Governance networks: Interlocking directorships of corporate and nonprofit boards

Abstract

AbstractThis study describes the interlocking networks of corporate directors serving on publicly listed corporate boards and those on the boards of nonprofit organizations in Western Australia in 2006. When this study was undertaken, the state was the beneficiary of a booming economy in resource development prior to the global financial crisis, yielding a substantial number of resource companies with their headquarters in Perth, the capital city of Western Australia. Through social network analysis using NetDraw, we trace the extent of interpersonal connections of prominent individuals who serve on these boards in this relatively isolated state in Australia. The network figures demonstrate the inner circle of companies and nonprofits with their interlocking directorships that suggest the growing interpenetration among the state, the market, and civil society. As a result of reduced government funding during the last two decades in Western Australia, nonprofit organizations have had to use market strategies to increase their revenues, which is one factor that has led to this greater interdependence between previously separate groups. Thus, market forces have blurred the boundaries that once separated private companies from nonprofit organizations, increasing the interlocking nature of their board directors.