Board interlocks, absorptive capacity, and environmental performance

Jing Lu, Fereshteh Mahmoudian, Dongning Yu, Jamal A. Nazari and Irene M. Herremans

Business Strategy and the Environment, 2021, vol. 30, issue 8, 3425-3443

Abstract: Coupling resource dependence theory with absorptive capacity concepts, we analyze the role absorptive capacity plays as a potential facilitator between board interlocks and environmental performance. Board interlocks act as avenues for knowledge and information that exist outside the organization to become resources to improve environmental performance. However, an organization also needs the ability to utilize knowledge to implement activities that lead to better environmental performance. Our results show that firms with a diversity of interlocks (greater number of board interlocks, interlocks in the same and different industries, and interlocks with top performers) achieve better environmental performance. Furthermore, we find that absorptive capacity, as measured by research and development (R&D) intensity, moderates the relationship between board interlocks and environmental performance.

Date: 2021
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