The social capital of interlocking directorates: Status conferral, influence brokerage, and information diffusion

Board interlocks form when a corporate director or CEO sits on the board of another firm. This chapter links disparate lines of research on board interlocks with a sociological approach to the study of social capital. Corporate board interlocks provide a unique source of social capital for firms and elites. Through connections to intra- and inter-organizational actors, board interlocks provide field level resources and constraints for organizations and elites engaging in a diverse array of strategic actions. Interlocks provide actors with status and legitimacy among respective constituencies such as customers, financial markets, and investors. The structure of interlocks also influences the adoption of corporate governance practices and the exertion of political power. Finally, interlocks are an important conduit for information regarding corporate governance, market developments, and performance related advice. These social capital resources (status, influence, and information) have important implications for organizational ascendance and decline, and shareholder value. Moreover, the consequences of board interlocks for organizations and elites are contingent on the conditions of the institutional fields in which firms are embedded. Further advancement of our understanding of board interlocks therefore hinges on our ability to investigate the dynamic interplay between board interlock structure, resources, agency, and institutional context.