Board networks as a source of intellectual capital for companies: Empirical evidence from a panel of Spanish firms

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.

Citation

Blanco-Alcántara, D., Díez-Esteban, J.M. and Romero-Merino, M.E. (2019), "Board networks as a source of intellectual capital for companies: Empirical evidence from a panel of Spanish firms", Management Decision, Vol. 57 No. 10, pp. 2653-2671. https://doi.org/10.1108/MD-12-2017-1238