‍Microstructure and the dynamic polarization effect of the competition field of an interlocking directorate network

JIN Yufang1 ZHANG Xiangjian2 XU Jin3

(1.School of Management, Fudan University, Shanghai, China 200433)
(2.Institute of Finance and Economics, Shanghai University of Finance and Economics, Shanghai, China 200433)
(3.Social Sciences Research Center, Sloan School of Management, Massachusetts Institute of Technology, Boston, US)

【Abstract】In the era of competition among network relationships, interlocking directorate networks, embedded in social, cultural and institutional backgrounds, has the characteristic of nepotism governance, and are an important factor affecting the competitiveness of enterprises. Based on the new perspective of competition field, the authors study the microstructure, characteristics and patterns of interlocking directorate networks, analyzing their dynamic evolution mechanism and rules, and formulating the theory on the competition field of an interlocking directorate network. The following findings are obtained. (1) In the competition field of an interlocking directorate network, a “core-marginal” structure is formed by nodes, relationships and resources, where the core enterprises dominate the association model and interest structure of the interlocking directorate network, and is able to control the flows of value, information and resource. (2) Based on different microstructural features and the interaction between elements, the competition field of an interlocking directorate network shows typical “wave-particle duality.” (3) Interlocking directorate networks are a kind of hyper market contract, which plays a role of coordination and control through information diffusion and exchange, trans-organizational cooperation and connection rules between enterprises in order to achieve the functions of resource access, risk aversion and supervision and control. (4) The competition field of an interlocking directorate network will undergo dynamic evolution of contraction, turbulence, consolidation and expansion, and the resources and market opportunities are gathered in core enterprise through the polarization effect. This study not only contributes to deepening the understanding of the interlocking directorate network structure, but also helps enterprises to establish more effective related strategy to promote competitiveness.

【Keywords】 interlocking directorates; competition field; link structure; dynamic polarization effect;

【DOI】

【Funds】 Project of National Natural Science Foundation of China (71272010) Project of National Natural Science Foundation of China (71273164) Project of National Natural Science Foundation of China (71473157)

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(Translated by LIAO Guo)

    Footnote

    [1]. ① Interlocking directors are directors in two or more than two boards of directors.(Mizruchi, 1996) Different from leaders and their subordinates in corporate bureaucracy, the interlocking directorates network is multi-dimensional, disperse, weak connections. Each enterprise builds a network around itself to strengthen interactions and exchange with board members in other enterprises. [^Back]

    [2]. ① Salman and Saives (2005) used centrality as a proxy index to measure enterprises’ core positions, and verified that centrality and competitiveness were in positive correlation. However, based on the resource dependency theory, poorly-performed enterprises have less power to protect them from risks. Thus, they hope to build connections with other enterprises to improve the ability of resource acquisition and business performance. [^Back]

    [3]. ② A social network is a graph from the perspective of graph theory, and is a collection of nodes and relations. Therefore, a social network includes the two subsets of nodes and lines. Social network analysis discusses the social relations between nodes and the network structure. [^Back]

    [4]. ① The media in interlocking directorate networks are channels, resources and relations for enterprises to build such networks, in other words, tangible and intangible resources in the networks. [^Back]

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This Article

ISSN:1002-5766

CN: 11-1047/F

Vol 38, No. 12, Pages 62-73

December 2016

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Article Outline

Abstract

  • 1 Introduction
  • 2 Microstructure of interlocking directorate networks
  • 3 Models and features of the competition field of an interlocking directorate network
  • 4 Dynamic polarization effect of the competition field of an interlocking directorate network
  • 5 Conclusion
  • Footnote

    References