Interlocking Directorate

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Interlocking Directorate

The relationship that exists between the board of directors of one corporation with that of another due to the fact that a number of members sit on both boards and, therefore, there is a substantial likelihood that neither corporation acts independently of the other.

Because the same persons occupy seats on the boards of companies that are supposed to compete in the marketplace, there is a potential for violations of federal antitrust acts, particularly the Clayton Act (15 U.S.C.A. §§ 12-27 [1914]) which prohibits the existence of inter-locking directorates that substantially reduce commercial competition.

References in periodicals archive ?
These interlocking directorates serve many purposes.
After Dooley (1969), a later review by Mizruchi (1996) posed the question: What do interlocks do?, exhibited five main determinants for the creation of interlocking directorates, some of them are focused on the firm's outputs purposes and others just serve the directors' interests.
A limited rationality model of interlocking directorates. Academy of Management Review, 9: 206-217.
other firms directly linked to the core sample by interlocking directorates) and then second-order neighbours (i.e.
El conjunto de empresas y directores multiples forman redes empresariales, son las llamadas redes de interlocking directorates (3).
Interlocking directorates in Canada: evidence from replacement patterns.
Unlike the Clayton Act, the PCA does not contain any specific provision expressly prohibiting interlocking directorates in competing businesses.
interlocking directorates under section 8 of the Clayton Act should be
Stearns, 1988, "A Longitudinal Study of the Formation of Interlocking Directorates," Administrative Science Quarterly 33, 194-210.
Lester and Cannella's (2006) article, "Interorganizational familiness: How family firms use interlocking directorates to build community-level social capital," provides a good example of how the personalism of family businesses allow them to make particularistic decisions that may be unavailable to nonfamily firms in solving their unique problems.
Second, these interlocks have integrated the circuits of industrial and money capital to such an extent that they now constitute "finance capital." (59) Third, Canadian finance capital is a "well-integrated and dense network of nationally based interlocking directorates" (66); that is, it is established by an East-West or pan-Canadian structure of corporate power.
These contacts can be formal alliances, cooperatives, interlocking directorates, intergovernmental relationships, supplier/customer relationships, and joint ventures or they can be more informal, from chance meetings or relationships based on mutual goals that are not legally binding.