Board interlocking network and the design of executive compensation packages

The standard approach used to model interlocks in the business and management literature is to treat each interlock of a network as an independent data point. However, such an approach ignores the complex inter-dependencies among the common director interlocks. We propose that an interlocking board network is an important inter-corporate setting that has bearing on how company boards make corporate decisions. Using a sample of 725 large U.S.-based public companies over the period 2007–2010, board member information, executive compensation information, and exponential random graph modeling (ERGM) techniques for social networks, we present evidence that board interlocks are positively linked with similarities in the design of executive compensation packages in interlocked firms, particularly the proportions of the options component. We also find evidence that board interlocks are positively linked with similarities in a number of board characteristics.     

THE IMPACT OF GENDER ON VOLUNTARY AND INVOLUNTARY EXECUTIVE DEPARTURE

We examine the frequency and conditions of executive departure from S&P 1500 firms. Based upon published news reports, we find that female executives are more likely than male executives to depart their positions voluntarily and involuntarily in the presence of controls for firm performance, firm governance, and human capital. We also find that women are less likely than men to depart voluntarily as firm size increases or board size decreases but more likely to be dismissed as the board becomes more male dominated. (JEL G30, G32, G34, J44)     

Investing in Turbulent Times: The Investment Behavior of Polish Firms in the Early Transition

We examine the investment behavior of a sample of Polish industrial firms over the period 1991–1993 by means of a model that views investment flows as part of the firm’s effort to adjust its assets and liabilities so as to maximize the returns to the firm. We argue that the application of neoclassical models of investment is more appropriate in cases where net investment is positive and where the returns to other assets and costs of liabilities are stable. If firms are seeking to reduce their capital stock, then the major constraints are not financial but rather set by the speed of physical depreciation. If the returns to other assets or the costs of liabilities change, then the firm will be forced to reconfigure its balance sheet in a way that may be inconsistent with the neoclassical model of investment. This paper examines the adjustments undertaken by Polish firms and shows that firms that did make positive net investments in this period were influenced by their capital intensity, profitability and by their costs of and returns to financial assets. The explanatory power of the model is relatively high when compared to previous studies of the investment behavior of firms in the early years of transition.     

Diversification of Korean housebuilding firms: The pattern and motives between 1980 and 1995

The Korean housebuilding industry made rapid growth during the 1980s and 1990s and the industry has been restructured. One of its outstanding characteristics has been the diversification of housebuilding firms. The objective of this paper is to examine the impact of government regulations on the restructuring of the Korean housebuilding industry. The extent and pattern of diversification were examined via an analysis of the period 1980–1995, and the motives for diversification were investigated using interviews and empirical modelling. The results show that Korean housebuilding firms were diversified into both related and unrelated businesses during the rapid growth period. The conclusion is that building firms tended to diversify into other businesses in order to use resources more efficiently. In particular they extended their activities into counter-cyclical businesses in order to compensate for business loss due to tight government regulation. The diversification is seen as a survival strategy under a regulated environment as well as a long-term growth strategy.     

Interlocking directorates in canada: evidence from replacement patterns

Cross-sectional studies of interlocking directorates cannot adequately address the question of whether the network is primarily an accumulation of planned liaisons between specific pairs of firms or whether it reflects a more diffuse collective interest of the capitalist class. By examining the outcomes when ties are broken, it is possible to discover if ties between specific firms are usually replaced, as would occur if planned liaisons dominated the network. Replacement patterns are examined for interlocks among all firms ever among the one hundred largest Canadian firms between 1946 and 1977. About 30 percent of the broken ties are replaced by ties between the same pair of firms. Ties involving an executive of one of the firms (“insider ties”) are more likely to be replaced as are ties between firms with two or more interlocks. The findings suggest that interlocks serve both as vehicles of intercorporate control and liaison and as reflections of the class character of the group from which the directors of large firms are recruited.     

