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.     

The network of global corporations and elite policy groups: a structure for transnational capitalist class formation?

This study situates five top transnational policy–planning groups within the larger structure of corporate power that is constituted through interlocking directorates among the world's largest companies. Each group makes a distinct contribution towards transnational capitalist hegemony both by building consensus within the global corporate elite and by educating publics and states on the virtues of one or another variant of the neo–liberal paradigm. Analysis of corporate–policy interlocks reveals that a few dozen cosmopolitans – primarily men based in Europe and North America and actively engaged in corporate management – knit the network together via participation in transnational interlocking and/or multiple policy groups. As a structure underwriting transnational business activism, the network is highly centralized, yet from its core it extends unevenly to corporations and individuals positioned on its fringes. The policy groups pull the directorates of the world's major corporations together, and collaterally integrate the lifeworld of the global corporate elite, but they do so selectively, reproducing regional differences in participation. These findings support the claim that a well–integrated global corporate elite has formed, and that global policy groups have contributed to its formation. Whether this elite confirms the arrival of a transnational capitalist class is a matter partly of semantics and partly of substance.     

Transnationalists and national networkers in the global corporate elite

Through a longitudinal network analysis of the interlocking directors of the world's 500 largest corporations (1996–2006), in this article I map continuities and changes in the social organization of the global corporate elite. I pursue two questions: (1) Can we trace the formation, within the elite, of a set of directors whose transnational interlocks form an inner circle of cosmopolitans? And (2) How does the regionalized character of global capitalism structure the global corporate elite in its national and transnational segments? Findings show that transnationalists have gained prominence within the global corporate elite and are firmly embedded in the network, through extensive ties to each other and to various national components. National networkers, despite thinning ranks and sparser interlocks, continue to form the backbone of the global corporate elite, and remain on balance nationally cohesive. Overall, despite modest accretions in participation from the semi‐periphery, and with the decline of the Japanese corporate network, the elite becomes centred even more strongly on the North Atlantic. With its growing regional cohesiveness, corporate Europe gains prominence within that heartland. This analysis helps specify the process of transnational capitalist class formation at its higher reaches.     

Are Latin America's corporate elites transnationally interconnected? A network analysis of interlocking directorates

Conflicting perspectives appear when thinking about the emergence of a cohesive transnational corporate network in Latin America. On the one hand, regional political integration, foreign investment growth, increased cross‐border mergers and acquisitions, and cultural and linguistic homogeneity may have fostered transnational networks among Latin America's corporate elites. On the other hand, domestic‐based business groups, family control and trade orientation to the USA may have hindered the emergence of a cohesive transnational corporate network in Latin America. Based on a network analysis of interlocking directorates among the 300 largest corporations in Latin America, I ask whether the region's corporate elites interconnect at the transnational level and form a cohesive transnational corporate network. I found few transnational interlocks, a lack of cohesion in the transnational corporate network and no regional leaders. Corporate elites in Latin America are not transnationally interconnected and so a cohesive transnational corporate network has not emerged. I discuss implications and avenues of future research.     

Networks in public policy: Nuclear energy in the Netherlands

The article analyses the network of interlocking directorates as a part of public policy analysis of nuclear energy policy in the Netherlands. This network represents an interorganizational communication structure on the policy decision level. An organization's position in this structure reflects its position in policy formulation and implementation. Semi-governmental bodies function as important mediators between central government and private actors, of which the engineering and electricity companies have been the most influential.     

Interlocks in the Netherlands: Stability and careers in the period 1960–1980

The article is oriented towards the dynamics behind the network of interlocking directorates. In the interorganizational perspective the stability of different types of interlocks/lines between corporations is of strategic importance; in the intraclass perspective, the carriers of persons. The article therefore analyzes both. It shows that particularly primary interlocks (interlocks between the corporation in which the multiple director has an inside position and the other corporations in which he has outside positions) as well as multiple interlocks between corporations are considerably more stable than other interlocks. They are most likely being used for interorganizational purposes. Most of the interlocks however are generated by a very specific career pattern in which an executive position in a large corporation is almost a prerequisite to obtain many directorships.     

