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Director networks and UK corporate performance

Director networks and UK corporate performance

Cronin, Bruce and Popov, Vladimir (2005) Director networks and UK corporate performance. International Journal of Knowledge, Culture and Change Management, 4. pp. 1195-1205. ISSN 1447-9524 (Print), 1447-9575 (Online)

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Abstract

The implications of the intricate pattern of relationships formed by company directors holding positions on multiple corporate boards, or 'interlocking', have long been the subject of speculation and investigation. While this web of inter-firm relationships is no longer regarded as prime facia evidence of collusive activity, a growing body of research on US firms has identified a range of performance effects on firms associated with information flows in these networks. Yet research on the role of director networks and firm performance is far from comprehensive and has largely been limited to the largest US corporates.
This paper extends the existing research in this field by drawing together the principal findings to date and testing these in a different national context and with a much larger dataset than used previously. The relationship between director interlocks and corporate performance is examined among 6428 UK firms, those with annual turnover of £100 million or more. Social network and regression analysis is used to detect significant relationships between the pattern of director interlinking and corporate performance.
A number of significant relationships are identified, broadly consistent with the US research but some phenomena distinctive to the UK is found, reflecting differences in the structure and sociology of capital markets in the two countries. In particular the role of executive directors is much less significant to the general financial performance of UK firms than to US firms and is more focused on reputational concerns in capital markets.

Item Type: Article
Additional Information: [1] Presented at the Fourth International Conference on Knowledge, Culture and Change in Organisations, held 3-6 August 2004, University of Greenwich, London, UK. [2] Article number: MC04-0126-2004 (print); MC04-0126-2004 (electronic).
Uncontrolled Keywords: interlocking directorates, corporate performance, business networks, information dissemination
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Centre for Business Network Analysis
Related URLs:
Last Modified: 14 Oct 2016 09:09
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/3703

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