Interorganizational/Interlocks

Interlocks

One of the first types of interorganizational network research focused on organizational interlocks. Interlocks, at the most general level, describe overlapping memberships among organizations. Research about corporate interlocks dates to 1905, but studies of the networks formed by these interlocking directorates did not appear until the 1970s. Research on interlocks has been divided about its causes. The resource dependence view suggests that interlocks may be a mechanism for collusion, co-optation, or monitoring, activities that are designed to control an uncertain environment. In contrast, social class research views underlying social relations as the root cause of interlocks. Such a view points to systems of clubs or society that promote social cohesion and control among society's elite. According to institutional theory, corporate interlocks are formed because such organizations seek legitimacy. Association with other prominent organizations through board membership can enhance an organization's stature with stakeholders. Increasingly, researchers have emphasized the compatibility of resource dependence, social class, and institutional views.

Three patterns of network relations are commonly examined among interlocks: centrality, clustering, and [Page 436]invariance over time. In studies of multi-industry corporate interlocks, banks tend to be the most central firms, and geographic clustering is prominent. One area of significant research has been the accidental breaking of corporate interlocks through retirement or death. While the significance of the results for the social class and resource dependence view remains an area of debate, research demonstrates that relations are not reconstituted with the same organization.

Institutional and information theories have been the most prominent frameworks for the study of outcomes of interlocking directorates. Exposure to other corporations' activities leads firms to imitate others' behaviors. Some research has supported such imitation in diverse areas such as corporate acquisition, philanthropy, and option backdating. However, research on profitability and debt/equity has been inconclusive, leading critics to assert that interlocking directorates fail to explain strategic behavior. Some critics suggest that studies of interlocking directorates minimize the complexities and dynamics of boards and their strategic decision-making processes.

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