Corporations across the world are highly interconnected in a large global network of corporate control. This paper investigates the global board interlock network, covering 400,000 firms linked through 1,700,000 edges representing shared directors between these firms. The main focus is on the concept of centrality, which is used to investigate the embeddedness of firms from a particular country within the global network. The study results in three contributions. First, to the best of our knowledge for the first time we can investigate the topology as well as the concept of centrality in corporate networks at a global scale, allowing for the largest cross-country comparison ever done in interlocking directorates literature. We demonstrate, among other things, extremely similar network topologies, yet large differences between countries when it comes to the relation between economic prominence indicators and firm centrality. Second, we introduce two new metrics that are specifically suitable for comparing the centrality ranking of a partition to that of the full network. Using the notion of centrality persistence we propose to measure the persistence of a partition’s centrality ranking in the full network. In the board interlock network, it allows us to assess the extent to which the footprint of a national network is still present within the global network. Next, the measure of centrality ranking dominance tells us whether a partition (country) is more dominant at the top or the bottom of the centrality ranking of the full (global) network. Finally, comparing these two new measures of persistence and dominance between different countries allows us to classify these countries based the their embeddedness, measured using the relation between the centrality of a country’s firms on the national and the global scale of the board interlock network.
Apart from interlocking directorates, can model relationships between firms based on a number of different types of ties, including trade @cite_10 , borrowing and lending of money @cite_35 and ownership, creating a network in which two firms are linked if one firm owns a certain percentage of another firm @cite_6 @cite_13 . In corporate networks, algorithms, to find groups of firms that are more connected with each other than with the rest of the network, are frequently applied @cite_9 @cite_12 @cite_6 . For both board interlock as well as ownership networks, it has been suggested that the communities that arise from the global corporate network have a clear regional character.
@cite_35 @cite_10 @cite_9 @cite_6 @cite_13 @cite_12
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0 Introduction.- I Themes and Problems.- 1.0 Introduction.- 1.1 The theory of finance capital.- 1.2 Interlocking directorates and economic power.- 1.3 Financial groups.- 1.4 Corporate elite and capitalist class.- 1.5 Summary.- II Between Market and Hierarchy.- 2.0 Introduction.- 2.1 The organization of firms and markets: a neo-classical explanation.- 2.2 Some definitions of firms.- 2.3 Power and control.- 2.4 Ownership and control.- 2.5 Competition, cooperation and control.- 2.5.1 Concentration and centralization.- 2.5.2 The level-of-analysis problem.- 2.6 Summary.- III Imperialism in the Seventies: two models.- 3.0 Introduction.- 3.1 Theories of imperialism.- 3.1.1 Their origins.- 3.1.2 After World War II.- 3.2 Two models.- 3.3 Research design.- 3.4 Summary.- IV The International Corporate Elite.- 4.0 Introduction.- 4.1 The organization of the supervising and executive function in different countries.- 4.2 Selection of the international corporate elite.- 4.3 Network characteristics of the international corporate elite.- 4.3.0 Introduction.- 4.3.1 The finance capitalists.- 4.3.2 The big linkers.- 4.4 Types of interlocking directorates.- 4.4.0 Introduction.- 4.4.1 Multiple interlocks.- 4.5 Summary.- V National Versus International Integration.- 5.0 Introduction to some graph-theoretical concepts.- 5.1 General patterns in the international network.- 5.1.1 Compactness of the international network.- 5.1.2 International integration of national networks.- 5.2 The international network of Western firms.- 5.2.0 Introduction.- 5.2.1 Local centrality.- 5.2.2 Global centrality.- 5.2.3 Overall centrality.- 5.3 Industrial concentration versus economic centralization.- 5.4 Summary.- VI Domination and Control.- 6.0 Introduction.- 6.1 Clusters of heavily interlocked firms.- 6.1.1 The network at multiplicity-level two.- 6.1.2 The network at multiplicity-level three.- 6.1.3 Conclusions.- 6.2 The network of officer-interlocks.- 6.2.0 Introduction.- 6.2.1 Domination and control.- 6.2.1.1 The network of all officer-interlocks.- 6.2.1.2 The network of control.- 6.2.2 Financial groups.- 6.2.3 Constellations of interests.- 6.3 Summary.- VII Competition and Cooperation: the role of banks.- 7.0 Introduction.- 7.1 Interlocks among banks.- 7.2 Overlapping spheres of interests.