Project team of Graduate School of Management, SPbU and Mathematics and Mechanics Faculty, SPbU: Irina Berezinets (project leader), Yulia Ilina, Dmitry Grigoriev, Nikolai Zenkevich and Ekaterina Sokolova have studied how new knowledge, skills and experience, obtained through the board interlocking, impact the efficiency of the directors activities in their role as monitors and resource providers, and through it, a performance of a company as a whole. The research was carried out as part of a grant from St. Petersburg University (ID: 60419345).
Multiple directorships as a valuable resource for the company is a determinant of a firm performance and serve as a value driver. The phenomenon of multiple directorships is investigated in the project from the perspective of how this indicator is related to the company's performance, based on the role and functions that the board of directors performs. Therefore, the research question of how multiple directors positions affect directors' monitoring, advising and resource providing role, and how board interlocks are related to company performance, is relevant and important. Research on this topic demonstrates two opposite positions as to whether multiple directorships is a factor of the value creation or it can have a negative impact on the performance of the firm. One of the positions, based on the “reputation” hypothesis, considers this phenomenon as a factor that positively affects the performance and value of the company.
Another one, which is based on the “busyness” hypothesis, on the contrary, argues that as a result of external directorships, directors become “busy,” which means they are not inclined or unable to perform their functions on the board efficiently. The results of this research were presented at Graduate School of Management, SPbU Research seminar that was held on June 5, 2021. The topic: «Multiple directorships and financial performance of Russian public companies”. In their presentation researchers substantiated their point of view on this problem, discussed new information technologies used to collect data, and presented the results of a pilot study on the multiple directors positions. The insights from these findings support a dynamic approach to intellectual capital of the board and a view of board interlocks as a valuable resource. Multiple directorships were observed from the short-term and the long-term perspective. This allowed to estimate how directors who held multiple directorships accumulated and aggregated specific professional skills, knowledge and experience that could increase the company’s value. Due to the “accumulated” interlocking directors bring into the company relations, contacts, experience, and competencies acquired over many years of directorship through their work in the board of directors of other companies, as well as gain experience in monitoring, which also positively affects management performance in the interests of shareholders.
During the seminar, doctoral students and alumni of GSOM actively participated in discussing the research results.