Boards of Directors in Swiss SMEs: little diversity, high stability

Low diversity and high stability: this is how the composition of boards of directors in Swiss SMEs can be summarized according to a new study conducted at the University of Zurich. The study is the first to provide up-to-date, comprehensive and detailed insights into the composition of boards of directors in small and medium-sized Swiss companies.

A new study by the University of Zurich shows low diversity and high stability on the boards of directors of Swiss SMEs. (Image: UZH)

The study is based on an analysis of more than 28,000 Swiss SMEs and provides detailed information on key characteristics of boards of directors, including board size, gender and nationality distribution, CEO duality and board members' terms of office. The author of the study is Angelo Antonio Di Feo from the University of Zurich.

Key findings of the study

  1. Small boards of directors dominate: Almost 90% of the SMEs surveyed have boards of directors with a maximum of four members. Small companies in particular rely on boards with only one or two members. This indicates a high concentration of management responsibility, which often lies with the owners themselves.
  2. Lack of women on boards of directors: On average, women make up only 20% of board members. The proportion of women varies greatly depending on the industry: in technology-oriented sectors such as the IT services industry, the proportion of women is only 9.3%, while social service companies have the highest figures with a proportion of 29.2%. These figures illustrate the existing diversity gaps in terms of more female representation in management bodies.
  3. Low international diversity: Only around 10% of Board members are not Swiss citizens. The proportion of foreign board members remains low overall, with an increase in border regions such as Ticino, where the proximity to Italy leads to a higher proportion of international board members.
  4. Long-term stability of the Board of Directors: The average term of office of board members is 8.3 years, which indicates that certain board members are shareholders, but also a high degree of stability and many years of experience within the boards. It is interesting to note that older companies tend to employ older board members, which indicates that certain board members are part-owners but also that there is greater continuity and tradition in corporate management.

Diversity as a challenge for SMEs

"Our analysis shows that the boards of directors of Swiss SMEs are significantly more homogeneous and smaller than those of listed companies. This raises the question of whether targeted measures to promote diversity, particularly in terms of gender, age and nationality diversity, could not only strengthen governance but also promote the long-term success of SMEs," explains Angelo Antonio Di Feo, author of the study. The results of the study could serve as a valuable basis for a broader discussion on governance standards and diversity in the SME landscape. Policy makers, business associations and companies could use the insights gained to develop targeted diversity initiatives that contribute to a stronger and more sustainable governance culture in SMEs.

Regional and sectoral differences

The study shows striking differences in the composition of the boards of directors, depending on the geographical location and sector of the companies.

  • Regional differences: In Ticino, boards of directors are the most international, with a proportion of 21.4% foreign members. In the Espace Mittelland region, this proportion is only 8.4%.
  • Sectoral differences: The proportion of female board members varies greatly between the different sectors. In public administration and social services, the proportion of women is 29.2%, while in the IT services sector it is only 9.3%. The CEO duality also shows strong sectoral differences: In construction, one person takes on the role of both CEO and board chair in 66.5% of cases. Industry, with the lowest value (raw materials and energy), has only 27.5% CEO duality.

Comparison with listed companies

The boards of directors of SMEs differ significantly from those of large listed companies. They are generally smaller and more homogeneous, with diversity characteristics such as gender and nationality being significantly less pronounced. In comparison, companies in the Swiss Market Index (SMI) have around 35% of women on their boards of directors, which is significantly higher than the figure for SMEs.

"Our study shows how regional and sector-specific characteristics shape governance structures in SMEs. The findings provide valuable impetus for the development of targeted measures that could help SMEs to further increase diversity in their management bodies," Di Feo continues.

Source: www.uzh.ch

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