Question

Many entrepreneurs try to control the composition of their boards of directors, but more experienced entrepreneurs tend to share control, inviting participation from institutional investors and outside directors.
Which option best summarizes the idea that might be guiding experienced entrepreneurs' behaviour?

• A. The experienced entrepreneurs expect experienced directors to monitor the performance of the enterprise and be a sounding board.
• B. The experienced entrepreneurs expect the institutional investors to support the opinion of entrepreneurs on all major decisions.
• C. The experienced entrepreneurs expect the institutional investors and outside directors to agree to higher remuneration for the board members.
• D. Experienced entrepreneurs expect the experienced directors to engage in day-to-day management of the company.

Hint:

Ask why an experienced entrepreneur would willingly give up some control; look for the option describing a genuine governance benefit like oversight or advice.

Answer 1

The Correct Option is A

The passage says experienced entrepreneurs willingly give up some control by bringing in institutional investors and outside directors. We need the reason that best explains why giving up control would make sense for someone experienced enough to know what they are doing.

1. Option A: Outside directors bring monitoring (checking that the business is run well) and act as a sounding board (people to test ideas on before big decisions). This is a real, well-known benefit of a diverse board, and it fits why an experienced entrepreneur would willingly share control.
2. Option B: This says investors are expected to just back whatever the entrepreneur decides. That defeats the point of adding outside directors and investors in the first place, since sharing control implies allowing independent views, not automatic agreement.
3. Option C: Expecting board members to sign off on higher pay for themselves is self-serving and has nothing to do with why an entrepreneur would want outside oversight; it does not fit the passage at all.
4. Option D: Outside directors typically oversee and advise, they do not run daily operations. Expecting them to handle day-to-day management goes against the standard role of a board.

Option A gives the most sensible motive: experienced entrepreneurs value having seasoned people watch over performance and offer guidance, which is exactly why they are willing to share control.

Let's summarize:

• Sharing board control usually happens to gain oversight and advice.
• Option A names both functions correctly: monitoring and being a sounding board.
• The other options either contradict the idea of independent oversight (B, D) or are unrelated motives (C).

So the answer is option A.