Research On Interlocking Director Network From The Perspective Of Embeddedness

As the carrier of social capital and manifestation of informal system, social network is becoming increasingly important in real situation with more and more attention to cooperation. Interlocking director network, which is one kind of social network, has properties of general social network, as well as its own specialty. Interlocking director network has dual nodes and can promote transformation of social capital from individual level to corporate level. In addition, the importance of interlocking director network can be reflected with the power structure change from stockholders-centerism to board-center ism. And interlocking director network has been a common phenomenon, so no matter from importance or generality, relevant researches are valuable. Compared with western countries, the study of interlocking director network is very poor and divergent, and the western mature theory can not be fully applied in Chinese social context. In this case, to research interlocking director network in China's special situation and system background has grate theoretical and practical value.The divergences of interlocking director network researches results from different research perspectives, so choose a comprehensive and profound perspective is the key to integrating ideas and eliminating divergences. Because embeddedness which is called "concepts umbrella", is a concept of high abstraction and flexibility, this paper choose embeddedness as perspective and principal line of the full text. Analysing embeddedness mechanism deeply with interlocking director network as carrier is rational response to embeddedness generalization and effective way to open black box of embeddedness. It could be said that researching interlocking director network with perspective of embeddedness can fill the research gap of interlocking director and embeddedness.The duality of essential attribute and network nodes are two characteristics of the interlocking director network. The board, which is the core of governance structure, takes the responsibility of monitoring, coordinating benefit relation, obtaining strategic resources and making strategic decision. It impenetrates the process of strategic management, and the diversified function of board can be summarized as governance function and strategic function. Interlocking director network is the entity of individual and enterprise network, and its nodes could be considered as individual or enterprise. The duality of essential attribute determines that governance and strategy are embeddedness subjects, and the duality of network nodes determines that social relations of enterprises and individuals are embeddedness objects. This has return to the essence proposition of embeddedness——economic action is embedded in social relations, presenting the embeddedness essence of interlocking director network is the dual embeddedness of governance and strategy, rather than just enterprise and director embed in network, thus the logical starting point of this paper is determined.Social relation in interlocking director network is only part of embeddedness object. Therefore, it is necessary to analyse the whole relations that the enterprise is embedded in. Based on the reference of Marx's classical Statements——the essence of human beings is the sum total of all the social relationship, enterprise can also be considered as the ensemble of social relations. The relations of enterprise present cha-xu pattern, entity boundary and virtual boundary being two relatively obvious borders. Governance and strategy, which are important aspects of enterprise operation, are embedded in three levels of outside virtual boundary, between entity boundary and virtual boundary, and inside entity boundary. Classifying interlocking director network embeddedness, it is in medium level.Interlocking director network is the carrier, and the social capital contained in is the value of it. The social capital includes two levels:individual and enterprise. Interlocking relations linked by outside directors are the majority, belonging to weak ties, and start from individual social capital. In this situation, only through the transformation of social capital from individual level to enterprise level, interlocking director network can link to enterprise's economic activities, affecting governance, strategy and the performance of the enterprise. This is also the embeddedness mechanism of interlocking director network. The enterprise's social capital includes multiple levels and is not only the plus of individual social capital. According to the fit, the social capital can be divided into three regions:preexisting, potential, and irrelevant, in which the social capital in potential region can transform from individual level to enterprise level through the role of boundary spanner. Within the interlocking director network, interlocking director has the relationship with the other enterprises, which is very possibly valuable to enterprise. Even more, interlocking director is the core human capital and is more prone to promote the enterprise's development and performance. According to above two points, interlocking director can undertake the task of boundary spanner, using interpersonal interaction to stimulate enterprise interaction based on the permeability of boundary. Through the effect of boundary spanner, the social capital is not be limited to individual level and can transform into resource of enterprise level, thus realize the dual embeddedness of governance and strategy.Interlocking director network effect on enterprise strategy and thus performance in three dimensions of cognitive dimension, relational dimension and structure dimension, and in this process corporate governance is a Moderating variable. As with anything, interlocking director network is a double-edged sword, and embeddedness paradox exists. That makes positive effect of interlocking director network have rational boundary. When embedded level less than Moderate embedded interval, there is a large amount of relationship redundancy and a great amount of social relations have not been translated into the enterprise resources. When embedded level more than Moderate embedded interval, there could be excessive embeddedness trap, which lies in the following two aspects: embeddedness inertia and embeddedness rent-seeking. Embeddedness inertia gives negative effect through confining strategic thinking and behavior, while embeddedness rent-seeking gives negative effect through damaging governance environment and fairness, making dual embeddedness have social liability.Considering the current situation of interlocking director network in China, this paper constructs related countermeasure optimization model based on the theory analysis. This model is composed of two modules:institution design and strategy choice. Institution design refers to optimization of related institution to realize rational allocation and burden of social responsibility, while strategy choice means the choice of thinking and action of network strategy to realize effective acquisition and accumulation of social capital. Social capital and social responsibility can be considered as benefit and cost of embeddedness. Adapting from double factor theory, social responsibility can be divided into health and inspirational, each taking maintenance and promotion effects on social capital. Under opposite solving thinking paradigm, social capital and social responsibility are integrated in the goal of raising the enterprise's relationship rent, therefore the integration of benefit and cost, as well as capital and responsibility can be realized. Based on this correlation of social capital and social responsibility, there is inner relation between the two modules of related countermeasure optimization model. And the two modules can respectively obtain rationality and autonomy, thus realize the effectiveness of interlocking director network. According to institution change theory and related theory of strategy, this model has dynamic feature, institution design and strategy selection being in the condition of dynamic equilibrium and gradually alignment. Therefore in order to achieve the objective function of effective embeddedness, constant improvement in view of the shortages of existing institution and strategy is imperative.