President interlocking, family firms and performance during turbulent times: Evidence from Latin America


  • Karen Watkins-Fassler Centro de Investigación e Inteligencia Económica, Universidad Popular Autónoma del Estado de Puebla, 17 Sur 901, Barrio de Santiago, C.P. 72410 Puebla, Mexico Mexico
  • Virginia Fernández-Pérez Departamento de Organización de Empresas, Universidad de Granada, Campus de Cartuja s/n, 18071 Granada, Spain Spain
  • Lázaro Rodríguez-Ariza Departamento de Organización de Empresas, Universidad de Granada, Campus de Cartuja s/n, 18071 Granada, Spain Spain



Empresas familiares, Interlocking de presidentes, Latinoamérica, Resultados, Incertidumbre


n Latin America, company ownership is typically concentrated in the hands of controlling families, who build powerful business groups which facilitate interlocking practices. The purpose of this study is to examine how President interlocking relates with financial performance in Latin American firms, under uncertainty circumstances. Using regression analysis (panel least squares), the association between return on assets and President interlocking during turbulent times is analyzed. For the latter, annual data (2009–2010) from non-financial publicly traded companies in Chile (243 firms) and Mexico (89 firms) is employed. It is documented that President interlocking in Latin American firms is positively associated with financial performance. However, this effect is higher in Chile than in Mexico, where minority shareholders and other stakeholders are better protected against expropriation. This study increases the understanding of the strengths of President interlocks in stormy times, by introducing the Latin American context.


Download data is not yet available.


Metrics Loading ...


Aguilera and Cuervo-Cazurra, 2009

R.V. Aguilera,A. Cuervo-Cazurra

Codes of good governance

Corporate Governance: An International Review, 17 (2009), pp. 376-387

Ahuja, 2000

G. Ahuja

Collaboration networks, structural holes and innovation: A longitudinal study

Administrative Science Quarterly, 45 (2000), pp. 425-455

Baek et al., 2004

J.S. Baek,J.K. Kang,K.S. Park

Corporate governance and firm value: Evidence from the Korean financial crisis

Journal of Financial Economics, 71 (2004), pp. 265-313

Baum and Oliver, 1992

J. Baum,C. Oliver

Institutional embeddedness and the dynamics of organizational populations

American Sociological Review, 57 (1992), pp. 540-559

Bazerman and Schoorman, 1983

M.H. Bazerman,D. Schoorman

A limited rationality model of interlocking directorates

The Academy of Management Review, 8 (1983), pp. 206-217

Beckman et al., 2004

C.M. Beckman,P.R. Haunschild,D.J. Phillips

Friends or strangers? Firm-specific uncertainty, market uncertainty, and network partner selection

Organization Science, 15 (2004), pp. 259-275

Berger and Bonaccorsi di Patti, 2006

A. Berger,E. Bonaccorsi di Patti

Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry

Journal of Banking & Finance, 30 (2006), pp. 1065-1102


Berglof and Claessens, 2006

E. Berglof,S. Claessens

Enforcement and good corporate governance in developing countries and transition economies

The World Bank Research Observer, 21 (2006), pp. 121-150

Boubakri et al., 2005

N. Boubakri,J.C. Cosset,O. Guedhami

Postprivatization corporate governance: The role of ownership structure and investor protection

Journal of Financial Economics, 76 (2005), pp. 369-399

Boyd, 1990

B. Boyd

Corporate linkages and organizational environment: A test of the resource dependence model

Strategic Management Journal, 11 (1990), pp. 419-430

Burt, 1983

R.S. Burt

Corporate profits and cooperation

Academic Press, (1983)

Cárdenas, 2014

J. Cárdenas

Are Latin America's corporate elites transnationally interconnected? A network analysis of interlocking directorates

