To What Extent Do Board Interlocks Matter for New Venture Growth and When Do They Matter More?

Abstract

The extant research addresses different aspects of the role of boards in new ventures (Li, Terjesen, & Umans, 2018). Board interlocks, instead, are understudied in the entrepreneurial setting (Lamb & Roundy, 2016). Moreover, findings on one of the most researched relationships in interlock literature – the relationship between board interlocks and firm performance – are inconsistent (Lamb & Roundy, 2016). Therefore, the paper investigates the extent to which and under which conditions board interlocks are related to new venture growth. The paper suggests a closer look at the characteristics of board interlocks, interlocking firms and environment surrounding new ventures in search for instances when board interlock matter (more) for venture growth. To address the relationships, I employ the Norwegian registry data – a longitudinal employer-employee matched dataset of all Norwegian residents and firms with the possibility to identify board directors and their affiliations, among an array of other variables/indicators. Enabled by data, the study design is longitudinal that is a step forward in board research (Mizruchi, 1996). As of 2014, the sample consists of about 62,000 interlocking firms, and among these, 25% are new ventures (15,000). The analyses show that board interlocks are double-edged swords, as their presence and characteristics are in contrasting relations with different aspects of new venture growth – growth in sales, assets, equity, profit and number of employees.