Network Of Interlocking Directorates Research Articles

Governance network externality: Exploring systemic risk generation mechanisms

We show three potential stages in transforming corporate debt default risk to systemic risk in an interlocking directorate network: network contagion of corporate debt default risk, network transformation, and network cascade of systemic risk. In addition, based on the arguments of ‘too connected to fail’ and ‘too big to fail’ in the scope of systemic risk, nodes with higher network connectivity and larger asset scale can significantly improve the efficiency of risk contagion, transformation and cascade in the network. Finally, a significant risk spillover effect exists between the real and financial sectors. From the perspective of corporate internal governance, we confirm that corporate ‘governance connections’ represented by the director network are crucial in transforming micro corporate risks to macro systemic risks and analyzes the whole process of systemic financial risks from endogenous outbreak to diffusion and finally accumulation and outbreak.

Meta-governance, uncertainty and self-organization in corporatist social service sectors: The case of Hong Kong

This article explores the relationship between meta-governance, uncertainty and governance network responses. A social network analysis was conducted on the interlocking directorate network among nonprofits before and after a market-oriented collibration triggered by a new public management reform to the corporatist social service provision system in Hong Kong. By unpacking and showing the distinct processes of network formation in response to substantive and strategic uncertainty arising from the market-oriented collibration, the study shows that although more nonprofit actors were directly included in the formalized policy venues after the reform, the network density and clustering coefficient dropped after the reform, potentially reducing the self-coordinating capacity of the governance network. However, for some nonprofit actors, node betweenness centrality increased and node degree centrality decreased, creating an enabling condition for adaption. Points for practitioners The uncertainties in meta-governance may bring about network processes at variance with the original intentions of public meta-governors that actors with complementary resources and competences combine their efforts in the provision of services and service innovation. To manage substantive and strategic uncertainties, public meta-governors need to find ways to increase the shared understandings of social problems, enhance the clarity of policy goals, and find a balance when collaborating between collaborative and market modes of governance.

Research on the Influence of Network Position on Corporate Social Responsibility: Moderating Effect Based on Ownership Concentration.

Based on the social network theory and the institutional theory, this study examines the influence of corporate network position on corporate social responsibility (CSR), and further explores the moderating role of ownership concentration. Given the characteristics of CSR in different aspects, this study explores the relationship between corporate network position and economic CSR, environmental CSR, and social CSR from the two aspects of the centrality and structural holes of interlocking directorate network based on the data of 1,034 Chinese A-share listed companies from 2010 to 2019. The results show that the centrality and structural holes of interlocking directorate network have positive effects on the overall level of CSR, and the impacts on economic CSR and environmental CSR are stronger than that on social CSR. In addition, ownership concentration has a positive moderating effect on the relationship between corporate network position and CSR. These findings enrich the depth of research on CSR, clarify the influence of the characteristics of interlocking directorate network on CSR in different dimensions, and supplement the knowledge of existing research.

Matchmaking Only for Equals? Cross-Network Influence of Status Distance on Triadic Closure

This paper examines the cross-network influence on triadic closure in interorganizational networks. In particular, I theorize status distance as a crucial antecedent of triad closure: from the status distance between a pair of potential partners the common third party infers how sustainable their future cooperation is likely to be, which influence the common third party’s decision on whether to facilitate triadic closure. Using a longitudinal dataset of interlocking directorates and loan guarantees between Chinese publicly listed firms in the period 2007-2016, I find that triadic closure in the loan guarantee networks is less likely to happen when the indirectly connected parties have a large status distance in the interlocking directorate network. The weakening effect of status distance on triad closure is attenuated when the common third party has more alternative partners – because the common third party is less concerned about potential damages to its relationships with the two parties. I also find that pairs of status distance are less likely to have reciprocal guarantees, showing why common third parties use status distance to infer the likelihood of sustainable cooperation. If a common third party facilitated triadic closure in the first place, the focal pair is then more likely to follow the cooperative norm of reciprocity. This study instills a greater appreciation for the forward-looking orientation of common third parties in evaluating potential challenges in the cooperation between its partners, and thus its decision on whether to help with closing an open triad.

Delineating the corporate elite: Inquiring the boundaries and composition of interlocking directorate networks.