Corporate involvement in Canadian hospital and university boards, 1946–1977

Les liens ?entrecroisement entre les conseils ?administration des 100 plus grandes corporations canadiennes et ceux ?hôpitaux et ?universités entre 1946 et 1977 font ?objet de cet article. Les liens entre corporations et universités se sont considérablement affaiblis au cours des années soixante, alors qu'un déclin similaire mais plus limité s'est produit entre corporations et hôpitaux. Pour ?essentiel, ces liens sont ?apanage, ?abord, de corporations sous contrôle canadien, dans les secteurs financier et du transport, et dans les services publiques; ensuite, ?universités québécoises, ontariennes et maritimes, vieilles et établies, qui ont plus de liens avec des corporations que les universités de ?Ouest. Le réseau pan-canadien de liens inter-entreprises est renforcé par des liens indirects, entre corporations, résultant de la présence de plusieurs corporations au conseil ?administration ?un hôpital ou ?une université. Sont aussi renforcés les sousréseaux régionaux et locaux de ce réseau national. This paper examines interlocking between the boards of the 100 largest Canadian corporations and the boards of major hospitals and universities, between 1946 and 1977. Interlocking between corporations and universities declined dramatically in the 1960s and there was a similar but weaker decline in interlocking with hospitals. Interlocks with hospitals and universities are concentrated among the Canadian-controlled corporations in the financial, utility, and transportation sectors which are generally viewed as central to the Canadian capitalist class. Long established, major universities in Atlantic Canada, Quebec and Ontario are found to have more interlocks with corporations than universities in Western Canada. Indirect ties between corporations, which result from two or more corporations being represented on the board of a hospital or university, reinforce the national network of intercorporate ties and strengthen its regional and city-based subnetworks.     

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.     

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.     

Corporate Linkage and Control of the Corporate Economy: New Evidence and a Reinterpretation*

This paper begins with a brief critical review of the major perspectives in the debate concerning ownership and control of major corporations. After examination of a new source of data compiled by a Senate committee (pertaining especially to the expansion of stock control by institutional investors and, most importantly, by major commercial banks), we argue that none of these perspectives is strongly supported. In concluding we tentatively outline a perspective wliicli seems to provide a better “fit” to the data. We argue that the dominant force in the overall capitalist economy is now an “intercorporate complex” of major corporations, with banks in a central coordinating position (though short of “control”) and an inner group of the “corporate class” providing the human linkage. This form of control is what we call “intercorporate control,” based upon the impersonal interests of major, interrelated corporate bureaucracies.     

Corporate Transformation to the Multilayered Subsidiary Form: Changing Economic Conditions and State Business Policy

Despite the prevalence of corporate change in the last decade, researchers have not examined whether a change occurred in the corporate form. The analysis here presents a historical case study of a large U.S. corporation and quantitative data on the largest 100 U.S. industrial corporations. The case study examines the effects of changing economic conditions and state business policy on the corporate form. This study demonstrates that the corporation changed to a multilayered subsidiary form (MLSF): a corporation with a hierarchy of two or more levels of subsidiary corporations with a parent company at the top of the hierarchy operating as a management company. Whereas rising debt and increasing competition in the 1970s and 1980s undermined corporations' capacity to accumulate capital, changes in state business policy in the mid-1980s provided the political-legal structure for corporations to restructure their assets as subsidiary corporations tax free. Changes in state business policy also provided a means for corporations to merge, acquire, and spin-off subsidiary corporations tax free. Quantitative data on the 100 largest U.S. industrial corporations show that while the multidivisional form decreased, the MLSF increased between 1981 and 1993. Findings support a capital dependence framework. The MLSF constructs liability firewalls among corporate entities and creates internal capital markets, reducing dependence on external capital markets.     

