“Status projection”—a study of the foundation of independent directors among China’s listed companies

摘要

Abstract A key issue for a state in transition when a new institution is imported into its domestic economic field is the relationship between the process dynamics of the formation of the new institution and the corresponding development of the network between firms. For China, such problems as the loss of the initial goal of the imported institution are particularly serious. This article studies the foundation of independent directors and the interlocking network of China’s listed companies created by independent directors. The article has two main findings: first, the institution creates a heterogeneous network. During the process, institutional actors with different backgrounds contribute to the structural heterogeneity of the interlocking network. Second, the heterogeneous network has feedback on the effectiveness of the institution. The heterogeneous network may either strengthen or weaken the new institution depending on the types of network ties. In the analysis, this article shows how political networks and professional networks are shaped by different independent directors with different former status and the different effects these networks have on the institution of independent directors.