Corporate elite studies have for long investigated networks of interlocking directorates to test and corroborate key theoretical expectations regarding the cohesive organization of such an elite and their ability and willingness to act on behalf of general business interests. These studies typically collect data on a list of 50, 100, 200 or 500 corporations ranked by economic size, sometimes stratified in sectors. The sampling approach often follows previous studies in order to increase comparability. These relatively arbitrary sampling practices are problematic because they impact the empirical results and our therefore the conclusions drawn from it. Using a sample of 3251 Canada‐based corporations, we establish that indeed different sampling criteria – that is sample size, proportion of financial firms, inclusion of state‐owned enterprises and so on – significantly impacts network properties of corporate elite networks. We establish rather disturbing differences, especially for smaller sample sizes (<100). Subsequently, we develop alternative demarcation criteria of the corporate elite based on a k‐core decomposition. We conclude by emphasizing that the sampling decisions in interlocking directorate studies should much more be carefully be thought through in future research on the topic, both in corporate elite studies and beyond.

Top Managerial Oversea Social Capital, Firm Network Position and Innovation: The Mediating Effect of Prestige and Power from Firm Network Position

In this article, we draw on the perspective of “embeddedness” with the resource dependence theory and social network theory to explore the relationship between oversea social capital, enterprise network advantageous position (“prestige” and “power”) and innovation capability by employing 1533 listed companies’ interlocking directorate network statistics among 2009-2013. The results show: 1) top managerial oversea social capital has a significant positive effect on enterprises’ innovation capability; 2) top managerial oversea social capital has a positive effect on obtaining the enterprise network advantageous position (prestige an power); 3) enterprise network advantageous position (prestige an power) has a mediating effect on the relationship between oversea social capital and innovation capability; 4) top managerial governmental social capital has a positive moderating effect on the relationship between oversea capital and innovation capability. This research enriches researches on how does top managerial oversea social capital transfer into innovation capability, and explores the collaboration mechanism of oversea social capital and domestic governmental social capital on improving enterprises’ innovation capability. This article provides both theoretical and practical implications on the future research on how to transfer top managerial oversea social capital into innovation capability improvement.

The Influence of Interlocking Directorates on the Propensity of Dividend Payout to the Parent Company

An examination was performed on whether director interlocks enabled the adoption of a dividend policy for the benefit of the parent company in the ownership structure. Specifically, the study investigated the dependence of the impact of the central position in the board network on the probability of dividend payment. Based on sample of firms listed on Polish capital market, it was observed that the more central the company’s position in the interlocking directorate network, the more likely it is to pay dividends to a subsidiary. This effect is related to the eigenvector centrality. The results obtained suggest that corporate financial policy can be spread across firms through the board network.

Tie heterogeneity in networks of interlocking directorates: a cost\u2013benefit approach to firms\u2019 tie choice

This conceptual paper investigates the creation of interlocking directorate ties focusing on firms’ choice between sent, received, and undirected board interlocks. Drawing on a framework on the benefits of board interlocks stemming from resource dependence theory, we synthesize prior research on the consequences of interlocks and demonstrate that each type of interlock goes along with unique knowledge-based, social influence-related, and institutional benefits and costs. We frame tie choice as a strategic decision based on a cost–benefit analysis and suggest that the tie-specific benefits and costs lead to the three types of ties not being equal alternatives. Appealing to specific motives for tie creation, these benefits and costs influence firms’ choice between the three types of interlocks. Our synthesis and cost–benefit analysis contribute to prior research by shedding light on the role of tie heterogeneity as a driver of tie creation as opposed to a factor causing firm-level outcomes. By focusing on content of ties, we extend the typically purely structural research on interlocking directorate networks. We suggest directions for future research and discuss possibilities to empirically validate our propositions on how tie-specific opportunities and constraints will affect tie choice.

The Spanish corporate structure through interlocking directorates

The aim of this paper is to determine to what extent globalization pressures are changing interlocking directorate networks modeled on continental capitalism into Anglo-Saxon models. For this purpose we analyse the Spanish network of interlocks, comparing the present structure (2012) with that of 1993 and 2006. We show how, although Spanish corporative structure continues to display characteristics of the continental economies, some major banks are significantly reducing industrial activity. Nevertheless, the financial organizations continue to maintain a close relationship with sectors such as construction and services. The analysis of the network of directorates shows a retreat in activity of industrial banking in Spain. Two large Spanish financial institutions, BSCH and La Caixa, continue to undertake activities of industrial banking in 2006, but this activity is significantly reduced in 2012. According to the theories on the role of the interlocking directorates, the companies in these sectors assure their access to banking credit by incorporating advisors from financial organizations to their board of directors. We cannot conclude that the structure of the Spanish corporate network has become a new case of Anglo-Saxon structure, but we got indications that are becoming less hierarchic as banks seem to slowly abandon centrality positions. This is especially salient if we compare the networks of 2006 and 2012, which show a continuing decrease of the role of banks and insurance companies in the network.

