The Structure of Interorganizational Elite Cooptation: Interlocking Corporate Directorates

Interorganizational elite cooptation, in the form of interlocking corporate directorates, is viewed as a cooperative strategy between economic organizations for reducing sources of uncertainty in their environments. Specifically, corporate interlocking is a means of anticipating or controlling sources of uncertainty stemming from the potentially disruptive unilateral actions of other corporations. In order to examine the relevant hypotheses, two comparable samples are constructed comprising the 200 largest nonfinancial and the 50 largest financial corporations as ranked by their assets for the periods 1935 and 1970. As hypothesized, the size of a corporation is directly related to the frequency of interlocking in general, even controlling for the size of its directorate. Also, financial corporations maintain more interlocks in general than nonfinancial corporations due to the importance of capital as a resource. Contrary to the theory, there is no clear relationship between such organizational characteristics as capital intensity and growth and the frequency of interlocking with financial corporations; moreover, there is even a significant negative relationship between dependency on external debt obligations and frequency of financial interlocking. As hypothesized, corporations with local market environments maintain a greater proportion of their interlocks at the local level than other corporations. Also, the structure of corporate interlocking has become more diffuse through time with a smaller proportion of the interlocks being maintained at the local level. However, contrary to the theory, the frequency of interlocking with financial corporations has increased rather than decreased through time.