Interlocking Directorate Networks and ESG Performance: Evidence from China

Abstract

This study examines the impact of interlocking directorate networks on the ESG performance of listed companies in China, offering insights into the role of informal institutions in shaping sustainable business practices. Employing social network analysis and multiple regression methods, the results demonstrate that firms embedded in stronger interlocking directorate networks exhibit significantly superior ESG performance. Mechanism analysis identifies absorptive capacity as a key mediator, suggesting that network position improves ESG outcomes by enhancing a firm’s ability to assimilate and apply external knowledge. Furthermore, heterogeneity tests indicate that this positive effect is notably stronger among non-state-owned enterprises and firms where directors lack prior green experience. These findings have valuable implications for enterprises seeking to cultivate ESG competitive advantages in the era of network relationships.