The interaction between inter-firm and interlocking directorate networks on firm's new product development outcomes

This paper explores the interaction between a prominent board of directors and the network of inter-firm relationships on new product development. Specifically, we posit a positive interaction effect between a prominent board and the inter-firm network and structural holes positions on the number of new products developed by the firm. We test the theoretical framework on a sample of 1758 agreements among 1890 biopharmaceutical firms over the period 2006–2010. We find that by filtering, complementing and legitimizing information coming from the inter-firm network, a prominent interlocking directorate network can improve the inter-firm network's effects on new product development. We discuss important implications for how inter-personal networks (such as the board interlock directorate network) help to develop the effectiveness of inter-firm relationship networks in achieving new product development outcomes.

Evolutionary and Co-Evolutionary Dynamics of Ownership and Control Linkages in Networked Economy (WITHDRAWN)

I follow the co-evolution of capital and interlocking directorate networks in Israel from 1992 till 2006 in order to gain better understanding of the impact of the networked economy form of corpora...

European firm networks and competition - theoretical background and empirical evidence

This paper analyses firm linkage via multiple directorships among 5,370 non-financial listed firms in the EU-15 member states plus Norway and Switzerland in the period 2005 to 2011. In addition, the network of minority shareholdings and simultaneous interlocking directorates is analysed for the year 2011. The results illustrate that both financial and director networks are dominated by national ties whereas also a range of international linkages is identified. In line with the literature, international director linkages increased in the period under investigation. Further, network analysis shows that regional distance seems to be an important factor for the establishment of personal network ties. Descriptive analyses also suggest a positive relationship between director and financial connections of firms and their financial performance compared to the non-connected firms in the sample. It seems that firm linkages via multiple directorships and minority shareholdings are beneficial for the connected firms to ensure competitive advantages. The paper concludes with policy recommendations and implications for business practice and provides an outlook on further research in this field.

Broken ties and corporate governance changes under uncertainty conditions. A longitudinal study of Italian boardroom network evolution

The recent systemic crisis that has affected the financial markets and real economies of major industrialized countries has had significant effects on the corporate governance and key organizational choices of large firms. In this context, the present study aims to verify whether the international crisis has significantly changed the structure of the interlocking directorate network that links large firms in the regulated Italian market. Furthermore the paper, which is a development of a preceding research study, also investigates the changes that have occurred in the interpersonal network of directors of the same firms previously observed. To this end, we present a preliminary analysis of the evolution of corporate governance in the main European regulated markets through a dynamic comparison of some synthetic statistical data observed at the end of the years 2006, 2008 and 2010. In the second part, after framing the interlocking directorate concept, we examine the evolution of the interlocking directorate network during the aforementioned observation period (2006-2010) with respect to larger Italian listed companies (FTSE MIB) and their directors

The Network Of Interlocking Directorates And Firm Performance In Transition Economies: Evidence From China

&lt;span style="font-family: Times New Roman; font-size: small;"&gt; &lt;/span&gt;&lt;p style="margin: 0in 36.1pt 0pt 0.5in; text-align: justify; text-justify: inter-ideograph; mso-pagination: none; mso-outline-level: 1;" class="MsoNormal"&gt;&lt;span style="font-family: Times New Roman;"&gt;&lt;span style="font-size: 10pt; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;Using &lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;a Chinese sample containing 8727 firm-years over the period from 2005 to 2010, we investigate the economic effect of interlocking directorate networks, and find that firms with central position&lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt; measured by network centrality&lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt; in interlocking directorate networks earn superior one&lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;-&lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt; to three&lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;-&lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;year ahead performance measured by return on assets (ROA) and return on Sales (ROS). We also show that the economic effect of interlocking directorate network is more pronounced in non-state-owned enterprises (NSOEs) compared to state-owned enterprises (SOEs). Our evidence is important, because it shows that &lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;to some extent&lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt; &lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;the &lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;interlocking directorate network can &lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-font-family: SimSun; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;serve &lt;/span&gt;&lt;span style="font-size: 10pt; mso-fareast-language: ZH-CN; mso-font-kerning: 22.0pt; mso-bidi-font-weight: bold;"&gt;as an solution to the institutional voids which are derived from the reform in Chinese translation economy. &lt;/span&gt;&lt;/span&gt;&lt;/p&gt;&lt;span style="font-family: Times New Roman; font-size: small;"&gt; &lt;/span&gt;

