Survival of the Embedded: Expelling and Embedding Forces on Members of the Corporate Elite
13 Pages Posted: 19 Aug 2008
Following the passage of the Sarbanes-Oxley Act (2002), directorships are demanding an increasing amount of directors' time and directors without full-time executive positions elsewhere can actually devote more energy to board activities. An unintended consequence of this legislation is a potential decrease in the number of directors who hold several board seats simultaneously. This may reduce the efficiency of information flow across organizations and slow the diffusion of innovation.The case of outside directors who have lost their executive positions in their home organizations provides an excellent opportunity to examine two competing theoretical perspectives: the inter-corporate and intra-class perspectives on corporate elites.We identify the conditions under which a director will be able to retain his/her board seat even after he or she loses the executive position that provided initial entry onto the board.Prior research on corporate elites has focused on how interlocking directorships serve to create inter-organizational linkages and on what happens when board members lose their seats and those linkages are broken. Rather than focusing on the ties in corporate networks, here we focus on the nodes of these networks, the individual members of boards of directors.
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