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Interlocking director networks and corporate digital transformation: evidence from China

Jinghan Zhang (School of Business, Guilin Tourism University, Guilin, China)
Hang Zhou (School of Business, Guilin Tourism University, Guilin, China)
Xinrui Zhang (School of Economics and Management, South China Agricultural University, Guangzhou, China)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 25 December 2024

57

Abstract

Purpose

This study investigates the role of interlocking director networks (IDN) in driving corporate digital transformation (CDT) and explores the moderating role of agency costs, diversification and financial distress.

Design/methodology/approach

The analysis uses data from Chinese A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2006 to 2021. A two-way fixed-effects model is employed to assess the impact of IDNs on CDT.

Findings

The results indicate that IDNs positively affect CDT. Furthermore, this effect is enhanced by agency costs and financial distress, while diversification acts as a negative moderator.

Originality/value

Informal institutions such as IDNs play a significant role in corporate governance in China’s relational society. This study focuses on the influence of informal institutions on digital transformation, expanding the understanding of the economic consequences of IDNs and enriching the literature on factors influencing digital transformation.

Keywords

Acknowledgements

Funding: This paper was supported by a research project of Guilin Tourism University, “The Impact Mechanism of Interlocking Director Networks on Strategic Change of Enterprises (Project No. 2023B09)” and a reasearch project of Guilin Tourism University, School of Business, “The Impact Mechanism of Interlocking Director Network on Corporate Digital Transformation (Project No. 2023XSKY09)”.

Citation

Zhang, J., Zhou, H. and Zhang, X. (2024), "Interlocking director networks and corporate digital transformation: evidence from China", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-06-2024-1029

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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