Network structure entropy, innovation, and corporate social responsibility: Evidence from interlocking director networks in China

Corporate social responsibility (CSR) has become a central concern in corporate governance research; however, how firms’ embeddedness in interlocking directorate networks influences CSR outcomes, and the internal mechanisms through which this influence operates, remain insufficiently understood. This paper employs social network analysis to construct company-level network structure entropy, measuring the embeddedness of firms within interlocking director networks (Freeman, 1979). Using panel data on Chinese A-share listed firms from 2015 to 2020, we examine the relationship between network embeddedness, innovation, executive tenure structure, and CSR performance. Our findings reveal that firms in advantageous network positions tend to demonstrate higher CSR engagement. Innovation acts as a crucial mediator, amplifying the positive impact of these networks on CSR. Specifically, firms with a culture of innovation leverage their network positions to drive CSR initiatives more effectively. Additionally, staggered chief executive officer (CEO) and chief financial officer (CFO) tenures further enhance the network-CSR relationship, particularly when CEO power is lower, consistent with insights from upper echelons theory (Hambrick & Mason, 1984). These insights highlight the importance of fostering innovation and strategic network positions for advancing CSR objectives in organizational governance.