How boards’ internal and external social capital interact to affect firm performance

Abstract

Board social capital encompasses two types of relationships: external and internal ties. This study examines the effects of board social capital on firm performance using a sample of the 103 companies listed on The Madrid Stock Exchange (2008). In order to measure board internal social capital, we consider the directors’ co-working experience on the board. On the other hand, to measure external board social capital, we rely on the directors’ ties to other organizations through interlocking directorates. We introduce internal social capital as a necessary variable for a more complete understanding of the external social capital/firm performance relationship. Our results have important implications for corporate governance practices. When firms propose reconsidering the composition of boards, they should not be guided solely by the intention of maximizing external connections. On the contrary, they should really take into account the fundamental role of internal social capital, which (1) intensifies the positive effects of the external capital when its level is low and (2) attenuates the negative effects of an excess of the board’s external social capital.

Monitoring, Corporate Performance and Institutional Directors

“…We also control for ownership concentration (OWNER), CEO duality as a dummy variable, denoted by DUALITY (Barroso‐Castro et al. ), and the age of the firm (AGE). A summary of the variables used and their calculations are provided in Table .…”

Employee’s Experience and Perceived Environmental Performance of Malaysian Chemical Related Industry

“…Employee's past environmental related experiences affects their thinking styles and behaviour as well as permit them to develop specific skills and procedural knowledge regarding to environmental management practices [10]. Employee's past environmental related experience can be obtained through their past educational background, and through internal and external social capital [11]. Recent study revealed those employees which have experience worked in company with green organization climate possessed strong organizational citizenship behaviour for the environment [12].…”

How does a board of directors influence within‐ and cross‐sector nonprofit collaboration?

“…In this paper, board social capital refers to board members' connections to other organizations (Barroso-Castro, Villegas-Periñan, & Casillas-Bueno, 2015). As boundaries between sectors are blurred, board social capital arising from ties outside the organization (e.g., interlocking directorates or board members with multiple organizational affiliations) has become more prevalent and important (Cornforth, 2012;Vidovich & Currie, 2012).…”