Economics at your fingertips  

Who appropriates centrality rents? The role of institutions in regulating social networks in the global Islamic finance industry

Remzi Gözübüyük (), Carl Joachim Kock () and Murat Ünal ()
Additional contact information
Remzi Gözübüyük: Sabanci University
Carl Joachim Kock: IE Business School
Murat Ünal: SONEAN GmbH

Journal of International Business Studies, 2020, vol. 51, issue 5, No 4, 764-787

Abstract: Abstract This study explains and tests the effects of country-level institutions on the distribution of centrality rents between two sets of actors in an interorganizational network. Building on the literature on corporate elites, we propose that a cohesive elite following organizational logics other than profit-maximization diverts centrality rents and induces costs on firms, and that macro institutions act as external governance mechanisms to shape this relationship. We develop our theory in the emerging Islamic finance industry, where “Shariah scholars” connect firms and constitute a religious corporate elite. While central scholars in this network create legitimacy for firms, they also shirk and cause information leakage, suggesting a negative centrality-performance relationship for the firms. Country-level institutions such as government regulation and democracy, we argue, ameliorate these effects by influencing this religious elite’s institutional logic and restraining their actions, while institutions developed from within the industry strengthen the power of the elite. Testing our theory in a network of 367 scholars and 396 institutions over 31 countries using multi-level methods, we indeed find a negative centrality-performance relationship that is ameliorated by stronger government regulation but exacerbated by better-developed industry-specific institutions, as well as a negative relationship between democratic and regulatory institutions and centrality.

Keywords: network theory; institutional environment; firm performance; corporate governance; networks; emerging markets; multi-level analysis (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

DOI: 10.1057/s41267-018-0202-4

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2020-08-08
Handle: RePEc:pal:jintbs:v:51:y:2020:i:5:d:10.1057_s41267-018-0202-4