Board networks as a source of intellectual capital for companies

Abstract

Purpose The purpose of this paper is to use the dynamic capabilities framework to explain the effect of board networks, as a source of intellectual capital, on firm performance. The authors propose that the influence of board interlocks depends on their ability to contribute to strategic decision making. As a result, their effect is subject to the business context in which they occur and the different role of the interconnected directors involved. Design/methodology/approach The authors use social network analysis to make board connections and to calculate centrality measures. The authors also identify busy boards to analyze whether their effect differs from centrality. The authors estimate the theoretical model using the Generalized Method of Moments in order to take advantage of the panel database. Findings For a sample of Spanish firms from 1999 to 2015, the results show there is no direct significant effect of directors’ networks on firm performance. However, the authors find a positive and significant influence of intra-industry board connections, particularly when they are established among outsiders. Research limitations/implications The Spanish context of the study can limit the generalization of the papers’ results. Practical implications The results can be useful both for practitioners – since they can serve as a guide for companies to reformulate their boards in search of the optimal structure-, and when implementing good governance codes – establishing limits for director interlocking. Originality/value This study helps to offer a better understanding of how directors’ networks can add value to the firm depending on the kind of resources they provide (context) and the role of the director who is connected.

Intellectual capital and performance of automotive manufacturers: the role of strategic thinking

“…Similar studies explored the relationship between IC and performance; for example, Blanco-Alcantara et al (2018) attempted to explain the influence of IC on firm performance, using the dynamic capabilities framework. They argued that the board's influence hinges largely on their ability to contribute to the process of decision-making although the effect is influenced by the business context and the various roles of the directors.…”

The influence of board social capital on corporate social responsibility reporting

“…This sample is representative since these firms represent most of the capitalization of the Spanish stock exchange and are more visible, with CSR reporting proving to be a crucial strategy for increasing their organizational competitiveness. Therefore, previous studies on the Spanish context have generally considered similar samples (Fuente et al , 2017; Blanco-Alcántara et al , 2019; Bravo and Reguera-Alvarado, 2019; Tejedo-Romero and Araujo, 2020). In addition, this sample provides an interesting scenario because of the particular characteristics of Spanish firms, which have a unitary board system and voluntary good governance practices (Manzaneque et al , 2016), and which are subject to intense pressure to enhance CSR reporting (Odriozola and Baraibar-Diez, 2017).…”

The Effect of Family Involvement on Innovation Outcomes: The Moderating Role of Board Social Capital

“…The results remain fully robust. Third, as executive directors can be busy with their internal, day‐to‐day tasks, and are, therefore, potentially less important for external knowledge sourcing (Blanco‐Alcántara, Díez‐Esteban, and Romero‐Merino, 2019; Liu and Paul, 2015), we excluded them from our external board social capital estimations and reestimated our main models. Our results are again fully robust.…”