Network board capital and performance of international companies

Вестник Санкт-Петербургского университета. Серия 5. Экономика. 2023. Vol. 39. No. 2. P. 198–216.

Teplykh G., Parshakov P.

The paper estimates the influence of links between boards of directors on corporate performance at the world level in the framework of network analysis. The vast majority of empirical papers on the topic analyses the case of isolated countries. The current study estimates the effect of networking in large companies at the international level. It enables a more correct construction of the network between directors and eliminates the influence of national specificity. We construct an international network of boards and calculate three alternative centrality metrics: degree, closeness, and betweenness. Then the econometric analysis is applied to estimate the effect of centrality on performance. We consider two dependent variables which are responsible for the long-term and short-term effects (correspondingly, M/B ratio and ROE). The effect of boards’ networking on firm outcomes is found to be positive on average for large global companies. This resultis robust to used centrality metrics and financial indicators.The influence of networking is found to be similar in the short and long term. We found that closeness centrality is the most important aspect of network capital for firm outcomes; degree has a moderate impact; the effects of betweenness are the weakest and statistically close to insignificant. The study contributes considerably to existing literature summarizing particular empirical evidences. Obtained findings also raise new theoretical issues and provide some useful practical implications.

Keywords: совет директоров, сетевой анализ, международные компании, board of directors, отношенческий капитал, network analysis, relational capital, international companies

Publication based on the results of: Intellectual Capital of an Organization: Human Resource Management Practices and Knowledge Sharing (2023)