Global Networks, 15 (2014), pp. 424-445

Carlin and Mayer, 2000

W. Carlin,C. Mayer

International evidence on corporate governance: Lessons for developing countries

Revista Abante, 2 (2000), pp. 133-160

Carpenter and Westphal, 2001

M.A. Carpenter,J.D. Westphal

The strategic context of external network ties: Examining the impact of director appointments on board involvement in strategic decision making

Academy of Management Journal, 4 (2001), pp. 639-660

Carrington, 1981

P. Carrington

Horizontal co-optation through corporate interlocks

University of Toronto, (1981)

(Unpublished doctoral dissertation)

Castañeda, 2005

G. Castañeda

Consequences of firms’ relational financing in the aftermath of the 1995 Mexican banking crisis

Journal of Applied Economics, 8 (2005), pp. 53-79

Caswell, 1984

J.A. Caswell

An institutional perspective on corporate control and the network of interlocking directorates

Journal of Economic Issues, 18 (1984), pp. 619-626

Chong et al., 2009

A. Chong,J. Guillén,F. López-de-Silanes

Corporate governance reform and firm value in Mexico: An empirical assessment

Journal of Economic Policy Reform, 12 (2009), pp. 163-188

Claessens et al., 2000

S. Claessens,S. Djankov,L.C. Xu

Corporate performance in the East Asian financial crisis

The World Bank Research Observer, 15 (2000), pp. 23-46

Coles et al., 2008

J.L. Coles,N.D. Daniel,L. Naveen

Boards: Does one size fit all?

Journal of Financial Economics, 87 (2008), pp. 329-356

Coles et al., 2001

J.L. Coles,V.B. McWilliams,N. Sen

An examination of the relationship of governance mechanisms on performance

Journal of Management, 27 (2001), pp. 23-50

Collins and Clark, 2003

C.J. Collins,K.D. Clark

Strategic human resource practices, top management team social networks, and firm performance: The role of human resource practices in creating organizational advantage

Academy of Management Journal, 46 (2003), pp. 740-751

Combe and Botschen, 2004

I.A. Combe,G. Botschen

Strategy paradigms for the management of quality: Dealing with complexity

European Journal of Marketing, 38 (2004), pp. 500-523

Davis, 1993

G.F. Davis

Who gets ahead in the market for corporate directors: The political economy of multiple board memberships

Best papers proceedings of the academy of management, pp. 202-206

Deloof and Vermoesen, 2015

M. Deloof,V. Vermoesen

Did corporate boards matter during the Great Depression? Belgian evidence

Working paper. University of Antwerp, (2015)

di Donato and Tiscini, 2009

F. di Donato,R. Tiscini

Cross ownership and interlocking directorates between banks and listed firms: An empirical analysis of the effects on debt leverage and cost of debt in the Italian case

Corporate Ownership and Control, 6 (2009), pp. 473-481

Drago et al., 2015

C. Drago,F. Millo,R. Ricciuti,P. Santella

Corporate governance reforms, interlocking directorship and company performance in Italy

International Review of Law and Economics, 41 (2015), pp. 38-49

Dyck and Zingales, 2004

A. Dyck,L. Zingales

Private benefits of control: An international comparison

Journal of Finance, 59 (2004), pp. 5637-6000

Dyer, 1996

J.H. Dyer

Specialized supplier networks as a source of competitive advantage: Evidence from the auto industry

Strategic Management Journal, 17 (1996), pp. 271-291

Farías, 2014

P. Farías

Business group characteristics and firm operating performance: Evidence from Chile

Academia Revista Latinoamericana de Administración, 27 (2014), pp. 226-235

Fernández-Pérez et al., 2012

V. Fernández-Pérez,V.J. García-Morales,O.F. Bustinza-Sánchez

The effects of CEOs’ social networks on organizational performance through knowledge and strategic flexibility

Personnel Review, 41 (2012), pp. 777-812

Fernández-Pérez et al., 2014

V. Fernández-Pérez,F.J. Llorens Montes,V.J. García-Morales

Towards strategic flexibility: social networks, climate and uncertainty

Industrial Management & Data Systems, 114 (2014), pp. 858-871


Fich and White, 2003

E.M. Fich,L.J. White

CEO compensation and turnover: The effects of mutually interlocked boards

Wake Forest Law Review, 38 (2003), pp. 935-959

Fich and White, 2005

E.M. Fich,L.J. White

Why do CEOs reciprocally sit on each other's boards?

