Transnational Business Networks

The European Corporate Elite Through the Lens of Network Analysis and Sequence Analysis

Dr Philippe Blanchard
University of Warwick
Francois-Xavier Dudouet
Université Paris-Dauphine
Dr Antoine Vion
Aix-Marseille Université
SMALL GROUP PROJECT:

Abstract

Does the accumulation of capital generate a transnational business community? This project takes the angle of “interlocking directorates” (“ID”), that is, networks of people holding simultaneous leading positions in several major companies, based in two or more countries. Yet we intend to push this approach further by examining sociologically how much interlockers resemble each other, interact with each other and, possibly, coordinate their activity. We combine and cross-fertilise the structural, network angle of ID studies, with the biography-oriented research on the sociology of elites. All along we keep a systematic, wide-scale empirical perspective, through a rigorous prosopography of interlockers in five core capitalist countries over a six-year period.
This perspective should enable us to uncover the concrete agents of corporate strategies, how they connect with each other and how they enter (then leave) the core business elite. Among other topics, we will: reassess the allegedly central role of transitional finance; seize the historical logics of accelerated transnational capitalist dynamics; better understand the tension between national roots and transnational socialisation; and articulate the transient logics of life course accidents and business alliances, with more structural economic changes (the relative success of business domains; renewed generations of career strategies and variations in national attractiveness).
Our project is a unique combination of international political economy, European studies, political sociology, sociology of economic elites and cutting-edge data analysis methods. Its outputs will be conference presentations to varied disciplinary audiences (political scientists, critical management specialists, social network analysts and sequence analysts, employment relations scholars), articles in high-ranked journals, a unique database on interlockers; training in summer schools and international doctoral networks; and the preparation of a more ambitious research project for the European Research Council.

The Research Idea

Does the accumulation of capital generate a transnational business community? Marxist theory has long been providing a positive but theoretical answer: a capitalistic class ruling the world beyond borders. By contrast, this project takes a radically empirical entry into the issue. We study “interlocking directorates” (“ID”), that is, networks of people holding simultaneous leading positions in several major companies, based in two or more countries. Existing ID literature does confirm the existence of a transnational business community with a certain level of cohesion. However we still do not understand how consistent this community is and how national agents are socialised into it. In other words, the sociological dimension of how much individual interlockers resemble each other, interact with each other and, possibly, coordinate their activity, is missing.
Our project innovates by combining and cross-fertilising the structural, network angle of ID studies, with the tradition of the sociology of elites, all along keeping a systematic, wide-scale perspective based on rigorous sampling and empirical documentation of ID cases. This is a challenge in terms of concepts, as we are bringing together intellectual traditions that are usually separate. But we are also pushing innovation in terms of methods, by combining network analysis, which enables to analyse statistically and graphically large-scale corpuses of firms and individuals, and sequence analysis, which accounts for the biographical dimension of individual business careers.

Background

The expression “interlocking directorates” originates in the work of the Pujo Committee, published in the USA in 1913. It was used to evaluate the power of banks over industry and to reveal and put into question discrete but effective industrial oligopolies. Systematic empirical research on this matter developed in the 1960-1970s, especially in the USA and Northern Europe. It has grown denser and richer over the last decade, but still suffers from several lacks: 1. The question of the emergence of a transnational business community (“TBC”) is still in debate, when some scholars argues for a growing TBC, other are more cautious. 2. Most ID studies focus on relationships between companies, leading to a dominance of organisational aspects. But corporate links do not imply the existence of social links by themselves. Too few studies address the social characteristics of interlockers–interpersonal links, professional backgrounds and educations 3. So far, network analysis and sequence analysis have always been used separately to examine corporate elite. We think that a close association of these two methods could bring heuristic results. 4. ID studies have attempted to address the crucial question of the centrality of finance, yet without bringing any definitive answer. Finance does hold rather a central position in the networks of firms, but we still ignore what this means for concrete individual interlockers, if finance specialists hold the same centrality as companies and how they lead their career in a more finance-oriented business environment (Dudouet et al. 2015).

The Focus

1. We propose a unique understanding of where the economic power lies. In times of hardship, following the financial crisis and uncertainties regarding employment and living standards, pressing questions rise about the origins of economic ups and downs. In spite of domestic actors, including governmental, claiming to keep control, suspicions often fall onto transnational factors, but most explanations rely on abstract theories and econometrics. Uncovering the concrete agents of corporate strategies, how they connect with each other and how they enter (then leave) the core business elite, will give a unique grasp of transnational economic logics. It will make usually discrete power circles more visible and tangible. In other words, it will describe the power held by this elite more robustly than, on one hand, self-praising interviews and press conferences by these leaders or affiliated experts, and, on the other hand, easy critics made to the same by outside political actors.
2. Our reassessment of the role of financial elites will also bring new and more reliable evidence of the alleged excessive and destabilising role of finance in modern economies. We should learn if individuals with financial expertise are central to their interpersonal networks, with what variations between national variants of capitalism.
3. Finally, our research aims to connect viewpoints that are usually separate in experts descriptions and journalists’ reports: the microscopic, individual logics of career strategies, with the business strategies of major transnational companies, within historical and national contexts.