Veränderte KontinuitätAltered Continuity

Despite profound economic and social changes in recent decades, many school leavers in Germany still go through the dual system of vocational training. The stability of this educational institution raises the question of whether, and if so how, apprentices’ entries into employment have changed in this period. Applying the method of sequence analysis, we look at process-produced longitudinal data from the Institute for Employment Research (IAB). It can be shown that the so-called standard pattern, that is the immediate hiring by the training firm on a full-time basis, has not been the norm at any time. Since the 1980s, we have observed a slight tendency for apprenticeship graduates to leave their training firms early. At the same time, continuation of employment within the training firm persists, and apprentices more frequently work part-time. We find the standard pattern of labour market entry to be most prevalent in large firms. Whereas women very often work part-time after their apprenticeships, foreign-born apprentices in particular suffer from disadvantageous labour market entry patterns, including longer periods of unemployment.     

A structural theory of interlocking corporate directorates

A theory is proposed that explains where interlocking corporate directorates should appear between sectors of an economy, where they should not appear, and the profitability of efficient corporate interlocking. Taking the sector of an economy as the unit of analysis, interlocking directorates are cast as strategically created constraints on those sectors of the economy most “problematic” for obtaining profits in a given industry of firms. The extent to which each sector of the American economy is problematic for obtaining profits in two-digit and four-digit manufacturing industries is estimated from research linking industry profits with the form of the pattern of relations defining the industry as a position in the network of dollar flow transactions given in the 1967 Input-Output Study for the United States. A two-stage process is described for sampling firms representative of large corporations involved in American manufacturing. Measures of alternative strategies for interlocking across sectors are described. Two classes of hypotheses are derived: (1) Firms in an industry should interlock with firms in some other sector in proportion to the extent to which the sector constrains the industry's profits. (2) Controlling for production and market differences, the ability of firms in an industry to obtain unusually high profits reflects their success in creating interlocks with those sectors most problematic for their industry's profits.     

Evidence of a transnational capitalist class‐for‐itself: the determinants of PAC activity among foreign firms in the Global Fortune 500, 2000–2006

Transnational capitalist class (TCC) theory is rooted in the claim that the globalization of the economy has led to a globalization of economic interests and of class formation. However, systematic evidence linking the indicators of transnational class formation with political behaviour is largely missing. In this article, I combine data on board of director interlocks among the 500 largest business firms in the world between 2000 and 2006 with data on the political donations to US elections of foreign corporations via the corporate political action committees (PACs) of their subsidiaries, divisions or affiliates. Controlling for the various interests of individual firms, I find that foreign firms that are highly central in the transnational intercorporate network contribute more money to US elections than do the less central foreign firms. Given prior research on board of director interlocks, this finding suggests that a segment of the transnational business community has emerged as a class‐for‐itself.     

Bringing the owners back in: An analysis of a 3-mode interlock network

This paper examines the association between ownership and director interlocks in Swedish big business during the period 1990–2005. By analyses of the 3-mode network of owners, firms, and directors, multiple director assignments are shown to be highly dependent on owner interlocks. The findings provide a new understanding of the mechanisms behind the formation of director interlocks. Furthermore, the association between the interlock types suggests that the ownership network may potentially (co-)produce some of the phenomena that have been attributed to the director network. Future analyses of director interlocks have to bring the owners back in.     

SOCIAL REPRODUCTION AND THE CORPORATE OTHER:

This article identifies and describes a phenomenon that has arisen over the course of the last generation: an institutionalized "afterschool" period marked by children's involvement in adult-organized and -supervised activities. We trace the historical development of this period and examine its socializing influences on children. Children experience passage through an "extracurricular career" that begins with a recreational ambiance but progresses into competitive and finally elite activities as they grow older and become more skilled. Along this route, their leisure activities become less spontaneous and more rationalized, focused, and professionalized. Adults' incursion into children's play thus represents a means for them to reproduce the existing social structure and to socialize young people to the corporate work values of American culture.     

