Interlocking directorships and firms performance: Social networking perspectives [Hubungan saling pengaruh lembaga pengarah dan prestasi firma: perspektif rangkaian sosial]

Interlocking or shared directorship is among important issues in corporate governance. according to resource dependence theory,interlocking directorship can become resources that can improve firm performance. this explanation is in line with business environment in malaysia that can be categorized as networked economy. on the other hand,interlocking directorships can also be related to social cronyism that can have negative impacts on firms. as such,an investigation should be made to examine these conflicting arguments on interlocking directorships. in particular,different than prior research,this study aims at examining the influence of interlocking directorship patterns and the impact of interlocking directorship's concentration on firm performance. using 240 firm-years data of technology firms listed on the main and ace markets,the results of tests reveal that interlocking non-executive directorships and interlocking directorship's concentration did not influence firm performance. nonetheless,the result also suggests that interlocking executive directorships have negative impact on performance. this result proves that executive directors who are also directors of other firms are in the position that may increase the risk of conflict of interests. in line with social capital explanation,the findings support prior literature on cronyism in directors' networking.