Analysing interlocking directorates: Theory and methods

In this review article an overview is given of research on interlocking directorates. The emphasis is on methodological problems and innovations. The start of research on interlocking directorates in Germany and the U.S.A. at the beginning of this century is described. Studies on financial groups are then discussed, followed by the sociological approach and longitudinal studies. Finally, more recent research is discussed, starting with a short introduction to the research on networks of interlocking directorates. In the last section five topics are discussed in more detail: component analysis, groups in the network, different types of interlocking directorates, the stability of interlocking directorates and the relation between different corporate interlocks.     

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.     

The global corporate elite after the financial crisis: evidence from the transnational network of interlocking directorates

What impact did the recent financial crisis have on the corporate elite's international network? Has corporate governance taken on an essentially national structure or have transnational networks remained robust? We investigate this issue by comparing the networks of interlocking directorates among the 176 largest corporations in the world economy in 1976, 1996, 2006 and 2013. We find that corporate elites have not retrenched into their national business communities: the transnational network increased in relative importance and remained largely intact during the crisis lasting from 2006 to 2013. However, this network does not depend – as it used to do – on a small number of big linkers but on a growing number of single linkers. The network has become less hierarchical. As a group, the corporate elite has become more transnational in character. We see this as indicative of a recomposition of the corporate elite from a national to a transnational orientation.     

The Corporate Elite and the Architecture of Climate Change Denial: A Network Analysis of Carbon Capital's Reach into Civil Society

This study employs social network analysis to map the Canadian network of carbon‐capital corporations whose boards interlock with key knowledge‐producing civil society organizations, including think tanks, industry associations, business advocacy organizations, universities, and research institutes. We find a pervasive pattern of carbon‐sector reach into these domains of civil society, forming a single, connected network that is centered in Alberta yet linked to the central‐Canadian corporate elite through hegemonic capitalist organizations, including major financial companies. This structure provides the architecture for a “soft” denial regime that acknowledges climate change while protecting the continued flow of profit to fossil fuel and related companies.     

China's pursuits of indigenous innovations in information technology developments: hopes,follies and uncertainties

Although the Chinese state has allowed US-based transnational corporations to play an instrumental role in China's information technology (IT)-led development strategy, a dominant segment of Chinese political and technological leadership has always been wary of the negative political, economic and cultural implications of continued American domination in digital technological developments. Chinese efforts at asserting greater control over a rapidly evolving networked communication infrastructure have been multifaceted. Significantly, the past few years have seen an escalation of domestic discourses on “network sovereignty” and “indigenous innovations” or the mastery of core technologies at the industrial development strategy and technological policy levels. An elite consensus has crystallized around the mobilization of national resources to catch up with the United States in hardware and software IT developments, particularly to achieve potential leadership in next-generation network technologies. However, China's quest for technological leadership in the network age continues to be constrained by a range of domestic political economic forces on one hand, and mediated by the paradoxical dynamics of interstate cooperation and rivalry in the political economy of global communication on the other. The growing transnational nature of the capitalist accumulation process, of which China's deepened global integration through its rapidly expanding and increasingly market-driven information industry has been a critical component, has further complicated these endeavors.     

Stakeholder influence,government power,and new opportunities for Chinese Internet companies: A multilevel network analysis of cross-sector networks

In recent decades, Chinese Internet companies have experienced exponential growth. As the Internet industry increasingly commends tremendous financial resources, they also face growing stakeholder expectations for corporate social responsibility (CSR) actions. One way through which Chinese Internet companies conduct CSR is by building cross-sectoral collaborations with nonprofit and nongovernmental organizations (NGOs) and governmental agencies. Aiming to understand Internet companies’ strategic relationship building on CSR issues, the researchers drew from stakeholder influence theory and research on a network approach to stakeholder influence, and applied multilevel network analysis to model three networks related to Chinese Internet companies’ CSR collaborations. Specifically, we found that power and urgency are significant predictors of the structure of Internet companies’ cross-sector CSR alliance network. Organizations affiliated or endorsed by the central Chinese government are the most desirable CSR stakeholders. Additionally, the study also revealed that for Internet companies, devoting their attention to Internet-related social issues could increase their desirability as strategic stakeholders from other sectors and among Internet companies.     

