The Context Matters: A Network Perspective on Interlocking Directorates in Italian Manufacturing Firms

Interlocking directorates occur when one individual has a position on the board of directors of two or more businesses. Research has focused chiefly on interlocking directorates of large or listed companies, despite the worldwide relevance of small and medium enterprises (SMEs). This exploratory paper aims to uncover the structure of systems composed by firms of all sizes, including SMEs. It uses a network-based technique to quantify the architectural characteristics of interlocking directorates between manufacturing firms of all sizes in a single country, Italy. Developing from a secondary dataset of 26,183 connected firms, the paper uncovers the interlocking networks with an interdisciplinary approach, adopting complex networks methods from statistical physics. By combining institutional theory with complex networks approaches, the findings highlight how different connection patterns arise from firms located in different regional contexts. Interlocking networks of firms of all sizes are highly fragmented, strikingly different from those composed only of large or listed firms. Overall, the paper develops a unique theoretical lens that integrates institutional and complex networks theories to describe firms’ interlocking directorates. In terms of practical implications, results highlight that policy-makers should consider how the patterns of connections between firms differ depending on the context.