“Interlocking Board of Directors”

On the other hand, there are several drawbacks associated with this practice as well. The most significant is that it can lead to conflicts of interest if a board member is serving on two boards at once that have competing interests or objectives. It also reduces accountability since responsibility for decisions may become blurred and unclear when multiple directors are involved in making collective decisions about individual corporations (Hall & Amoroso, 2017). Additionally, interlocking boards often lack diversity due to favoritism or cronyism; therefore decreasing the potential for innovative ideas or fresh perspectives from being presented at the table (Mizruchi & Fein, 1999). In conclusion, while having a shared interlocking board of directors across multiple corporations can be beneficial in some cases such as gaining access to new experiences and knowledge that might not otherwise be available; however there are significant risks associated which must be taken into consideration before engaging in this type of arrangement including conflicts of interest and reduced accountability among others. References: Hall B., & Amoroso D. (2017). The impact of corporate governance on firm performance: A review and synthesis of recent literature Meditari Accountancy Research 25(2), 148–183 . doi: 10.1108/medar-05-2016-0024 Mizruchi M., & Fein S.(1999). Power structure research past present future Annu Rev Sociol 25 119–152 . doi:10/1146/annurev25_1_0199_119149 Mizruchi M.(1996) What do Interlocks Do? An Analysis Linking Directors’ Interlock Networks To Corporate Social Outcome American Soc Sci Rev 90(4): 877–95

Sample Solution

The practice of an “Interlocking Board of Directors” has been considered since the early 1900s (Mizruchi, 1996). There are pros and cons to having a board member serve on more than one board in this manner. On the positive side, it allows for greater cross-pollination between different organizations by providing individuals with a broader range of experience. This may help companies make informed decisions regarding their operations and strategies. Furthermore, it could lead to improved networking opportunities that can benefit both companies involved.