Strategy or Class? Two Theories of Interlocking Directorates

Why do the same people end up sitting on the boards of several different companies? Two theories give very different answers, each based on a different view of how power works. The first is a strategic explanation. It says firms put the same directors on multiple boards on purpose, as a way to manage uncertainty and gain access to outside resources, which highlights the choices and cleverness of company leaders (Pfeffer & Salancik, 1978, as cited in Pettigrew, 1992). On this reading, a shared board seat is a calculated move to lock in access to money, information, or influence the firm needs.

The key insight: when two opposing theories predict the same pattern, the data can't crown a winner — and the mature reading holds both lenses at once.

The second theory reads the same pattern in a much bigger way. It sees these shared seats as a tool by which a tight-knit group of wealthy elites holds on to power in society and keeps their shared interests aligned, treating any single firm's independence as fairly minor (Pettigrew, 1992). The shared directors are not so much agents of particular companies as members of a ruling class whose overlapping seats stitch the elite together. Where the first theory sees clever managers, this one sees a unified upper class.

The two views come from opposite political starting points and seem, at first, to describe incompatible worlds. One puts the spotlight on the strategic firm chasing its own advantage, while the other puts it on a social class chasing collective power. A scholar loyal to one framework can find it hard to take the other seriously, since they appear to disagree about who the real actors even are and what drives them.

Yet research suggests the two can be reconciled more easily than their heated language implies. The class theorists themselves admit that companies do have their own independent workings, and, more strikingly, both theories predict roughly the same network of board connections despite their different starting points (Pettigrew, 1992). The same observable web of shared board seats fits either story, which means the disagreement is partly about interpretation rather than about facts that could clearly settle it.

This overlap carries a useful lesson about theory and evidence. When two frameworks predict the same patterns, the data alone cannot crown a winner, and insisting on just one reflects belief more than proof. The richer understanding holds both lenses at once, accepting that board connections can serve a firm's strategy and reinforce the unity of an elite at the same time. Strategy and class are not rival explanations that cancel each other out but overlapping ones.

Where this fits in the SalesEvolution system

The transferable lesson here is intellectual humility about explanations — and sales leaders need it constantly. When a quarter goes well, the rep's skill, the market tailwind, and the marketing spend all "predict" the same result, and crowning one as the cause is belief, not proof. Holding multiple explanations until the evidence can actually distinguish them is the same discipline behind avoiding false-positive decision errors and judging performance by full track record rather than a vivid story. It's part of the analytical rigor we build through coaching and training.

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