Journal of Corporate Finance, 11 (2005), pp. 175-195

Fich and Shivdasani, 2006

E.M. Fich,A. Shivdasani

Are busy boards effective monitors?

The Journal of Finance, 61 (2006), pp. 689-724

Fliaster and Spiess, 2008

A. Fliaster,J. Spiess

Knowledge mobilization through social ties: The cost–benefit analysis

Schmalenbach Business Review, 60 (2008), pp. 99-117

Galaskiewicz et al., 1985

J. Galaskiewicz,S. Wasserman,B. Raushenbach,W. Bielefeld,P. Mulaney

The influence of corporate power, social status and market position on corporate interlocks in a regional network

Social Forces, 64 (1985), pp. 403-443

Geletknaycz and Hambrick, 1997

M.A. Geletknaycz,D.C. Hambrick

The external ties of top executives: Implications for strategic choice and performance

Administrative Science Quarterly, 42 (1997), pp. 654-681

Golden and Zajac, 2001

B.R. Golden,E.J. Zajac

When will boards influence strategy? Inclination times power equals strategic change

Strategic Management Journal, 22 (2001), pp. 1087-1111

Gomes, 2000

A. Gomes

Going public without governance: Managerial reputation effects

The Journal of Finance, 55 (2000), pp. 615-646

Granovetter, 1994

M. Granovetter

Business groups

Handbook of economic sociology, pp. 453-475

Harford and Li, 2007

J. Harford,K. Li

Decoupling CEO wealth and firm performance: The case of acquiring CEOs

The Journal of Finance, 62 (2007), pp. 917-949

Haynes and Hillman, 2010

K.T. Haynes,A. Hillman

The effect of board capital and CEO power on strategic change

Strategic Management Journal, 31 (2010), pp. 1145-1163

Huse, 2005

M. Huse

Accountability and creating accountability: A framework for exploring behavioural perspectives of corporate governance

British Journal of Management, 16 (2005), pp. 65-79

Jiraporn et al., 2009

P. Jiraporn,S. Manohar,C.I. Lee

Ineffective corporate governance: Director busyness and board committee memberships

Journal of Banking and Finance, 33 (2009), pp. 819-828

Khanna and Palepu, 2000

T. Khanna,K. Palepu

Is group affiliation profitable in emerging markets? An analysis of diversified Indian business groups

Journal of Finance, 55 (2000), pp. 867-891

Koenig and Gogel, 1981

T. Koenig,R. Gogel

Interlocking corporate directorships as a social network

The American Journal of Economics and Sociology, 40 (1981), pp. 37-50

Kor and Sundaramurthy, 2009

Y.Y. Kor,C. Sundaramurthy

Experienced-based human capital and social capital of outside directors

Journal of Management, 35 (2009), pp. 981-1006

Leff, 1978

N.H. Leff

Industrial organization and entrepreneurship in developing countries: The economic groups

Economic Development and Cultural Change, 26 (1978), pp. 661-675

Lefort, 2005

F. Lefort

Ownership structure and corporate governance in Latin America

Revista Abante, 8 (2005), pp. 55-84

Lefort and González, 2008

F. Lefort,R. González

Hacia un mejor gobierno corporativo en Chile

Revista Abante, 11 (2008), pp. 19-45

Lim and Porpora, 1987

M.H. Lim,D.V. Porpora

Stock ownership and interlocking directorates among Malaysia's top corporations

Critical Sociology, 14 (1987), pp. 77-101

Loderer and Peyer, 2002

C. Loderer,U. Peyer

Board overlap, seat accumulation and share prices

European Financial Management, 8 (2002), pp. 165-192

Martin et al., 2015

G. Martin,R. Gözübüyük,M. Becerra

Interlocks and firm performance: The role of uncertainty in the directorate interlock-performance relationship

