ROLES OF INTERLOCKING DIRECTORATES IN AN EMERGING COUNTRY: CONTROL AND COORDINATION IN FAMILY BUSINESS GROUPS

Abstract

Maman (1999) proposed that, in countries in which business groups are dominant forms for organizing economic activities, the interlocking directorate is a managerial tool that can be prioritized to control and coordinate activities of their affiliated firms within the same groups and align their business objectives. This organizational connection appears to be an intentional strategy on the part of the groups‟ headquarters. In order to study the interlocking ties in Turkish family business groups (FBG), this study focused on interlocking directorates among listed firms in Turkey. The findings of preliminary study reveal that almost all of the interlocking ties were within the business groups (BG) in our sample. This is the result of assignment of familyaffiliated and/or professional inside directors to the various boards of companies in the BG. We also found that compare to vertical ties; business groups are using more horizontal interlocking connections to bond their affiliated companies together.