Research On The Influence Of Interlocking Director's Network On Enterprise Performance

In recent years,domestic and foreign economic patterns have undergone tremendous changes,accompanied by it,there must be institutional changes,from the perspective of the new institutional economics,in the transition economy,it makes enterprises face high market transaction costs,due to the highly uncertain institutional environment,the underdeveloped formal market mechanism.Especially,China's market economy system is still far from perfect in the moment;there is still a lack of system,specifically,in the absence of a sound judicial system,there are two difficulties in the business.First,the business environment is highly uncertain.China's economic reform is groping forward,it makes the business environment changing rapidly because of the changing economic policies,this uncertainty is increasing in the context of economic restructuring and upgrading in recent years.Second,the cost of market transactions is too high.It makes the process and the consequences of the transaction is difficult to predict due to the lack of effectiveness of the trading system arrangement,in order to be successful,Both parties have to pay a higher cost to measure the credit of the transaction,to guarantee payment and after-sales service.More seriously,Litigation can not effectively resolve trade disputes in China,it cause that Companies will strive to ensure that the transaction details are in control,so that higher transaction costs will be raised.In such an environment,enterprises can use a variety of informal mechanisms to replace the formal market mechanism,in order to reduce transaction costs and achieve organizational goals.One of the main forms of these informal mechanisms is the �social relations network�,the chain of directors is a typical network of social relations,�the Chain of directors� means that the network of social relations formed between enterprises because of someone serves as a director of two or more companies,it can bring the flow of resources,the transmission of information,recognition and approval for the enterprise through these social networks,thereby enhancing the certainty of the environment,reducing transaction costs,at the same time,enterprises can get resources in the social network and improve performance.Based on the above understanding,on the basis of reviewing and summarizing the relevant literature,the author takes interlocking director theory as the theoretical basis,uses social network analysis,analysis a conclusion that the good network location of the enterprise is beneficial to the improvement of the enterprise performance,proposed to Use the network center to measure the merits of the network location,starting from the chain director's network center degrees,it can get the enterprise network center degree,and then The relationship between enterprise network centrality and firm performance can be studied,the author uses empirical approach to the a-share listed companies as samples,based on the analysis of the center degree of the chain director,the author take the chain director of network center,network center of mean as an enterprise of degrees,return on assets as enterprise performance,respectively explores the relationship of the power center,the closed center,the mediation center,the center of characteristic vector degrees and the corporate performance,considering the correlation of several center degree indicators.This paper uses factor analysis to extract the central index of four common factors,in this way it can more accurately measure the network location of enterprises.Authors use roe measure of enterprise performance,use the chain network center director the median as the enterprise's network center degrees the robustness test,it is concluded that the higher the network center degree,the better the Business performance.This research provides a new theoretical and practical evidence about how the network of chain director makes an effect on enterprise performance,it's benefit for supplying the shortage of the domestic research on interlocking directorates network,and enriches the research of informal mechanisms under the condition of an imperfect official market mechanism in current.At the same time,it can provide a new train of thought for enterprises to improve performance at the background of current highly uncertain system environment and a not developed formal market mechanism,also this research is significant for regulating the behavior of chain board and promoting a benign development of real economy in China.In this paper,the innovation is about variables.This paper conducts factor analysis about the four center degree indexes of interlocking directorates which include the point center degrees,the mediation center,the close to the center,and the center of characteristic vector degrees.And take the factor as the explanatory variable,this can avoid an inaccurate empirical results which comes from the impact between the four center degree indexes.Besides,conclusion has the certain innovation.Summarizing the existing research,the scholars don't have a consistent conclusion.Especially in empirical research,the different center degree index has the inconsistent or opposite conclusion.In this paper,empirical results show that not only the four network center degree index but also the center degree factor is positively related with enterprise performance,and the significant level is 1%.