Board composition and interlocking directorate evolution as a consequence of the recent financial crisis: evidence from Italian listed companies

The recent systemic crisis that has affected the financial markets and real economies of major industrialized countries has had significant effects on the corporate governance and key organizational choices of large firms. In this context, the present study aims to verify whether the international crisis has significantly changed the structure of the interlocking directorate network that links large firms in the regulated Italian market. To this end, the first part of the paper presents an analysis of the evolution of corporate governance in the main European regulated markets through a comparative analysis of some synthetic statistical data observed at the end of the years 2006, 2008 and 2010. In the second part, after framing the concept of interlocking directorate in a theoretical perspective, we examine the evolution of the network of personal ties between large Italian listed companies in the period of observation (2006-2010) using Social Network Analysis

National and international interlocking directorates within Europe: corporate networks within and among fifteen European countries

This article focuses on the structural aspects of interlocking directorate networks within and among fifteen European countries. The results show large quantitative differences in network densities within countries. These differences are strongly and significantly related to the ‘variety of capitalism’ in place. Second, an analysis of the interlocking directorates across country borders reveals a European interlocking directorate network in which different countries take quite different positions. As it turns out, a country's international position is strongly and significantly related to its EU membership duration. Additionally, there are indications of a link between the structure of the interlocking directorate network within a country and how that country is positioned in the international network. Data were collected in 2006 concerning 362 corporations with 6115 board positions in fifteen European countries.

Modelling the evolution of a bipartite network—Peer referral in interlocking directorates

A central part of relational ties between social actors is constituted by shared affiliations and events. The action of joint participation reinforces personal ties between social actors as well as mutually shared values and norms that in turn perpetuate the patterns of social action that define groups. Therefore the study of bipartite networks is central to social science. Furthermore, the dynamics of these processes suggests that bipartite networks should not be considered static structures but rather be studied over time. In order to model the evolution of bipartite networks empirically we introduce a class of models and a Bayesian inference scheme that extends previous stochastic actor-oriented models for unimodal graphs. Contemporary research on interlocking directorates provides an area of research in which it seems reasonable to apply the model. Specifically, we address the question of how tie formation, i.e. director recruitment, contributes to the structural properties of the interlocking directorate network. For boards of directors on the Stockholm stock exchange we propose that a prolific mechanism in tie formation is that of peer referral. The results indicate that such a mechanism is present, generating multiple interlocks between boards.

How Major Public-Listed Blue Chip Enterprises in Germany Protect Themselves from Hostile Takeovers by Foreign Investors through Networks of Interlocking Directorates

How Major Public-Listed Blue Chip Enterprises in Germany Protect Themselves from Hostile Takeovers by Foreign Investors through Networks of Interlocking Directorates

Small states, international pressures, and interlocking directorates: the cases of Switzerland and the Netherlands

Abstract Interlocking directorate networks among business enterprises have increasingly come under pressure due to internationalization and deregulation of markets. We show that in the small and internationalized economies of Switzerland and the Netherlands extensive changes have taken place. However, considerable differences in the form and the extent of these changes exist between the two countries. We argue that only by investigating which actors change their behavior we can understand and interpret the reasons for changes in the network structure. Combining a review of the Dutch and Swiss corporate governance landscape with a network analysis of board interlocks, we show that the changes in corporate networks are strongly affected by individual corporate strategies. The changing role of financial institutions in particular explains much of the variance between the two countries. Increasing influence of market pressures through dispersed ownership, on the contrary, does not explain changing patterns of interlocking directorates.

The Interurban Corporate Interlocking Directorate Network of Canada and the United States: A Spatial Perspective

The Interurban Corporate Interlocking Directorate Network of Canada and the United States: A Spatial Perspective