K.van Veen & E.M. Heemskerk, (2018) Interlocking Directorate Networks, Springer Encyclopedia for
Social Networks and Mining. DOI: https://doiorg.proxy-ub.rug.nl/10.1007/978-1-4614-7163-9_274-1*
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evidence from the transnational network of interlocking directorates, Global Networks, Volume16, Issue
1, 68-88.
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Implausibility of Effective Board Monitoring, The Academy of Management Annals, DOI:
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, K.van Veen & E.M. Heemskerk, (2018) Interlocking Directorate Networks, Springer Encyclopedia for Social
Networks and Mining
The article explores the concept of interlocking directorate networks, which refers to the phenomenon of
individuals serving on multiple corporate boards. The authors discuss the history and evolution of interlocking
directorate networks, the benefits and drawbacks of these networks, and the implications for corporate
governance and decision-making.
Interlocking directorate networks refer to the practice of individuals serving on the board of directors of multiple
companies. This practice is common in many countries and industries, and it has been suggested that it can have
both positive and negative effects on corporate governance.
The article provides an overview of the concept of interlocking directorate networks, including their prevalence
and the reasons why they occur. The authors also discuss the potential benefits and drawbacks of interlocking
directorate networks, and they examine some of the empirical research that has been conducted on this topic.
The authors suggest that interlocking directorate networks can provide a number of benefits to companies and the
broader economy. For example, individuals who serve on multiple boards can bring valuable knowledge and
expertise from one company to another. They can also help to build trust and facilitate collaboration between
companies, which can lead to greater innovation and efficiency.
However, interlocking directorate networks can also have negative effects on corporate governance. For example,
they can create conflicts of interest if directors are serving on the boards of competing companies. They can also
lead to a lack of diversity on boards, which can limit the range of perspectives and ideas that are considered in
decision-making.
The authors also discuss the methods that have been used to study interlocking directorate networks, including
social network analysis and statistical models. They examine some of the key findings from this research,
including the degree of connectivity between different companies and the characteristics of the individuals who
serve on multiple boards.
Finally, the authors consider some of the policy implications of interlocking directorate networks. They suggest
that policymakers should be aware of the potential benefits and drawbacks of these networks and should consider
ways to mitigate the negative effects while preserving the positive ones. For example, they suggest that
regulations could be put in place to limit the number of boards on which individuals can serve, or to require
greater disclosure of potential conflicts of interest.
Key Points and Takeaways:
Interlocking directorate networks have a long history, dating back to the late 19th century when business
elites began serving on multiple boards to promote collaboration and coordination among firms.
Interlocking directorate networks can provide several benefits, such as facilitating information sharing
and coordination among firms, promoting industry-wide cooperation and innovation, and enhancing the
reputations and social capital of individuals serving on multiple boards.
Interlocking directorate networks can also have drawbacks, such as creating conflicts of interest and
potential collusion among firms, limiting diversity of viewpoints and expertise on corporate boards, and
exacerbating income inequality and wealth concentration among the business elite.
The prevalence and structure of interlocking directorate networks varies across different countries and
industries, with some countries and industries being more interconnected than others.
Interlocking directorate networks can have implications for corporate governance and decision-making,
as individuals serving on multiple boards may prioritize their personal interests or the interests of their
network over the interests of their individual firms.
The article discusses several methods for studying interlocking directorate networks, including social
network analysis, which can be used to identify the structure and composition of these networks and to
analyze the relationships between individuals and firms.
It highlights the importance of considering interlocking directorate networks in the context of broader
economic and political trends, such as globalization, deregulation, and the rise of shareholder activism.
The authors suggest that interlocking directorate networks may become less prevalent in the future due
to increasing regulation, technological disruption, and changing societal attitudes towards corporate
governance.
The article provides insights for policymakers, corporate leaders, and governance professionals looking
to promote transparency, accountability, and effective decision-making in the corporate sector.
In conclusion, the article provides a comprehensive overview of the concept of interlocking directorate networks
and their role in corporate governance. The authors suggest that while these networks can provide several
benefits, they can also have negative effects on decision-making and diversity. The article highlights the
importance of studying these networks to better understand their implications for companies and the broader
economy, and it suggests some potential policy solutions to address the negative effects of interlocking
directorate networks.
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