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Interlocking directorates and dynamic corporate performance: the roles of centrality, structural holes and number of connections in social networks

Author

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  • Wei-Kang Wang

    (Yuan Ze University)

  • Wen-Min Lu

    (National Defense University)

  • Qian Long Kweh

    (Canadian University Dubai)

  • Mohammad Nourani

    (Universiti Sains Malaysia)

  • Rong-Suei Hong

    (Yuan Ze University)

Abstract

This study investigates how interlocking directorates affect dynamic corporate performance among 187 Taiwanese electronics companies during a 3 year sampling period (2013–2015). This study consists of two stages. First, this study measures the operational efficiency of electronics companies using the dynamic slacks-based measure model of data envelopment analysis. Second, this study adopts a truncated-regression model with bootstrap to examine the impacts of interlocking directorates on dynamic corporate performance. The empirical findings of this study indicate that centrality (direct connections), structural holes (indirect connections), and the number of connections (total connections) related to interlocking directorates have significant positive influences on the dynamic corporate performance of Taiwanese electronics companies. The results suggest that more interlocks at the board level leads to better corporate performance over a long-term period. Overall, this study uses social network analysis to shed light on the role of interlocking directorates and its importance to dynamic corporate performance from the resource dependence perspective.

Suggested Citation

  • Wei-Kang Wang & Wen-Min Lu & Qian Long Kweh & Mohammad Nourani & Rong-Suei Hong, 2021. "Interlocking directorates and dynamic corporate performance: the roles of centrality, structural holes and number of connections in social networks," Review of Managerial Science, Springer, vol. 15(2), pages 437-457, February.
    • Handle: RePEc:spr:rvmgts:v:15:y:2021:i:2:d:10.1007_s11846-019-00347-2
    DOI: 10.1007/s11846-019-00347-2
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    Cited by:

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    2. Özlem O. Akdeniz & Hussein A. Abdou & Ali I. Hayek & Jacinta C. Nwachukwu & Ahmed A. Elamer & Chris Pyke, 2024. "Technical efficiency in banks: a review of methods, recent innovations and future research agenda," Review of Managerial Science, Springer, vol. 18(11), pages 3395-3456, November.

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    More about this item

    Keywords

    Social network; Interlocking directorates; Corporate performance; Data envelopment analysis; Dynamic slacks-based measure;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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