Managing networked boards and sustainable value creation: evidence from Malaysia’s Shariah-compliant companies

Governance networks are formed through board interlocks that may influence the diffusion of sustainability-related information, norms and strategic practices between companies. Yet, the sustainability implications of network positioning remain uncertain, especially in institutional contexts characterised by competing governance expectations. This study investigated the relationship between board network centrality and ESG performance among Shariah-compliant Malaysian public listed companies from 2019 to 2023. Utilising the Social Network Theory, the study examined how different dimensions of board network centrality related to sustainability outcomes. Based on panel data from 186 companies, the analysis employed fixed-effects and correlated random-effects estimations to separate short-term variation in network position from long-run structural embeddedness. The results revealed a temporal-structural duality. Short-term increases in brokerage positions were associated with lower ESG outcomes, suggesting coordination challenges and governance strain. In contrast, companies that remained persistently positioned as brokers exhibited significantly higher ESG performance over time, indicating the long-term value of structural embeddedness. Within-company effects of degree, eigenvector and closeness centrality were insignificant. The findings suggested that governance networks created sustainability value not through temporary increases in connectivity, but through persistent structural embeddedness over time