sized enterprises (SMEs) are important for managing the tension between tradition and innovation. We adopt key corporate governance theories to examine the control, strategic and service roles of BoDs. We investigate their demographic elements (i.e., composition, characteristics, and structure) to identify best and innovative BoD practices, such as the recruitment of non-executive independent directors and the presence of qualified and skilled BoD members. We also highlight the contributions of the BoD to SME innovation and performance through its interaction with firm processes (i.e., adequate and timely documentation and performance-based remuneration) and tasks (i.e., risk assessment and management and performance control). We contribute to the discourse on entrepreneurship and innovation in family SMEs by clarifying the central and important contributions of BoDs in an increasingly complex and turbulent environment.