Pathways to independent governance: a fuzzy-set analysis of Post-IPO board transformations in Japanese venture firms

Abstract This study explores the factors affecting the transformation of board structures in post-initial public offering (IPO) venture firms, specifically the shift toward boards dominated by independent outside directors. Initially, most newly listed venture firms adopted boards led by executive directors, with limited external oversight. However, many transitioned to a board structure with multiple independent outside directors within a few years post-IPO. Through a fuzzy-set qualitative comparative analysis of 156 companies in the Japanese emerging market, this study identifies three causal pathways (equifinality) and key factors that drive such governance changes, such as strategic direction, organizational structure, and shareholder composition. The causal asymmetry between firms that adopted the new board structure and those that did not is also highlighted. These findings advance the understanding of how theoretical framework, such as agency theory, resource dependence theory, and the corporate lifecycle model, apply to post-IPO governance, thus connecting entrepreneurship and corporate governance literature.