Strategic Management Journal, 36 (2015), pp. 235-253

McEvily and Marcus, 2005

B. McEvily,A. Marcus

Embedded ties and the acquisition of competitive capabilities

Strategic Management Journal, 26 (2005), pp. 1033-1055

McKinsey and Company, 2007

McKinsey & Company

Potenciando el Gobierno Corporativo de las Empresas en Chile


McNulty and Pettigrew, 1999

T. McNulty,A. Pettigrew

Strategists on the board

Organization Studies, 20 (1999), pp. 47-74

Milliken, 1987

F.J. Milliken

Three types of perceived uncertainty about the environment: State, effect, and response uncertainty

The Academy of Management Review, 12 (1987), pp. 133-143

Mitton, 2002

T. Mitton

A cross-firm analysis of the impact of corporate governance on the East Asian financial crisis

Journal of Financial Economics, 64 (2002), pp. 215-241

Mizruchi and Galaskiewicz, 1993

M.S. Mizruchi,J. Galaskiewicz

Networks of interorganizational relations

Sociological Methods and Research, 22 (1993), pp. 46-70

Mizruchi, 1996

M.S. Mizruchi

What do interlocks do? An analysis, critique and assessment of research on interlocking directorates

Annual Review of Sociology, 22 (1996), pp. 271-298

Nadkarni and Narayanan, 2007

S. Nadkarni,V.K. Narayanan

Strategic schemas, strategic flexibility, and firm performance: The moderating role of industry clockspeed

Strategic Management Journal, 28 (2007), pp. 243-270

Nicholson et al., 2004

G. Nicholson,M. Alexander,G. Kiel

Defining the social capital of the board of directors: An exploratory study

Journal of the Australian and New Zealand Academy of Management, 10 (2004), pp. 54-72

OECD, 2004

OECD Principles of Corporate Governance (2004):

OECD, 2011


Strengthening Latin American corporate governance: The role of institutional investors

OECD Latin America Corporate Governance Roundtable, (2011)

Ong et al., 2003

C. Ong,D. Wan,K. Ong

An exploratory study on interlocking directorates in listed firms in Singapore

Corporate Governance: An International Review, 11 (2003), pp. 323-333

Palmer, 1983

D.A. Palmer

Broken ties: Interlocking directorates and intercorporate coordination

Administrative Science Quarterly, 28 (1983), pp. 40-55

Peng et al., 2001

M.W. Peng,K.Y. Au,D.Y.L. Wang

Interlocking directorates as corporate governance in third world multinationals: Theory and evidence from Thailand

Asia Pacific Journal of Management, 18 (2001), pp. 161-181

Pennings, 1980

J.M. Pennings

Interlocking directorates

Jossey-Bass, (1980)

Pfeffer, 1972

J. Pfeffer

Size and composition of corporate boards of directors: The organization and its environment

Administrative Science Quarterly, 17 (1972), pp. 218-228

Pfeffer and Salancik, 1978

J. Pfeffer,G. Salancik

The external control of organizations

Harper & Row, (1978)

Piccardi et al., 2010

C. Piccardi,L. Calatroni,F. Bertoni

Communities in Italian corporate networks

Physica A: Statistical Mechanics and Its Applications, 389 (2010), pp. 5247-5258

Podolny, 1993

J.M. Podolny

A status-based model of market competition

American Journal of Sociology, 98 (1993), pp. 829-872

Powell et al., 1999

W.W. Powell,K.W. Koput,L. Smith-Doerr,J. Owen-Smith

Network position and firm performance: Organizational returns to collaboration in the biotechnology industry

