SOCIAL CAPITAL OF CORPORATE BOARDS: EFFECTS ON FIRM GROWTH

In this study, we analyzed how the internal and external social capital of the board of directors affects a firm's performance and whether the ownership structure moderates such effects. Our empirical analyses were based on a sample of directors from over 100 large, publicly-traded companies in Korea. Results showed a negative relationship between the internal social capital of the whole board and firm growth, and a positive relationship between the external social capital of inside directors and firm growth. In addition, strong ownership structure reduced the influence of the whole board's internal social capital on firm growth. These findings imply that strong bonding among corporate directors can reduce the board's active functioning and firm growth, but that this effect can be mitigated by strong ownership. With regard to external social capital, inside directors' network beyond the firm boundary appears to be an effective tool to leverage firm growth.