Increased Environmental Uncertainty and Changes in Board Linkage Patterns

Increases in competitive uncertainty and resource dependence accompanied the deregulation of the airline industry. In such a situation, firms might use interlocking among boards of directors as a coping strategy. This study examined whether changes in board interlocking occurred with deregulation. M...

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Bibliographic Details
Published in:Academy of Management journal 1990-03, Vol.33 (1), p.106-128
Main Authors: Lang, James R., Lockhart, Daniel E.
Format: Article
Language:English
Subjects:
Air transportation industry
Airlines
Business structures
Dyadic relations
Economic competition
Financial institutions
Financial services industries
Industrial regulation
Principal place of business
Trunk roads
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Summary:Increases in competitive uncertainty and resource dependence accompanied the deregulation of the airline industry. In such a situation, firms might use interlocking among boards of directors as a coping strategy. This study examined whether changes in board interlocking occurred with deregulation. Measures of direct head-to-head competition, indirect interlocking among competitors, and individual firms' financial dependence and performance allowed tests of hypotheses that would not have been possible with cross-sectional research. Results showed that indirect board interlocking was focused among competitors and that the focusing increased with industry uncertainty and the distance between firms' headquarters. Direct interlocking with financial institutions increased according to changes in individual firms' financial dependence and financial performance.
ISSN:0001-4273
1948-0989
DOI:10.5465/256354