Research in the Sociology of Organizations, 16 (1999), pp. 129-159

Ravasi and Zattoni, 2006

D. Ravasi,A. Zattoni

Exploring the political side of board involvement in strategy: A study of mixed-ownership institutions

Journal of Management Studies, 43 (2006), pp. 1671-1702

Salas-Porras, 2006

A. Salas-Porras

Fuerzas centrípetas y centrífugas en la red corporativa mexicana (1981–2001)

Revista Mexicana de Sociología, 68 (2006), pp. 331-375

Santiago et al., 2009

M. Santiago,C.J. Brown,A. Baez

Prácticas de gobierno corporativo en América Latina

Academia Revista Latinoamericana de Administración, 43 (2009), pp. 26-40

Santiago and Brown, 2009

M. Santiago,C.J. Brown

An empirical analysis of Latin American board of directors and minority shareholders’ rights

Forum Empresarial, 14 (2009), pp. 1-18

Santos and da Silveira, 2007

R.L. Santos,A.D.M. da Silveira

Board interlocking no Brasil: A participacao de conselheiros em múltiplas companhias e seu efeito sobre o valor das empresas

Revista Brasileira de Financas, 5 (2007), pp. 125-163

Schneider, 2008

B.R. Schneider

Economic liberalization and corporate governance: The resilience of business groups in Latin America

Comparative Politics, 40 (2008), pp. 379-397

Seibert et al., 2001

S.E. Seibert,M.L. Kraimer,R.C. Liden

A social capital theory of career success

Academy of Management Journal, 44 (2001), pp. 219-237

Shleifer and Vishny, 1997

A. Shleifer,R.W. Vishny

A survey of corporate governance

The Journal of Finance, 52 (1997), pp. 737-783

Silva et al., 2006

F. Silva,N. Majluf,R.D. Paredes

Family ties, interlocking directors and performance of business groups in emerging countries: The case of Chile

Journal of Business Research, 59 (2006), pp. 315-321

Sirmon et al., 2007

D.G. Sirmon,M.A. Hitt,R.D. Ireland

Managing firm resources in dynamic environments to create value: Looking inside the black box

Academy of Management Review, 32 (2007), pp. 273-292

Sonquist and Koenig, 1984

J.A. Sonquist,T. Koenig

Interlocking directorates in the top US corporations: A graph theory approach

Bulletin of Sociological Methodology, 2 (1984), pp. 41-74

Tricker, 2009

B. Tricker

Corporate governance: Principles, policies and practices

Oxford University Press, (2009)

Tsai and Ghoshal, 1998

W. Tsai,S. Ghoshal

Social capital and value creation: The role of intrafirm networks

The Academy of Management Journal, 41 (1998), pp. 464-476

Uddin and Choudhury, 2008

S. Uddin,J. Choudhury

Rationality, traditionalism and the state of corporate governance mechanisms: Illustrations from a less developed country

Accounting, Auditing and Accountability Journal, 21 (2008), pp. 1026-1105

Useem, 1984

M.C. Useem

The inner circle

Oxford University Press, (1984)

Uzzi, 1997

B. Uzzi

Social structure and competition in interfirm networks: The paradox of embeddedness

Administrative Science Quarterly, 42 (1997), pp. 35-67

Valenti and Horner, 2010

A. Valenti,S.V. Horner

Corporate directors’ social capital: How centrality and density impact board monitoring

Journal of Applied Business and Economics, 11 (2010), pp. 117-127

Zaheer and Bell, 2005

A. Zaheer,G.G. Bell

Benefiting from network position: Firm capabilities, structural holes, and performance

Strategic Management Journal, 26 (2005), pp. 809-825




How to Cite

Watkins-Fassler, K., Fernández-Pérez, V., & Rodríguez-Ariza, L. (2016). President interlocking, family firms and performance during turbulent times: Evidence from Latin America. European Journal of Family Business, 6(2).



Research article