Transnational Board Interlocks as a Source of Non‐experiential Knowledge for the Firm in Foreign Markets

Abstract

AbstractBoard interlocks between firms headquartered in different countries are increasing. We contribute to the understanding of this practice by investigating the transnational interlocks formed by the 100 largest British firms between 2011 and 2014. We explore the association between different attributes of a firm's internationalization process, namely performance, structural and attitudinal, and the extent of the firm's engagement in transnational interlocks. We posit that the value of transnational interlocks as a non‐experiential source of knowledge will vary according to which of these three attributes becomes more prominent as the firm internationalizes. We do not find a significant relationship between the performance and structural attributes of internationalization, as measured by the firm's percentage of foreign sales and assets, respectively, and increased engagement in transnational interlocks. We do, however, find an inverted U‐shaped relationship between the attitudinal attribute of internationalization, represented by the psychic dispersion of the firm's foreign operations, and the firm's number of transnational interlocks. This non‐linear relationship reveals both a natural boundary for the firm's capacity to engage in transnational interlocks and a reduced willingness to engage in such ties once a certain degree of attitudinal internationalization has been reached.