Interlocking Directors Network,Organizational Slack And Firm Performance

Nowadays,the development of China's economy is stepping into an important period of strategic transformation,managers need to be fully prepared to cope with all predictable and unpredictable risks or challenges in that kind of severe and complex environment.The interlocking directors network is formed due to one director lists on the board of another company,which set up a bridge between enterprises to help each other.The interlocking directors network has some incomparable advantages in dealing with uncertainty,building information exchange channels and promoting innovation which other social networks do not have.Therefore,companies in the fiercely competitive environment have paid their attention to the network of interlocking directors,obtaining the social capitals of individuals or enterprises embedded in the network by establishing direct or indirect mutual trust relationships and seek for a better performance of the company.As enterprises entering the era of network competition,scholars apply the relevant theories and analytical methods of social networks into their research on corporate performance,exploring the impact the interlocking directors network has on the performance of listed companies.However,due to the different environmental backgrounds and differences in research samples,the study of the relationship between the two have not yet reached a conclusion.In order to explore the relationship between the two and the intermediary or regulatory role played by other variables more clearly,this paper introduces the mediator variable of organizational slack and the adjustment variable of CEO duality into the research.Based on the impact the network position of interlocking directors has on the performance,we study the role of CEO duality in adjusting the relationship between the reduction of organizational slack caused by interlocking directors network and corporate performance from the perspective of organizational slack.This paper uses the main board listed companies of Shenzhen Stock Exchange during the period of 2013-2017 as research sample,and obtains employment information of directors who fit the definition of interlocking directors based on certain data screening and processing standards.Then the large-scale social network analysis software UCINET is used to build a network of interlocking directors,and the centrality index which describe network position of the “node” is calculated.The regression analysis of the four research hypotheses are carried out after we construct the relationship models between interlocking directors network,organizational slack,CEO duality and enterprise performance.In the end,the paper draws the following conclusions: First,the relationship between interlocking directors network and corporate performance is significantly positive,the higher the network centrality the better the enterprise performance;Second,the interlocking directors network is significantly negative correlated with organizational slack.The establishment of external interlocking directors network enables enterprises to search for and obtain the required resources at a low cost,reducing the organizational slack actively or passively held in the organization.Third,organizational slack partly mediates the relationship between interlocking directors network and enterprises performance.The interlocking directors network has an indirect positive impact on corporate performance through lowering organizational slack.Fourth,the CEO duality plays as an adjusting role between organizational slack and corporate performance.The CEO duality strengthens the negative correlation between them.In the last part of this article,we provide some helpful advices based on the empirical results of the relationship between the interlocking directors network,organizational slack,CEO duality and listed company performance in establishing interlocking directors relationship and choosing the suitable governance arrangement.What's more we expound the shortcomings in this study and look forward to the future research.