Study On The Effects Of Interlocking Directorates Network On Vertical Integration

The Merger and reorganization of state-owned enterprises is the transformation and integration based on industry value chain, which is the distribution of global capital resources in China. We need to construct local industry value chain and the core competitiveness of key enterprises and focus on enterprise "vertical integration" phenomenon at the right time. Recent studies of social relationships has opened up a new theoretical perspective for vertical integration strategy's motivation. Board members via interlocking directorates coupled to embedded network make a significant impact on the company's survival and development. In all social relations, interlocking directorates has become an important factor in the company's strategic decisions for serving as a platform to get social, cultural and political information resources to improve the competitiveness of enterprise. However, existing researches mainly focus on the interlocking directorates impact on enterprise performance, they cannot explain the behavior performance of interlocking directorates that is how interlocking directorates affect the enterprise strategy. On the basis of these studies, this paper, with the data of Shanghai Stock Exchange, studied how the interlocking directorates network embeddedness affects the vertical integration strategy and demonstrates the moderating effects of government regulation in the process.In accordance with the need of vertical integration strategy management, this study, referring to transaction-cost theory, resource-based view and social-network theory, focuses on three issues:Firstly, what's the characteristics of interlocking directorates network? Secondly, how does network embeddedness of interlocking directorates influence vertical integration in the firm? Lastly, how does the government regulation have effect on the relationship between interlocking directorates network and the vertical integration strategy? First of all, we define the relevant concepts and elaborate the vertical integration theory, interlocking directorates theory and social-network theory. Then we deeply analysis the mechanism of interlocking directorates network influence on vertical integration strategy from the respect of relationship and structural embeddedness. Furtherly, we introduce the government regulation variable, and put forward the research hypothesis. Then, the social network analysis method is conducted to analyzes characteristics of interlocking directorates network. At the same time, we choose the BP neural network to simulate the influence of interlocking directorates network to vertical integration strategy, as well as analysis the moderating effects of government regulation by using the relationship matrix of BP neural network model.The result suggests that:The relationship embeddedness of interlocking directorates positively relates to vertical integration. The structural embeddedness of interlocking directorates has negative effects on vertical integration. The positive relationship between the relationship embeddedness of interlocking directorates and vertical integration will strengthen as government regulation increases; The negative relationship between the structural embeddedness of interlocking directorates and vertical integration will weaken as government regulation increases. What's more, it is found that the interlocking directorates have a lag effect on vertical integration.