interlocking directorate

An interlocking directorate (or directorship) is created when an individual who sits on the board of directors of one business organization takes a board seat with another. One study of 456 of the most important manufacturing firms in the United States in 1981 suggested that more than 70 per cent had at least one director who also sat on the board of a financial institution.
An extensive literature on the causes and consequences of corporate interlocks has developed since early studies in the 1960s. Some investigators suggest that within-industry interlocks are established in order to restrict competition in the market . Others propose that interlocks between financial institutions and business corporations perform a monitoring function by which the former control the profitability of their investments. Critics argue that the quantitative indicators used by most researchers fail to capture the complexity and dynamics of boardroom and inter-firm relations. For this reason it has proved difficult to establish convincing causal links between the structure of interlocking directorates and corporate behaviour in the market (see, ‘What Do Interlocks Do? An Analysis, Critique, and Assessment of Research on Interlocking Directorates’, Annual Review of Sociology, 1996). See also decomposition of capital.

Dictionary of sociology. 2013.

Look at other dictionaries:

  • interlocking directorate — n: a directorate linked with that of another corporation by interlocking directors Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. interlocking directorate …   Law dictionary

  • Interlocking directorate — Network diagram showing interlocks between various U.S. corporations/institutions, and four major media/telecom corporations (circled in red) …   Wikipedia

  • interlocking directorate — noun : a directorate linked with that of another corporation by interlocking directors so that the businesses managed by them are to some degree under one control * * * a corporate directorate that includes one or more members who serve… …   Useful english dictionary

  • interlocking directorate — a corporate directorate that includes one or more members who serve simultaneously in the directorates of other corporations. * * * …   Universalium

  • interlocking directorate — Describes cross memberships of directors on each other s company Board of Directors. Bloomberg Financial Dictionary …   Financial and business terms

  • interlocking directorate — The relationship between two or more corporations who have directors or officers in common. 19 Am J2d Corp § 1307 …   Ballentine's law dictionary

  • interlocking directors — n. People who serve on the boards of directors of two or more corporations simultaneously, resulting in a situation called an interlocking directorate, which can be used to restrict competition and is often illegal under antitrust law. The… …   Law dictionary

  • Directorate — An organization headed by a director. In finance, directorate is sometimes used in place of board of directors, which is the group of individuals that makes decisions for a corporation on behalf of its shareholders. In politics, directorates are… …   Investment dictionary

  • directorate — Synonyms and related words: board, board of directors, board of regents, board of trustees, bureaucracy, cabinet, cadre, captainship, chairmanship, convenership, council, custody, dictatorship, directorship, directory, executive arm, executive… …   Moby Thesaurus

  • directorate — n. interlocking directorates * * * [d(a)ɪ rekt(ə)rɪt] interlocking directorates …   Combinatory dictionary

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