Using interlocks as a corporate strategy: a descriptive analysis of the Spanish case

Organizations may use a number of different strategies to survive, grow, and achieve success. One of the possible strategies is the use of social capital, in particular interlocks by boards of directors, as their benefits can range from political advantages to better access to information. Despite the increasingly importance of social networks, they have received little attention by scholars when analyzing Spanish corporate boards. This paper pretends to fulfill some of this gap by analyzing interlocks of the largest firms in the Spanish stock exchange in the years 2004 and 2009. The main contribution of this study will relate to a better understanding of the mechanisms used by corporate boards to increase the competitiveness of organizations which in turn changes the network previously created. The analysis will be twofold: First, we are concerned with particular features of the network, that is, its structure and its evolution to understand the development of the network. Second, we are concerned with the board and its composition which explain network’s structure. The results show the network large Spanish firms create had minor modifications after the five year period. Also, board size and board composition seem to be variables determinant of firm’s degree centrality in the network, being outsiders in the board those who provide post of the interlocks the firm has. Surprisingly, the Spanish network does not have banks as major players at its core anymore, which is contrary to resource dependence theory since links with banks are an important resource for both, the firm, which may have access to better loans; and the bank, which reduces its monitoring costs.