Latino Faces,Corporate Ties: Latino Advocacy Organizations and Their Board Membership

Although they have increased exponentially since the 1960s, social scientists know little about ethnic advocacy organizations. These nonprofits are important bridges between underresourced communities and mainstream funding organizations and their directors are established ethnic leaders. Sociologists study interlocking directorates—or shared board membership—to understand how organizations fit together within broader social networks. Network concepts, particularly the theory of institutional isomorphism, suggest that organizations are likely to be similar to the extent they are connected and operate within a common organizational field. We apply this logic to Latino advocacy organizations to examine the underlying source of cohesion across this ethnic field. We ask whether the organizations are tied by interlocking directorates of ethnic elites who sit on their boards of directors or if board members' common affiliation with other elite institutions creates the structural conditions that facilitate potential ideological or behavioral similarity. A social network analysis of five prominent Latino advocacy organizations reveals support for both hypotheses: Latino board members are both embedded in ethnic‐based networks and entrenched within elite organizational webs. This suggests that ethnic elites who sit on the boards of Latino advocacy organizations are also corporate elites, selected for the social capital they bring to these nonprofits.     

Regrounding the ‘Ungrounded Empires’:localization as the geographical catalyst for transnationalism

The emerging literature on transnationalism has reshaped the study of immigration in the USA from ‘melting pot’ and later ‘salad bowl’, to ‘switching board’, which emphasizes the ability of migrants to forge and maintain ties to their home countries. Often under the heading of ‘transnationalism from below’, these studies highlight an alternative form of globalization, in which migrants act as active agents to initiate and structure global interactions. The role of geography, and in particular, localization in transnational spaces, is central to the transnationalism debate, but is yet to be well articulated. While it has been commonly claimed that transnationalism represents deterritorialized practices and organizations, we argue that it is in fact rooted in the territorial division of labour and local community networks in immigrant sending and receiving countries. We examine closely two business sectors engaged in by the Chinese immigrants in Los Angeles: high‐tech firms and accounting firms. Each illustrates, respectively, the close ties of Chinese transnational activities with the economic base of the Los Angeles region, and the contribution of local‐based, low‐wage, small ethnic businesses to the transnational practices. We conclude that deeper localization is the geographical catalyst for transnational networks and practices.     

Public and private photographs of refugees: the problem of representation

In 1948 Manivald Sein made a series of photographs as he crossed the Atlantic Ocean, illegally, on board the Walnut. He was one of 347 passengers, mostly Estonian refugees, who escaped Soviet occupation near the end of Second World War and who were again fleeing Stalin's wrath after living in Sweden for four years. This article will examine the various ways photographs taken by refugees in transit not only give a voice to their experience, but more importantly, allow outsiders to see them as complex human beings, which in turn provides a powerful counterpoint to prevailing stereotypes.     

The duality of firms and directors in board interlock networks: A relational event modeling approach

The long tradition of scholarly work on corporate interlocks has left us with competing theoretical frameworks on the causes of interlock networks. Board interlocks are studied either as means to overcome the resource dependence of corporations or as a group cohesion mechanism of business elites. This contrast is due to an empirical divide of the literature where either the firms or the individuals are considered as decision-making bodies. In systematically ignoring the agency of the other group of actors, these literatures suffer from both theoretical and empirical biases in understanding the drivers of new interlocks. In this paper, we employ a relational event modeling technique that allows us to overcome this problem. The analysis of board appointments in Denmark demonstrates how in fact both personal and corporate considerations simultaneously drive the evolution of the corporate networks. The study of the duality of actors is essential for understanding the causes and consequences of corporate networks across time and space.     

How attorney representation and adjudication affect Canadian arbitration and labor relations board decisions

Few studies have investigated the effects of either attorney representation or attorney adjudication on arbitration board decisions, and none has investigated these effects on labor relations board decisions. I examine the effects of lawyers, as both representatives and adjudicators, on arbitration and labor relations board decisions in an analysis of 272 Canadian discipline cases involving the right to refuse unsafe work. My results show that the employee is more likely to have management’s discipline overturned if she uses a lawyer when the employer does not. However, the employer gains no comparable advantage by hiring a lawyer when the employee does not. In addition, neither side benefits by hiring a lawyer when both do so. Attorneys are also no more or less likely than non-attorneys to overturn or reduce management’s discipline.     

