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Defining the Social Capital of the Board of Directors: An Exploratory Study

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  • Nicholson, Gavin J.
  • Alexander, Malcolm
  • Kiel, Geoffrey C.

Abstract

This paper advances the resource dependence and social networks literature by investigating a board's structural social capital created as a consequence of interlocking directorates. Using approaches and measures developed by social network analysis we compare the interpersonal directorship networks of the top 250 companies in the United States and Australia. We find that the smaller, sparser Australian network is only marginally less compact and connected than the larger US network at the firm level of analysis. However, at the director level of analysis the US network is much larger and more connected than its Australian counterpart. As a result, we argue that scholars studying the resource dependence role of boards should consider using measures of interpersonal links as well as traditional measures of inter-firm links.

Suggested Citation

  • Nicholson, Gavin J. & Alexander, Malcolm & Kiel, Geoffrey C., 2004. "Defining the Social Capital of the Board of Directors: An Exploratory Study," Journal of Management & Organization, Cambridge University Press, vol. 10(1), pages 54-72, January.
    • Handle: RePEc:cup:jomorg:v:10:y:2004:i:01:p:54-72_00
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    Cited by:

    1. Ferris, Stephen P. & Javakhadze, David & Liu, Yun, 2020. "The price of boardroom social capital: The effects of corporate demand for external connectivity," Journal of Banking & Finance, Elsevier, vol. 111(C).
    2. Richard W. Carney & Travers Barclay Child, 2015. "Business Networks and Crisis Performance: Professional, Political, and Family Ties," Tinbergen Institute Discussion Papers 15-135/V, Tinbergen Institute, revised 20 Feb 2015.
    3. Larcker, David F. & So, Eric C. & Wang, Charles C.Y., 2013. "Boardroom centrality and firm performance," Journal of Accounting and Economics, Elsevier, vol. 55(2), pages 225-250.
    4. Giudici, Giancarlo & Giuffra Moncayo, Giancarlo & Martinazzi, Stefano, 2020. "The role of advisors’ centrality in the success of Initial Coin Offerings," Journal of Economics and Business, Elsevier, vol. 112(C).
    5. Natalia Ortiz‐de‐Mandojana & Juan Alberto Aragon‐Correa, 2015. "Boards and Sustainability: the Contingent Influence of Director Interlocks on Corporate Environmental Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 24(6), pages 499-517, September.
    6. Larcker, David F. & So, Eric C. & Wang, Charles C. Y., 2010. "Boardroom Centrality and Stock Returns," Research Papers 2061, Stanford University, Graduate School of Business.
    7. Kuang, Yu Flora & Lee, Gladys, 2017. "Corporate fraud and external social connectedness of independent directors," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 401-427.
    8. Daniliuc, Sorin Ovidiu & Li, Lingwei & Wee, Marvin, 2020. "Busy directors and firm performance: Evidence from Australian mergers," Pacific-Basin Finance Journal, Elsevier, vol. 64(C).
    9. Justyna Swiatowiec-Szczepanska, 2016. "Social Network Analysis in Strategic Management – Potential and Limitations of Application (Analiza sieci spolecznych w zarzadzaniu strategicznym – mozliwosci i ograniczenia stosowania)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 14(64), pages 31-49.
    10. Kambar Farooq & Muhammad Azeem & Chin Man Chui & Jun (Tony) Ruan, 2023. "Board Connections and Dividend Policy," Abacus, Accounting Foundation, University of Sydney, vol. 59(4), pages 983-1040, December.
    11. Yue Vaughan & Yoon Koh, 2023. "Better-connected boards and their influence on corporate social responsibility: Evidence from U.S. restaurant industry," Tourism Economics, , vol. 29(8), pages 2057-2080, December.
    12. John Nowland & Andreas Simon, 2018. "Is poor director attendance contagious?," Australian Journal of Management, Australian School of Business, vol. 43(1), pages 42-64, February.
    13. Chen Chen & David K. Ding & William R. Wilson, 2021. "The Old Boys Club in New Zealand Listed Companies," JRFM, MDPI, vol. 14(8), pages 1-21, July.
    14. Justyna Swiatowiec-Szczepanska & Michal Zdziarski, 2016. "Application of ONA in Change Management – Empirical Research in Energy Industry (Zastosowanie analizy sieci organizacyjnych w zarzadzaniu zmiana – badanie empiryczne w branzy energetycznej )," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 14(64), pages 157-176.
    15. 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.
    16. De Beule, Filip & Elia, Stefano & Garcia-Bernardo, Javier & Heemskerk, Eelke M. & Jaklič, Andreja & Takes, Frank W. & Zdziarski, Michal, 2022. "Proximity at a distance: The relationship between foreign subsidiary co-location and MNC headquarters board interlock formation," International Business Review, Elsevier, vol. 31(4).
    17. Szymon Kaczmarek & Satomi Kimino & Annie Pye, 2014. "Interlocking directorships and firm performance in highly regulated sectors: the moderating impact of board diversity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(2), pages 347-372, May.

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