Using resource dependence theory, we analyze board interlocks, their industry origin, and their relationship to firms' greenhouse gas (GHG) emissions. Interlocks create connections by having board members from one firm sit on other firms' boards, providing an avenue for sharing information and resources to aid in knowledge transfer and capability development. As firms face challenges for improved GHG emissions performance, they may look to their board members' connections to other firms to acquire needed resources. Using a sample of US Standard & Poor's (S&P) 1500 firms for years 2009 to 2018, we find that firms with a greater number of board interlocks achieve lower GHG emissions intensity. We also find that boards for the best performing companies have interlocks in the same industry, in other industries, and with firms leading in GHG emissions intensity, especially for firms in higher environmentally impacting industries, as they face greater emissions challenges.
Coupling resource dependence theory with absorptive capacity concepts, we analyze the role absorptive capacity plays as a potential facilitator between board interlocks and environmental performance. Board interlocks act as avenues for knowledge and information that exist outside the organization to become resources to improve environmental performance. However, an organization also needs the ability to utilize knowledge to implement activities that lead to better environmental performance. Our results show that firms with a diversity of interlocks (greater number of board interlocks, interlocks in the same and different industries, and interlocks with top performers) achieve better environmental performance. Furthermore, we find that absorptive capacity, as measured by research and development (R&D) intensity, moderates the relationship between board interlocks and environmental performance.
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