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Keywords:

  • board of directors;
  • director interlocks;
  • environmental performance;
  • social capital;
  • sustainability

Abstract

This paper highlights the importance of a firm's board with respect to sustainability issues by analysing the relationship between director interlocks, i.e. directors who simultaneously belong to the boards of directors of several companies, and a firm's environmental performance. The previous literature has focused on the influence of firm-level resources on corporate environmental performance. This study utilizes insights from a resource-based view and research on social capital to demonstrate that the environmental performance of a firm is also influenced by the difficult-to-imitate capabilities that are embedded in the network relationships of its directors. Our results support a contingency perspective of the social capital theory that finds that director interlocks are positively connected with the environmental performance of a firm in two specific situations: (1) when the firm is linked to a larger parent company and (2) in cases of low and high levels of interlock diversity. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.