Interlocking directorships

[Introduction] When a director of one company at the same time serves on the board of another company, the two companies are said to be interlocked by that director. Through this linkage each company has potential access to information about the activities of the other, either explicitly as intelligence transferred by the director or implicitly in shaping the director’s perspective and general views. Director interlocks formed by executive directors, employed by the firm, are generally interpreted as more instrumental for the firm than those formed by non-executive directors. Firms are often interlocked with more than one other firm and those firms, in turn, with others; a web of social relationships envelops business.