FIRM SURVIVAL,UNCERTAINTY, AND FINANCIAL FRICTIONS: IS THERE A FINANCIAL UNCERTAINTY ACCELERATOR?

Using a large panel of unquoted UK firms over the period 2000–2009, we examine the impact of firm‐specific uncertainty on corporate failures. In this context we also distinguish between firms which are likely to be more or less dependent on bank finance as well as public and nonpublic companies. Our results document a significant effect of uncertainty on firm survival. This link is found to be more potent during the recent financial crisis compared with tranquil periods. We also uncover significant firm‐level heterogeneity because the survival chances of bank‐dependent and nonpublic firms are most affected by changes in uncertainty, especially during the recent global financial crisis. (JEL E44, F32, F34, G32)     

Self-employed immigrants and their employees: evidence from Swedish employer-employee data

We present a study of the employees of self-employed immigrants with unincorporated firms in Sweden using matched employer-employee data from 2014. Non-European immigrants are more likely than natives to have employees in their firms. Furthermore, immigrants, especially non-European immigrants, are more likely than natives to employ immigrants in their firms, and non-European immigrants are most likely to employ recently arrived non-European immigrants with low education in their firms. Males are more likely than females to have employees in their firms, but self-employed females are more likely than self-employed males to have female employees. This is the case for all immigrant groups as well as for natives. We conclude that self-employed immigrants play a role in the labour market integration process since they create employment opportunities for immigrant groups that have difficulty entering the labour market.

     

ARE SMALL FIRMS MORE BEAUTIFUL OR IS BIGGER BETTER? A Study of Compensating Differentials and Law Firm Internal Labor Markets

Research on the size–job rewards relationship emphasizes extrinsic rewards that are typically more prevalent in large, complex organizations. We examine whether certain intrinsic rewards are more characteristic of small firms and shift the focus from manufacturing industries to professional service (law) firms. We find that small is not entirely beautiful. Smaller firms offer more autonomy but no more challenging work or better coworker relations, whereas larger firms offer lucrative salaries, enhanced benefits, and greater promotional opportunities. Our results challenge the compensating differential explanation whereby large firms offer superior extrinsic rewards to compensate for a shortfall of instrinsic job rewards.     

The spread of “big box” retail firms and spatial stratification

Large “big box” retail firms, including general merchandisers (e.g., Walmart and Target) as well as “category killers” (e.g., Home Depot and Toys “R” Us), have spread rapidly across the United States over the past 4 decades. These firms have been lauded for their presumed consumer benefits linked to expansive product selections and discount prices. They have also been criticized for their perceived negative effects on locally owned businesses, jobs, and wages. We provide an overview of the existing literature and point to promising directions for the development of theory and research on this topic. We, in this article, highlight the importance of this shift in economic organization and encourage sociologists to critically examine the stratification consequences of the rise and spread of these firms.     

How information technology affects wages: Evidence using internet usage as a proxy for IT skills

Many research studies have found a positive link between information technology (IT) in the work place and wages. Using data from the December, 1998 Current Population Survey, we examine the impact of IT, as proxied by on-the-job Internet usage, on wages. After controlling for selectivity bias, we estimate an average wage gain of 13.5 percent for on-the- job Internet usage. This wage advantage is consistent with estimates from studies based on data collected earlier in the 1990s examining the impact of computers in the workplace. We also tested for differences across industries in the manufacturing sector. We conclude that industries marked by less intensive use of technology offered significantly higher wage premiums than industries characterized by more intensive use of technology. This finding undermines the argument that higher wages go to those working in high-tech firms, not to those with high IT skills. We also find evidence that high-tech firms sort workers by skill level, which is also consistent with earlier studies.