being an exploratory one, represents a companies’ financial performance using its profitability. In the interest of this research, traditional financial indicators like stock returns and equity ratios (Stuart & Yim, 2010) were not used as these indicators were not considered for entry into the Fortune 500 list. Literature Review There have been many empirical studies done in the field of interlocking directorships and there are considerable amount of literature available. Research on interlocking directorships has gained increasing prominence within the field of organizations, but it has come under increasing criticism as well. Interlocking directorships A director interlock exists when a director simultaneously sits on the of 2 or more different companies. A link between two companies is said to exist when an individual sits on the boards of both companies (Mizruchi, 1996). If a director of one company is also a director of one or more companies, then these companies are said to be interlocked by virtue of this director’s connection, even though there is no formal or actual relationship between them (Smith, 2009). The number of linkages is always counted, so the focus is on dyadic relationships. If a second individual also sits on the boards of the two organizations, a second link exists. This type of network is commonly referred to as an affiliation network (Wasserman & Faust, 1994). Interlocking directorships are generally seen as beneficial to organizations. They are a central case of interpersonal linkage between companies at board level (Heracleous & Murray, 2001). These directors at their position and with the potential to influence organizational strategy, they carry the responsibility to achieve the organization’s goals. However, interlocking directorships have also been seen to have adverse implications. Firstly, the high level power relationships of interlocking directorships can be exploited among the organizations (Roy, Fox, & Hamilton, 1994). According to (Carroll, Stening, & Stening, 1990), interlocking directors have been referred to as sinister due to their association with competitive and illegal behavior. Furthermore, the US Congress considered that interlocking directors could be abused by unethical business as a means to facilitate and restrict competition in markets and in 1914, the Clayton Anti-Trust Act was passed to prohibit interlocks between companies deemed to be operating in the same markets (Mizruchi, 1996). Regulations on Interlocking Directorships
being an exploratory one, represents a companies’ financial performance using its profitability. In the interest of this research, traditional financial indicators like stock returns and equity ratios (Stuart & Yim, 2010) were not used as these indicators were not considered for entry into the Fortune 500 list. Literature Review There have been many empirical studies done in the field of interlocking directorships and there are considerable amount of literature available. Research on interlocking directorships has gained increasing prominence within the field of organizations, but it has come under increasing criticism as well. Interlocking directorships A director interlock exists when a director simultaneously sits on the of 2 or more different companies. A link between two companies is said to exist when an individual sits on the boards of both companies (Mizruchi, 1996). If a director of one company is also a director of one or more companies, then these companies are said to be interlocked by virtue of this director’s connection, even though there is no formal or actual relationship between them (Smith, 2009). The number of linkages is always counted, so the focus is on dyadic relationships. If a second individual also sits on the boards of the two organizations, a second link exists. This type of network is commonly referred to as an affiliation network (Wasserman & Faust, 1994). Interlocking directorships are generally seen as beneficial to organizations. They are a central case of interpersonal linkage between companies at board level (Heracleous & Murray, 2001). These directors at their position and with the potential to influence organizational strategy, they carry the responsibility to achieve the organization’s goals. However, interlocking directorships have also been seen to have adverse implications. Firstly, the high level power relationships of interlocking directorships can be exploited among the organizations (Roy, Fox, & Hamilton, 1994). According to (Carroll, Stening, & Stening, 1990), interlocking directors have been referred to as sinister due to their association with and illegal behavior. Furthermore, the US Congress considered that interlocking directors could be abused by unethical business as a means to facilitate and restrict competition in markets and in 1914, the Clayton Anti-Trust Act was passed to prohibit interlocks between companies deemed to be operating in the same markets (Mizruchi, 1996). Regulations on Interlocking Directorships competitive