In the complex landscape of corporate governance and capital markets, understanding and curbing corporate unethical behavior (CUB) remains a paramount challenge. A groundbreaking study undertaken by Hu and Li delves into this enduring issue by examining the role of top management team interlocking networks (TMTIN) within Chinese A-share listed companies from 2009 to 2019. The research traverses uncharted territory by empirically linking TMTIN—a collective social network structure—with the suppression of unethical corporate practices, revealing fresh insights into the intricate dynamics shaping ethical governance in emerging markets.
At the heart of this study lies the concept of TMTIN, which captures the interconnectedness between top executives across firms through shared appointments on boards or committees. These interlocking directorates create a web of social and professional ties, positioning certain management teams as network hubs that wield considerable influence over corporate behavior. Hu and Li’s analysis demonstrates that occupying central positions within these networks significantly inhibits the prevalence of unethical actions, underscoring the vital role social capital plays in curbing opportunistic corporate conduct.
Delving deeper into the structural nuances of TMTIN, the study distinguishes between different types of centrality metrics—betweenness, eigenvector, degree, and closeness—to unravel which network positions most effectively constrain CUB. The findings highlight that betweenness and eigenvector centrality, indicators of brokerage capacity and connections to influential peers, exert a stronger suppressive effect on unethical behavior than degree and closeness centrality, which reflect mere connection counts or proximity within the network. This distinction illuminates the functional intricacies of social networks, suggesting that strategic positioning as a critical intermediary or influential node is more pivotal than simply broad connectivity.
The research further explores external and internal factors that modulate the TMTIN-CUB relationship, bringing to light the powerful amplifying effect of media coverage. External scrutiny acts as a catalyst, reinforcing the deterrent impacts of network centrality by elevating transparency and corporate accountability. Media attention, therefore, does not merely report unethical actions but actively shapes the network’s ability to police and regulate corporate behavior, thereby intensifying the ethical constraints borne by central management teams.
In addition to media influence, the study scrutinizes the heterogeneity within TMT knowledge backgrounds—aspects including political, overseas, award-based, financial, and academic experiences—and their moderating roles on the effectiveness of TMTIN in checking unethical practices. Political connections and award recognitions emerge as particularly potent in enhancing the inhibitory power of TMTIN, likely due to their ties to regulatory influence and reputational capital. Overseas experience similarly strengthens ethical governance by broadening perspectives and embedding cross-border norms.
Conversely, financial and academic backgrounds present a nuanced picture. TMT members with financial expertise often exhibit a short-term, performance-focused mindset that undermines collaborative information sharing and sustained ethical investment, thus dampening the positive network effects. Academics, despite their theoretical insights, may lack practical applicability and grapple with limited reputational authority within complex regulatory environments. Their narrower social embeddedness and functional ties confined to capital markets or scholarly circles further dilute their contribution to network efficacy in curbing unethical behavior.
Beyond identifying influencing factors, Hu and Li advance a comprehensive multi-channel mechanism that explicates how TMTIN mitigates CUB. They propose that central network positions confer significant information advantages, enabling firms to access early warnings and critical compliance signals that deter misconduct. Additionally, resource advantages stemming from network access facilitate better allocation toward governance and ethical safeguards. Crucially, social reputation—the collective recognition and accountability embedded in interlocking ties—serves as a powerful normative force reinforcing ethical behavior among connected management teams.
This threefold mechanism enriches the theoretical landscape of social network analysis by broadening the scope from traditional information and resource perspectives to include reputational dynamics as a vital conduit for ethical governance. Such a framework not only clarifies the pathways through which TMTIN exerts influence but also underscores the multifaceted nature of network effects on corporate morality, opening avenues for refined empirical examination in future studies.
Importantly, the study situates its findings within the institutional context of the Chinese market, an emergent economy characterized by unique governance norms and regulatory configurations. The research contributes to the localization of social network theory by demonstrating that collective network structures like TMTIN operate effectively in non-Western settings to shape corporate ethics. This contextual embedding affirms the adaptability and relevance of network theory while highlighting the diverse manifestations of governance dynamics across global capital markets.
The practical implications of the research are profound. Firms seeking to enhance their ethical standing can strategically develop TMTIN by encouraging centrality within interlocking networks. Particularly, prioritizing recruitment of executives with political, overseas, or award-based backgrounds can amplify governance quality by reinforcing the network’s capacity to check unethical conduct. Equally, investors and stakeholders gain a valuable lens for assessing firm integrity by monitoring media exposure levels and analyzing TMT knowledge profiles, equipping them to anticipate and respond to potential ethical risks.
Moreover, the amplified role of media underscores the necessity for transparent and proactive communication strategies within corporations. By fostering an environment of external scrutiny, firms not only improve reputational resilience but also strengthen the internal discipline mechanisms linked to TMTIN. Collectively, these insights advocate for an integrated governance approach, leveraging social network structures, diverse expertise, and external accountability to cultivate sustainable ethical cultures.
Despite its comprehensive scope, the study acknowledges certain limitations that pave the way for future inquiries. The conceptual model, anchored in social network theory, does not capture the full complexity and multifactorial nature of corporate unethical behavior. Subsequent research could integrate additional contextual variables and employ mixed methods approaches, including qualitative case studies, to render richer, more vivid understandings of how TMT dynamics intersect with misconduct.
The reliance on secondary data sources, while authoritative, introduces data gaps and temporal constraints—most notably, the dataset concluding in 2019. To extend and update findings, future research should incorporate fresh data streams and survey methodologies, allowing for real-time tracking of network evolution and ethical outcomes in the rapidly shifting corporate landscape.
Furthermore, focusing exclusively on centrality as a proxy for TMTIN structure simplifies the intricate multidimensionality of social networks. The authors recommend future work to incorporate nuanced network indicators such as structural holes and brokerage diversity, which could illuminate hidden pathways through which networks influence behavior. Such analytical deepening would sharpen theoretical precision and practical applicability alike.
The study ultimately stands as a seminal contribution to the interdisciplinary intersection of corporate governance, ethics, and social network theory. By unraveling the latent power of interlocking managerial ties framed within a context of media transparency and knowledge diversity, Hu and Li chart a forward-looking roadmap for firms, investors, regulators, and scholars committed to fostering credible and resilient capital markets. Their findings resonate beyond China’s borders, offering universally relevant insights into how complex social structures govern ethical behavior in the age of interconnectedness.
As global markets continue to evolve, the strategic development and management of top management networks will likely emerge as a critical lever for ensuring corporate responsibility. Harnessing the multifaceted advantages of these networks—information sharing, resource mobilization, and reputation safeguarding—promises to redefine governance paradigms and restore trust in the corporate sector. This study’s revelations about the dynamic interplay of network centrality, external scrutiny, and heterogeneous managerial backgrounds illuminate pathways toward that transformative future, making it a must-read for anyone invested in ethical capitalism.
Subject of Research:
The influence of top management team interlocking networks on corporate unethical behavior, with a focus on the moderating roles of media coverage and executive knowledge backgrounds.
Article Title:
Top management team interlocking network and corporate unethical behavior: the moderating role of media coverage and knowledge background.
Article References:
Hu, Y., Li, Z. Top management team interlocking network and corporate unethical behavior: the moderating role of media coverage and knowledge background. Humanit Soc Sci Commun 12, 887 (2025). https://doi.org/10.1057/s41599-025-05231-x
Image Credits: AI Generated
