ComparativeAnalysisontheRegionalCorporateNetworkof

1AComparativeAnalysisontheRegionalCorporateNetworkofInterlockingDirectorshipinShanghaiandGuangdongRenBingTheChineseUniversityofHongKongTel:[e-mail]HongKongHongKong,Shatin,N.TTel:00852-26097802Fax:[e-mail]2004-MayAcknowledgement:TheauthorthanksProf.MikePenginOhioStateUniversity,Prof.LuyuanandWeiLiqunintheChineseUniversityofHongKongfortheirvaluablecommentsandsuggestions.2AComparativeAnalysisontheRegionalCorporateNetworkofInterlockingDirectorshipinShanghaiandGuangdongAbstractStructuralaspectsofcorporatenetworkshavebeenrarelyexploredinChina.Thisarticleaimstohelpfillthisgapbyfocusingoninterlockingdirectorates,akeystructuralaspectofcorporatenetworks.Specifically,fromasocialembeddednessperspective,wedescribetheregionalcorporatenetworkpatternofinterlockingdirectoratesinShanghaiandGuangdong,andanalyzetherelationshipsbetweenthenetworksofdirectorshipinterlocks,firmbehavior,andregionaleconomicgrowth.WefindthatfirmsinShanghaiareembeddedwithinacohesiveandlarge-component-basedcorporatenetwork,whereasfirmsinGuangdongareembeddedwithinasporadicandsmall-component-basedcorporatenetwork.WearguethattheeconomicdevelopmentofShanghaimaybehighlycorrelatedwithitscorporatenetworkstructureofinterlockingdirectorates,whichfacilitatesfirms’understandingoftheenvironment,enhancesinter-firmresourceacquisitionandinter-firmcoordinationandcontrol.ForGuangdong,wesuggestthatfirmsmayacquireresources,coordinateinter-firmrelationships,andeludeenvironmentaluncertaintyprimarilythroughmarketmechanismsasopposedtonetworkmechanisms.Implicationsofthesefindingsforfutureresearcharediscussed.Keywords:InterlockingdirectoratesRegionalCorporatenetworkShanghaiGuangdong3AComparativeAnalysisontheRegionalCorporateNetworkofInterlockingDirectorshipinShanghaiandGuangdong1.IntroductionStructuralanalysisoncorporatenetworkamongChinesefirmsisstilllackingintheliterature.OnthefoundationofRen,AuandLin(2001),thispaperprovidesatentativeempiricalanalysisonthepatternsofregionalcorporatenetworkinShanghaiandGuangdong,China.Employingthesocialembeddednessperspectiveandsocialnetworkanalysismethod,thepaperanswerstwosetsofquestions.First,howisthecorporatenetworkpatternformedthroughinterlockingdirectorshipinShanghaiandGuangdong?Andhowdotheydiffer?Second,howmighttherespectivenetworkaffectfirmeconomicbehaviorsandregionaleconomy?TheimportanceofanalyzingthecorporatenetworkinChina,particularlyinShanghaiandGuangdongisreflectedinthefollowingrespects.First,empirically,littleresearchhasbeenconductedonthestructuralnetworkformedamongChinesefirmsintheacademicarea.WithmuchattentionfocusingonGuanxianditsrolesindevelopingthetransitioneconomy,howinter-firminterlocknetworkplayitsrolesdeservesmuchattention.ByanalyzingitsassociationswitheconomicbehaviorandperformanceinShanghaiandGuangdong,thepaperwillanswerthequestionthathownetworkformsmatter.Besides,theanalysisfacilitatesourunderstandingontwowell-developedregionalmarket,ShanghaiandGuangdonginChina.Byanalyzingtheirregionalcorporatenetworkpattern,thepaperseekstofindouthownetworkplaysitsroleinshapingdifferenteconomy.Thisfindingwillprovidevaluablesuggestionstopolicymakersandpractitioners.4Second,inTheory,mostresearchemploysthenewinstitutionaleconomicsperspectivebyregardingnetworkformsasasubstituteofthemarket.Thesocialembeddednessperspectivehowever,israrelyused.Thispaperusesthesocialembeddednessperspectiveindiscussingwhysocialstructureisimportantandhowsocialstructureaffecteconomicaction.Itemphasizesthesocialconstructionoftheeconomy.Thepaperflowsinthefollowingway.Thefirstsectionintroducestheconceptsoncorporateinterlocknetworkandmeasurementofvariables.ThesecondsectiondescribesthepatternsofcorporateinterlocknetworkinShanghaiandGuangdong.Italsoprovidesdiscussionsonhowthesetwonetworksdiffer.Thethirdsectionanalyzeshowtheregionalcorporatenetworkassociateswithfirmeconomicbehaviorsandregionaleconomy.Thefourthsectionisconclusionsanddiscussions.Implicationsofthepaperandfutureresearchdirectionarealsodiscussed.2.TheCorporateNetworkofInterlockingDirectorshipInterlockingdirectoratereferstothephenomenonofonedirectorservesontwoormorethantwocompanies.Acorporatenetworkofinterlockingdirectoratesiscomposedwith“points”representedbycorporationsand“lines”representedbyinter-firminterlocklinkage.First,attheinter-firmlevel,firmssharingcommondirectorsformthelinkageofinterlockingdirectorship.Second,theinter-firminterlockinglinkagefurtherformsacorporatenetworkofinterlockingdirectorate.Inexamininghowtheinterlocknetworkaffectfirmeconomicbehaviorsandfirm5performance,Pennings(1980)foundthatinterlocknetworkfacilitatesfirmeconomicperformance.Burt(1983)arguesthatinterlocknetworklessensthemarketconstraintsthatfirmsface.Relativetothepuremarket,thereexistaninter-firmmarketofdirectorshipinterlocks,andfirmeconomicactionandperformanceareembeddedwithinsuchanetworkmarket.Firmsinaregioninterlocktoformaregionalcorporateinterlocknetwork.Fromtheperspectiveofregionalnetwork,Stokman,Ziegler,andScott（1985）analyzedtheinterloc