The Influence Of Interlocking Directorates On Strategic Deviation And Strategic Variation

In the context of globalization, the degree of dynamism and uncertainty in environment deepens. Environmental change and organizational adaptation are the two fundamental issues of strategic management research. Strategic change is an effective method to coordinate internal and external resources in the environment. The purpose of the strategic change is to build and maintain competitive advantage. Recent researchers of social theory explore new perspectives of the motivation factor behind strategic change. With development of board system and modern enterprise system, interlocking directorates are becoming increasingly common in companies. Interlocking directorates have easy access to resources, information and collaboration. The function, as widely recognized, has become one of the important factors that affect strategic change.This study investigates how interlocking directorates influence strategic deviation and variation, as well as the moderating effects of unabsorbed slack and historical organizational performance. This study, basing on Chinese A-share listed company data, focuses on three issues:(1) How does the centrality of interlocking directorates influence strategic deviation and variation in the firm?(2) Will the positive relationship between interlocking directorates and strategic change strengthen as unabsorbed slack increases?(3) Does the historical organizational performance, as one of the capability cues, strengthen the positive relationship between the centrality of interlocking directorates and strategy change?This study uses social network analysis and statistical regression analysis. Through theoretical research and empirical analysis, the result suggests that:(1) The centrality of interlocking directorates positively relates to strategic variation;(2) The positive relationship between the centrality of interlocking directorates and strategic variation will strengthen as unabsorbed slack increases;(3) The positive relationship between the centrality of interlocking directorates and strategic deviation will strengthen as organizational performance increases. This study measures the strategy change in both static and dynamic dimensions, by dividing it into strategic deviation and strategic variation. This paper tries to expand the insights on the relationship between interlocking directorates and strategic management.Managers can also refer to the results and pay more attention to the potential opportunity provided by the interlocking directorates.