- 7.3 International bank consortia.- 7.4 The American banks.- 7.5 Summary.- VIII The Impact of World Crisis: changes in the network.- 8.0 Introduction.- 8.1 A new economic world order?.- 8.2 Selection of the 1976 sample.- 8.3 The international corporate elite.- 8.3.1 Finance capitalists.- 8.3.2 Big linkers.- 8.4 International versus national integration.- 8.5 Centrality in the nested networks (1976).- 8.6 Domination and control in the 1976 network.- 8.7 Summary.- IX Summary and Conclusions.- 9.1 Introduction.- 9.2 The structure of the international corporate elite.- 9.3 Conflict or cooperation.- 9.4 The meaning of interlocking directorates.- 9.5 The international corporate elite.- References.- Authors Index.- Firms Index.- Appendix A. The implications of the intricate pattern of relationships formed by company directors holding positions on multiple corporate boards, or 'interlocking', have long been the subject of speculation and investigation. While this web of inter-firm relationships is no longer regarded as prime facia evidence of collusive activity, a growing body of research on US firms has identified a range of performance effects on firms associated with information flows in these networks. Yet research on the role of director networks and firm performance is far from comprehensive and has largely been limited to the largest US corporates. This paper extends the existing research in this field by drawing together the principal findings to date and testing these in a different national context and with a much larger dataset than used previously. The relationship between director interlocks and corporate performance is examined among 6428 UK firms, those with annual turnover of £100 million or more. Social network and regression analysis is used to detect significant relationships between the pattern of director interlinking and corporate performance. A number of significant relationships are identified, broadly consistent with the US research but some phenomena distinctive to the UK is found, reflecting differences in the structure and sociology of capital markets in the two countries. In particular the role of executive directors is much less significant to the general financial performance of UK firms than to US firms and is more focused on reputational concerns in capital markets. We describe a methodology to examine bipartite relational data structures as exemplified in networks of corporate interlocking. These structures can be represented as bipartite graphs of directors and companies, but direct comparison of empirical datasets is often problematic because graphs have different numbers of nodes and different densities. We compare empirical bipartite graphs to simulated random graph distributions conditional on constraints implicit in the observed datasets. We examine bipartite graphs directly, rather than simply converting them to two 1-mode graphs, allowing investigation of bipartite statistics important to connection redundancy and bipartite connectivity. We introduce a new bipartite clustering coefficient that measures tendencies for localized bipartite cycles. This coefficient can be interpreted as an indicator of inter-company and inter-director closenesss but high levels of bipartite clustering have a cost for long range connectivity. We also investigate degree distributions, path lengths, and counts of localized subgraphs. Using this new approach, we compare global structural properties of US and Australian interlocking company directors. By comparing observed statistics against those from the simulations, we assess how the observed graphs are structured, and make comparisons between them relative to the simulated graph distributions. We conclude that the two networks share many similarities and some differences. Notably, both structures tend to be influenced by the clustering of directors on boards, more than by the accumulation of board seats by individual directorss that shared multiple board memberships (multiple interlocks) are an important feature of both infrastructures, detracting from global connectivity (but more so in the Australian case)s and that company structural power may be relatively more diffuse in the US structure than in Australia. Using a sample of 4,278 listed UK firms, we construct a social network of directorship-interlocks that comprises 31,495 directors. We use social capital theory and techniques developed in social network analysis to measure a director's connectedness and investigate whether this connectedness is associated with their compensation level and their firms overall performance. We find connectedness is positively associated with compensation and with the firm's future performance. The results do not support the view that executive and outside directors use their connections to extract economic rents. Rather the company compensates these individuals for the resources these better connections provide to the firm.