Elucidating the Role of Corporate Governance in Firms' Entrepreneurial Performance

Corporate governance, by establishing oversight structures and accountability mechanisms, affects resource allocation and the quality of decision-making and thereby shapes organizational performance. Studies indicate that effective governance mechanisms are aligned with increased efficiency and the creation of long-term value. The actual effects vary depending on the industrial context, ownership structure, and moderating factors. The aim of this study is to examine the direct effect of corporate governance on entrepreneurial performance and to clarify the mediating role of organizational innovation in this relationship, taking into account its strengthening or limiting potential. The methodology of this research is quantitative with a pragmatist philosophy. The statistical population comprises all steel companies listed on the Tehran Stock Exchange, and with a focus on medium and large companies, firm size and industry type (metals and steel) were considered as control variables. Sampling was conducted using systematic elimination, and ultimately 44 companies were selected; of approximately 75 questionnaires sent, 68 were returned and used for the final analysis. The findings indicate that corporate governance has a positive and largely direct effect on entrepreneurial performance—an effect substantial enough to underscore the importance of the governance system for entrepreneurial activities. Furthermore, organizational innovation was identified as a mediating variable, but the strength of this mediation is weak and its direction is negative. As a moderator, it was also observed that in firms with high levels of innovation, the positive effect of governance on entrepreneurial performance is attenuated—likely due to the short-term costs and risks associated with innovation and other contextual factors—whereas in firms with low levels of innovation, the effect of governance on performance is strengthened.