Abstract
The corporate governance functions effectively by calling for outside
experts into the executive board. An inclusion of outside professionals gets
Japanese companies cope with encountered business challenges effectively.
As compared to large companies, small and medium enterprises (SMEs) in
Japan are reluctant to invite outside people into board members. To date, little
research has been done regarding why and how Japanese SMEs have
introduced outside executives in corporate decision-makings. There are two
main functions provided by part-time executives; monitoring function and
advising function for the corporate management. A questionnaire survey
and face-to-face interviews were administered in the Kyoto area in order to
examine the use of outside experts in SMEs. The current study reports that
Japanese SMEs hire outside experts as advisers, rather than part-time board
members. It clarifies the important roles played by external executives for managing
SMEs, and suggests the credibility of professors in business schools as
advisors.