ENVIRONMENTAL JUSTICE AND THE POLITICAL PROCESS: Movements, Corporations, and the State

I explore two questions in this article: (1) How has the role of the U.S. state in the political process changed vis‐à‐vis corporations? (2) What tactical repertoires have movements devised to confront this changing political process? Through the lens of the U.S. environmental movement, I find that (1) the state's policy‐making authority has weakened as corporations have become both policy makers and the new targets of challengers, (2) the environmental movement has devised organizing strategies–such as corporate‐community compacts or good neighbor agreements–to respond to and influence this new political process, and (3) those segments of the movement that ignore the political economic process are likely to meet with failure. These changes in the political economy constitute a challenge for the political process model. I therefore propose a “political economic process’ perspective to extend the political process model and more accurately capture these dynamics. The political economic process perspective evaluates four state‐centric assumptions of the political process model (the state as the primary movement target or vehicle of reform, the state policy‐making monopoly, capital as just another interest group, and the primacy of the nation‐state level of analysis) and demonstrates that the political economic process has changed in dramatic ways.     

Creating “Community”? Preparing for Bushfire in Rural Victoria

The term “community” has a long and contested lineage in social analysis and debate. This lineage, however, is not generally recognized in policy and public debates on community and bushfire in Australia. “Community” is thought to be central to bushfire preparedness in Australia, especially in rural areas, but what “community” actually means in this context is vague at best. There is an ever‐present tension between the use of “community” as a reference to locality, a “sense of community” as experienced by residents, and the use of “community” as a rhetorical tool by governments and state agencies. We argue that a rigorous analysis of the concept of “community” is critical to an understanding of the processes involved in preparing for the challenges associated with disaster, in this case bushfires. These broader issues are supported by research (a series of surveys, interviews, and focus groups) carried out with residents living in (predominantly rural) bushfire‐prone areas in the state of Victoria, Australia. Ultimately, we assert that social participation and social networks are likely to be the crucial aspects of community that play a central role in effective bushfire preparedness.     

Motives of corporate political donations: industry regulation,subjective judgement and the origins of pragmatic and ideological corporations

What motivates corporate political action? Are corporations motivated by their own narrow economic self‐interest; are they committed to pursuing larger class interests; or are corporations instruments for status groups to pursue their own agendas? Sociologists have been divided over this question for much of the last century. This paper introduces a novel case – that of Australia – and an extensive dataset of over 1,500 corporations and 7,500 directors. The paper attempts to understand the motives of corporate political action by examining patterns of corporate political donations. Using statistical modelling, supported by qualitative evidence, the paper argues that, in the Australian case, corporate political action is largely motivated by the narrow economic self‐interest of individual corporations. Firms’ interests are, consistent with regulatory environment theory, defined by the nature of government regulation in their industry: those in highly regulated industries (such as banking) and those dependent on government support (such as defence) tend to adopt a strategy of hedging their political support, and make bipartisan donations (to both major parties). In contrast, firms facing hostile regulation (such as timber or mining), and those without strong dependence on state support (such as small companies) tend to adopt a strategy of conservative partisanship, and make conservative‐only donations. This paper argues that regulatory environment theory needs to be modified to incorporate greater emphasis on the subjective political judgements of corporations facing hostile regulation: a corporation's adoption of conservative partisanship or hedging is not just a product of the objective regulation they face, but also whether corporate leaders judge such regulation as politically inevitable or something that can be resisted. Such a judgement is highly subjective, introducing a dynamic and unpredictable dimension to corporate political action.