Transnational board interlocks

Abstract

Purpose While previous studies have focused on the role of directors in the formation of transnational interlocks, this paper argues that firm strategy can also influence the development of these relationships. The purpose of this paper is to shed light on the practice of transnational interlocks by extending board interlocks theory from the national to the transnational context, and exploring aspects that are unique to the transnational level. Design/methodology/approach Based on the experiences of four British firms, this paper develops a conceptual framework that integrates under-examined dimensions of this networking practice at the organizational level of analysis, specifically degree of internationalization (DOI) and psychic distance (PD). Findings The paper argues that firms will increasingly engage in transnational interlocks as internationalization intensifies, and that expansion into psychically distant countries may result in further engagement in these connections. Further, firms will tend to form transnational received interlocks at their early stages of internationalization, and transnational sent and neutral interlocks at later stages of this process. It identifies four categories of firms: locals, extenders, explorers and cosmopolitans. Practical implications Directors can contribute to their firms’ success by interlocking with firms located in key foreign markets. Firms should also welcome directors with transnational board appointments to secure knowledge and resources overseas. Originality/value The manuscript contributes to our understanding of transnational interlocks by examining the independent and joint influence of the firm’s DOI and PD on the formation of such relationships.