Center for Research on Strategic AlliancesKellogg School of Management
Center InfoResourcesContactKellogg Home Page
General Resources
Journal Articles & Publications
 
 
 
 
 
Index
Search
Internal Site
Northwestern University

Defections from the Inner Circle: Social Exchange, Reciprocity, and the Diffusion of Board Independence in US Corporaitons
James D. Westphal and Edward J. Zajac, Administrative Science Quarterly 42 (1997): 161-183


This study seeks to reconcile traditional sociological views of the corporate board as an instrument of elite cohesion with recent evidence of greater board activism and control over top management. We propose that CEO-directors may typically support fellow CEOs by impeding increased board control over management but that CEO-directors may also foster this change if they have experienced it in their own corporation. Drawing on social exchange theory, we develop and test the argument that these CEO-directors may experience a reversal in the basis for generalized social exchange with other top managers from one of deference and support to one of independence and control. Using data from a large sample of major U.S. corporations over a recent ten-year period, we show (1) how CEO-directors "defect" from the network of mutually supportive corporate leaders, ( 2) how defections have diffused across organizations and over time, and (3) how this has, contributed to increased board control, as measured by changes in board structure, diversification strategy,
and contingent compensation. We also provide evidence that a social exchange perspective can explain the diffusion of these changes better than more conventional perspectives on network diffusion that emphasize imitation or learning.

(full text article-Kellogg community only)
(to request a full-text copy, email the center)


 

©2001 Kellogg School of Management, Northwestern University