Theoretical Novelty

Firstly, our moves the focus towards the longitudinal dimension of business networks. This is crucial in a context of accelerated transnational capitalistic exchanges of goods, capital and workforce, but also information, expertise and leadership. Interlockers build their careers in a complex, changing environment, where national models of business cultures confront, causing shifts in the strategic resources and skills needed to remain central in the network. Combining a perspective on evolving networks of companies and individuals, as well as dynamic and adaptive careers, is our core, pioneering objective.
Secondly, we wish to renew the discussion about the tension between national roots and transnational socialisation. Interlockers both contribute to the reproduction of social hierarchies in their national field, and to the constitution of a wider, transnational field that operates along other countries’ legal frameworks. This is an important part of the discussion about the autonomy of the transnational. Notions such as “middle(wo)men” or intermediate actors should contribute to this aim.
Thirdly, we are grounding the project in a strong stream of sociological research (Devin 1995; Dezalay and Garth 1998) that studies transnational and European phenomena using classical sociological concepts: individuals’ social properties, mobility, contribution to creating transnational spaces, and social field (Georgakakis and Rowell 2011; Cohen 2011). We are also inspired by studies of other professional groups, including in the sectors of law, security, accounting, the European Union, employers organisations or trade unions.

Methodology

The project combines three families of methods in a unique way. The first method, inspired by historians’ prosopography and the sociology of professions, crops information from companies’ reports, archives, online CVs and professional directories. One dataset gathers all memberships in boards of directors, and the other individual sociological characteristics. To date, our corpus comprises all companies that compose the main national stock indices of five central West-European countries (Germany, France, Italy, the Netherlands and Belgium), over a six-year period (2005-2010). This amounts to 215 companies, 3,536 directors and top executives, 525 interlockers and 123 transnational interlockers. The second method, as used in ID studies, is network analysis, with statistical and visualisation tools in a two-mode variant (companies and directors). The third method, sequence analysis, was imported from genetics and computer science in the 1980s and has flourished in life course studies in the 2000s (Blanchard et al. 2014). We apply it to yearly positions occupied by our core 123 interlockers since they started their business career.
This three-method framework will enable us to triangulate transnational business organisations and individuals in an unprecedented way. We will relate certain profiles of individual careers and specific career episodes, to corresponding network locations (central, peripheral or isolated), and with social-professional vignettes describing representative individuals. When relevant, we will switch between the transient dynamics of life course accidents and business alliances, and more structural economic changes (the relative success of business domains; renewed generations of career strategies and variations in national attractiveness).

Work Plan

We plan to hold three intense two-day meetings over one year (2017) for three team members: Dr P. Blanchard (PI, Warwick, Political science; expert in political sociology and data analysis, including sequence analysis [Blanchard et al. 2014]), Dr François-Xavier Dudouet (Paris Dauphine, Sociology; international political economy, with a focus on the sociology of economic elites, data bases and prosopography) and Dr Antoine Vion (Aix-Marseille, Political science and Sociology; economic sociology and international studies, especially transnational dynamics in Europe). Meetings will take place in January, May and October and will consist in: debriefing feedbacks from conference presentations; mutual updates from theoretical and methodological literature; planning of data collection and treatments; calibrating data coding procedures; discussing empirical results; writing up co-authored articles; preparing the extension of the project beyond 2017 and related funding application. The PI’s teaching replacement is intended to facilitate the writing up period (Sept.-Dec.).
We plan conference presentations to several distinct audiences that should provide complementary feedback: political scientists, critical management specialists, social network analysts and sequence analysts, employment relations scholars. The second output will be articles in high-ranked journals with an interest in international political economy/sociology and related methodological innovations. One article would be centred on original results about the consistence of the European transnational business community, to be submitted to Global Networks, the British Journal of Sociology or the European Sociological Review. The other one would demonstrate the way to combine fruitfully network and sequence analysis, possibly submitted to Sociological Methodology or Political Science Research and Methods.

Outcome

Three more kinds of outputs are expected. Our databases on interlockers will be kept under embargo for several more years, but we will release it ultimately to the wider scientific community. The file and its joint documentation could be hosted by our dedicated website, and by the relevant academic platforms, so as to guarantee its diffusion in optimal conditions and among the widest audience.
We also plan to spread the methodological advances mentioned above through summer schools and international doctoral networks: The ECPR Summer School in Methods and Techniques, with P. Blanchard as an instructor and a member of the scientific board; The SNA summer schools related to the International Network for Social Network Analysis (INSNA); The European doctoral Workshop in Industrial Relations (nine Universities, including Warwick and Aix-Marseille), with which A. Vion is involved; the Lille’s Summer school in Quantitative Methods in Social Sciences.
We are also preparing a more ambitious research project for the European Research Council. In particular, we will address the complex strategies developed by interlockers in order to access the centre of the network, investing simultaneously or successively multiple companies so as to cumulate resources. We will analyse multiple board memberships by means of multiple sequence analysis (Fillieule and Blanchard 2013) and address more thoroughly the complex intertwining of networks and sequences. At the same time, we plan to enlarge our corpus to minor Eurozone countries, so as to address the centre-periphery dynamics of transnational capitalism (Braudel 1949).